SURVEY OF THE END-USE VALUE OF FOREIGN ECONOMIC AND COMMERCIAL REPORTING

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP58-00597A000100040045-0
• Release Decision: RIFPUB
• Original Classification: U
• Document Page Count: 40
• Document Creation Date: December 16, 2016
• Document Release Date: October 13, 2004
• Sequence Number: 45
• Content Type: REPORT

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aff 7--& to air,
Survey of the End-Use Value of Foreign
Economic and Commercial Reporting
A report submitted to the Committees on Appropriations of
the Senate and the House of Representatives by the Bureau
of the Budget at the request of the Senate Committees
# # # # # # ;# # # ib 'f i; # * #
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Summary of findings and conclusionsOoo.....o..........eo000o.oo00... 1
Introduction . O o .. ... . .. . . . 0 . o o . . . . o . 4 .. o . . o e o . . o o ... O . o . o . 0 0 . o . e o . o e lii
I. Foreign reporting in the postwar period......................... 1
II. Government use of Foreign Service Reports** ..... ................ 7
III. Business uses of foreign reports ......... 00....0.....0...... boas 19
IV. Other sources of foreign economic and commercial intelligence... 25
V. User charges for services based on Foreign Service reports...... 28
VI. Detail, frequency and coverage of foreign reports ............... 30
VII. The volume of foreign reporting needed..........o ..............o 32
Appendixes
A. Excerpts from monthly reports for February 1955 of Department of
Commerce field offices
B. Business comments on foreign economic and commercial intelligence
services
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1. The scope and content of foreign economic reports have changed
significantly in the years following World War II. These changes
reflect new informational needs related to the influential role of.
the United States in international affairs. Recognition of these
needs has resulted not only in a greatly increased volume of reports
compared with the pre World War II period but in the development of
a more analytical and comprehensive type of economic reporting from
foreign posts.
2. In carrying out its responsibilities under Executive Order 10249
issued June 4, 1951, the State Department, through its Division of
Foreign Reporting, has completely revised the structure of foreign
economic reporting by formulating requirements on a country-by-country
basis instead of the subject or commodity basis of reporting formerly
used. The comprehensive economic reporting programs now in effect for
each country give added emphasis to analyseq of economic conditions and
industrial relationships which affect a country Bs economic stability and
at the same time permit reporting requirements to be tailored to (a) the
importance and industrial development of the country, and (b) the per-
sonnel available at the post for reporting activity. Illustrative of
the latter type of adjustment is the 25 percent reduction in the number
of reports requested from abroad between December 1952 and December 1954,
largely reflecting reductions in the Foreign Service staff.
3. The State Department's centralized review of requests for Foreign
Service economic reports has resulted in:
(a) virtual elimination of duplication in data requests sent
to the field;
(b) extensive use of foreign statistical publications instead
of prepared statistical reports;
(c) effective review of each proposed new report in terms of
frequency, extent of detail said geographical coverage; and
(d) the assignment of priorities to approved reporting requests
as a guide to relative importance in adjusting workload
at the foreign post.
4. Government agencies require economic information relating to foreign
countries for use in the formulation of economic policy, the development
of estimates of foreign potentials, the conduct of negotiations, the pro-
motion of United States interests, and the establishment and administration
of agency economic programs. Repetitive data requirements which can be
planned in advance to meet these needs are set forth in a Comprehensive
Economic Reporting Program (CERP) prepared for each country. The CERP
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reports received from the Foreign Service are actively used in achieving
these agency program objectives. In addition, single-time data requests
to meet unanticipated needs may be made by agencies as "spot" requests.
In general, the information now obtained in CERP and "spot" Foreign
Service reporting programs is essential to achievement of the Government
functions noted.
5. No other source of information about economic conditions abroad
available to Government agencies is judged to be a practical alternative
to Foreign Service reporting.
6. Our Government's policy of promoting foreign trade has greatly in-
creased the demand for commercial intelligence about world trade opportuni-
ties as an aid to the business community in its search for new foreign
markets. Literally thousands of business firms and trade organizations
look to the Government as their principal source of information about
trade opportunities abroad. Although the provision of commercial intelli-
gence has long been a traditional responsibility of the Government, in
recent years these requirements have had to compete for the resources
available for foreign reporting with increasingly comprehensive economic
data needs. Dissatisfaction with the coverage and timeliness of the
Government's commercial intelligence reports has been expressed by busi-
ness users.
7. In those instances where data are obtained primarily for transmittal
to private users (for example, commercial intelligence reports concern-
ing, specific situations), it is recommended that agencies providing such
services take action to establish user charges on a more realistic basis,
taking into account the present value of the services and the increased
costs to the Government in providing them.
8. Current needs of the United States Government for analytical and
statistical information about world economic conditions, country-by-
country, plus the increasingly urgent needs of the business community
for information about trade and investment opportunities abroad appear
to justify some strengthening of our Foreign Service reporting program.
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This report was prepared in response to a request of the Committee
on Appropriations of the U. S. Senate to the Bureau of the Budget to make
a comprehensive survey of foreign economic reporting Wand assess the im-
portance an end-use value of all types of reports being requested and
prepared."( The Committee requested that when such a study is completed
a report of findings and conclusions be filed with both the Senate and
House Appropriations Committees.
From the context'in which the request was made, and from discussion
with staff of the Senate Committee, it appeared that Congressional con-
cern with this subject was focused primarily on such questions as whether
the Governmentes foreign reporting services are serving useful and impor-
tant purposes, the extent to which they tend to duplicate other services
and sources of information, to what extent the amount of detail, frequency
or geographic coverage of the reports might be reduced, and whether the
service could be put on a self-supporting basis through a system of user
charges.
More specifically, the purposes were defined as follows:
1. To provide a basis for appraising the importance and
end-use value of economic and commercial intelligence
reported by the Foreign Service;
2. To determine whether the data reported are essential to
effective performance of necessary Government functions
and business operations;
3. To ascertain whether the information reported is avail-
able to end users from other sources;
It.
To determine whether the cost of providing foreign
economic and commercial intelligence services can be
defrayed by imposing charges on the users at a level
sufficiently high to make the activity self-supporting,
or substantially self-supporting;
To ascertain whether the amount of detail, frequency
or extent of geographic coverage of needed Foreign
Service reports can be reduced without seriously im-
pairing their value to users.
U. S. Congress. Senate. Committee on Appropriations. Departments
of Stat? Justice and Commerce Appropriation Bill, 1955 (83rdCon-
gress, d Session, senate Report No. 1 Washington, U.S. Govern-
ment Printing Office, 1950, p. 46
iii
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The scope of the study was limited explicitly to end-uses of
economic and commercial intelligence obtained through reporting by the
United States Foreign Service. No need was felt to be concerned with
whether a particular kind of information was reported by the political
or economic staff of the embassies, by Agricultural, Commercial, Labor
or Treasury Attaches, so long as it formed a useful part of the body
of data available to Government agencies for economic and commercial
intelligence purposes. Thus political reporting by the Foreign Service
was not excluded categorically, as much of what is defined as political
reporting has incidental value for economic and commercial use. Mili-
tary intelligence, on the other hand, was excluded categorically from
the scope of the survey (although economic intelligence obtained by
defense agencies from Foreign Service reports, and used for nonmilitary
purposes, was not excluded),
The survey did not cover the processes of foreign reporting as
such; that is, being limited to end-uses, it was not designed to
measure or appraise the effectiveness of procedures used in gathering
information abroad or the efficiency of Foreign Service personnel at
reporting posts in other countries. Such questions were dealt with
only indirectly through examination of the administrative arrangements
and procedures in Washington for evaluation and appraisal of the
quality of individual reports and for rating performance of the re-
porting function.
The study was carried out partly by regular staff of the Bureau
of the Budget and partly by temporary personnel engaged for the purpose.
The salaries paid to the latter, as well asatravel and other direct
costs incurred in connection with the project, were financed by means
of an allocation of funds appropriated for."Expenses of Management
Improvement" (Appropriation No, 11X0(761), made by the Director under
authority vested in him by ExecutivelOrder No. 10559, September 8, 19548
The survey was directed, under general supervision of the Assistant
Director for Statistical Standards, Bureau of the Budget, by Dr. James E.
Gates, Dean of the College of Business Administration, University of
Georgia, assisted by Carl F. Behrens( of the economics faculty of the
University of Virginia.
Invaluable assistance in major phases of the study was provided by
the Budget Bureau's Advisory Council on Federal Reports, by individual
members of the Council, and by the Executive Secretary of the Council,
Mr. Russell Schneider. In particular, the Advisory Council on Federal
Reports established a Special Committee on Foreign Economic Reporting
to advise and assist the Bureau in carrying out the survey, Mr. Joseph A.
Sinclair, Secretary of the Commerce & Industry Association of New York,
who was appointed to membership on the Advisory Council by the American
Chamber of Commerce Executives, served as Chairman of the Special Com-
mittee, assisted by Mr. Vincent Bruno, also of the Commerce & Industry
Association of New York. In addition to Mr. Sinclair, the membership
of the Special Committee on Foreign Economic Reporting of the Advisory
Council on Federal Reports was as follows:
George Q. Adamson, General Manager, International
Division, Dun & Bradstreet, Inc.
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Bjarne Asper, Vice President, Johns-Manville Inter-
national Corporation
E. F. Buryan, General Manager, Revlon International
Corporation
Philip J. Gray, Manager, Foreign Credit Interchange
Bureau
Stanley Hollis., President, American Foreign Credit
Underwriters Corporation
Harold B. Say, Manager, Washington, D.C., Office,
Portland, Oregon, Chamber of Commerce
H. Andre Weismann, Vice President, Gillespie &
Company of New York, Inc,
The Special Committee on Foreign Economic Reporting was especially
helpful in the preparation and circulation of a questionnaire on busi-
ness uses of Foreign Service reports, which was sent out to business
firms and organizations in all parts of the country by the Bureau of the
Budget and the Advisory Council on Federal Reports, in nearly every case
with the collaboration of the local Chamber of Commerce.
Replies to the questionnaire on.business uses of Foreign Service
reports, valuable as they were in providing information for this aspect
of the study, were only one of the sources utilized. Very valuable
information was obtained also through personal visits and telephone
interviews with a large number of people outside the Government repre-
senting a wide range of business interests,. including banks, law firms,
publishing houses, trade associations, individual business firms, credit
agencies, and many others. Much was, gleaned also from examination of
materials actually used in business operations in the foreign trade
field, and from publications and other commercial intelligence services
available from nongovernmental sources.
The investigation of end-use of foreign reports by Government
agencies was conducted principally by interviews with Federal agency
personnel. Every important Executive agency was covered by interviews,
and agencies that use foreign reports only occasionally or incidentally
were consulted by telephone or personal visits. In addition, examina-
tion was made of Government publications containing information from
Foreign Service reports, and mailing lists and distribution practices
were analyzed in many cases. Several studies were made, tracing parti-
cular types of reports through all the processes in their dissemination
and end-use.
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The project staff received full cooperation and assistance in every
agency visited. Copies of publications and unpublished materials were
made freely available; access to files was given wherever requested;
special analyses of various kinds were prepared by a number of agencies
for purposes of the study; and, in short, except for difficulties in
staffing the project, it can be said that no serious problems were
encountered in connection with the study. The small staff available
for the purpose could not possibly have completed the project without
the very generous cooperation received from the other agencies.
Special mention should be made of the cooperation and assistance
provided by the Division of Foreign Reporting of the Department of
State, the Bureau of Foreign Commerce of the Department of Commerce,
and the International Cooperation Administration of the Department of
State (known as the Foreign Operations Administration at the time the
study was made),
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I. FOREIGN REPORTING IN THE POSTWAR PERIOD
To understand the nature of the problems to which this study is
addressed, it is necessary to be aware of the postwar changes in the
volume and character of economic and commercial reporting, and in the
needs of Government and business for such reporting, as compared with
the situation that existed before World War II. Most of the commercial
intelligence and economic reporting services maintained before the war
are still in demand, but the needs for such information have expanded
greatly in scope and intensity. Present-day needs of Government in
connection with economic and military aid programs, economic defense
measures such as export controls, and many other activities that were
not even contemplated twenty years ago, involve high priority require-
ments for comprehensive economic data from all parts of the world.
These requirements affect not only the volume but the character
of reporting, involving much more intensive and critical analysis of
economic conditions abroad. An obvious example is provided by the de-
tailed information now required on the movement of goods in East-West
trade, which had no parallel in the prewar period. 'Similarly., the
normal peacetime operations of Government in past years did not give
rise to the kinds of needs we now have for critical analyses of the
economic potential or capabilities of our allies to support military
forces, evaluation of production and raw materials resources of other
countries, appraisal of foreign requirements for products and materials
and of possibilities abroad for absorption of our surplus agricultural
commodities, and the like.
At the present time nearly all Federal. agencies are end-users to
some extent of economic reports obtained from our diplomatic posts abroad.
More than a dozen agencies are substantial users.
Business needs for foreign commercial intelligence have not changed
as markedly, but they too have been affected by postwar developments,
notably the substantial increase that has occurred in the volume of our
foreign trade, and the shifts that have takgn place in the patterns of
international trade (e.g., the relative increase in exports of machinery
and other finished manufactures as compared with agricultural products
and raw materials). Changes in the geographical patterns of trade aris-
ing from trade restrictions of various kindq, including limitations on
trade with some countries, and other factorq have operated to affect
significantly the volume and character of the demands for commercial
intelligence services.
The provision of commercial intelligence about a particular firm,
product or industry has been a traditional service of our Government
representation abroad. Until recently, however, the business community's
postwar need for this type of overseas representation has not seemed
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urgent and commercial intelligence data requirements have had to compete
for the reduced resources available for foreign reporting with increas-
ingly comprehensive and urgent economic data needs. Our program for the
fostering of foreign trade has given greater urgency to the demands for
an expanded commercial intelligence service by those who consider such
information indispensable in the search for new markets. As a result
considerable dissatisfaction with the present coverage and lack of time-
liness of commercial reports is registered by business users.
Administration of foreign economic reporting
Executive Order No. 102)49 of June 4, 1951, placed the responsibility
for the administration of the foreign reporting system upon the Department
of State. Under the provisions of that order, the Department of State
was established as the focal point in the Government charged with develop-
ing a comprehensive program, correlating the requirements of the several
interested agencies, and making optimum use of available staff resources.
The responsibilities placed upon the Department of State inevitably
resulted in some friction, much of which was unavoidable. This situation
has been intensified for several reasons. The changing nature of the
demands for foreign economic reporting has made the administration of our
reporting systems ever more complex. New reporting requirements have had
to compete for the limited resources. of staff abroad. There have had to
be changes in priorities and in the scheduling of reports submissions.
These factors have been accentuated in the last two.years by a 25 percent
reduction in economic reporting personnel at Foreign Service posts. De-
spite these conditions, however, it is believed that the administrative
arrangements put into operation by the Department of State under Executive
Order 10249 have been a positive factor in assuring a more effective
reporting system.
The Division of Foreign Reporting, operating under the direction of
the Controller, is the focus within the Department for administration of
foreign economic reporting operations. Since the issuance of the Execu-
tive order, that Division has given intensive attention to many major
aspects of. the foreign reporting services. In some ways, the most note-
worthy accomplishment has been the completion, for each of the different
countries and areas, of the "Comprehensive Economic Reporting Program"
(CERP), called for in the Executive order.
CERP. - Basically these programs, or plans, comprise the detailed
statemen of requirements of the Federal Government as a whole for econ-
omic data, including analyses of economic conditions in foreign countries,
normally gathered through the Foreign Service, insofar as these can be
anticipated on a systematic or recurring basis. Each "CERP" is tailored
to a particular country or area, and includes only those items of informa-
tion that are needed from that area. They are formulated after consulta-
tion with the reporting personnel in the field as well as with the Federal
agencies concerned with data from the area. Moreover, they are reviewed
in the same systematic manner and revised as needed to keep them up to
date.
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As compared with previous reporting instructions, the CERPts involve
many fewer requirements of questionable essentiality. They recognize
more clearly the varying importance of different subjects in various
countries. And they reflect on a more current basis the reporting needs
related to the strategic and influential role of the United States in
world affairs. The new instructions also provide for improvements in
procedures for transmitting information. For example, instructions were
revised to encourage the practice of sending copies of foreign publica-
tions instead of writing specially prepared statistical reports when
publications can be supplied to serve the purpose.
The CERP's not only list the items of data on which information is
to be reported, but indicate the frequency of reporting required for each
item to meet the known needs for the data; specify the dates on which
reports are due (except for items to, be reported "when available" or as
published"); and show the priority rating assigned to reporting on the
individual items. A CERP typically includes four sections, as follows:1
1. Section A.--Requirements for basic or background re orts.--These
cover topics on which there is little or no change from year to year--
such as climate, general economic, social, physical and other more
or less stable characteristics of the country--on which there is
seldom need to report more than once. The content of such report-
ing may be left to the discretion of the embassy or other reporting
post.
2. Section B.?-Requirements for re titive statistical data.--This
section lists the subjects and commodities on which a continuing
flow of data are needed monthly, quarterly, annually, or "as avail-
able." The items listed and the frequency of reporting specified
for different items vary widely, from country to country according
to the importance of particular subjects or commodities in the
country and the extent or intensity of our own interests in them.
For most items listed, the reporting requirement can be met by
submittal of publications containing the statistical data, and
the instructions to the reporting post so specify.
3. Section C.-Requirements fo repetitive analytic re orti .--This
sect on serves as a guide to the subjects on which analytic reports
are needed at regular intervals, and to the particular aspects of
these subjects that are of special importance in terms of United
States interests. For most of the subjects listed, reports are re-
quired only once a year.
IV The content, of a typical CERP described here is illustrated by the
one established for Japan, dated February 23, 1954, which was re-
printed as Exhibit A to the Report of the Investigations Division
of the Senate Appropriations Committee on "Foreign Reporting Service,"
March 1954, p. 15-24.
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Lt. Section D0--Alert list,-'-This section lists topics of particular
importance for reporting as significant developments occur. The
list is carefully selected and is limited to a relatively small
number of topics in which agencies in Washington are known to be
particularly interestedok
Priorities.--Procedures for assigning priorities to guide field posts
in allocating resources to competing; demands for information are basic
to the operation of the "CERP" scheme. Before the new scheme was inaugur-
ated, the Division of Foreign Reporting established well defined procedures
of this kind in consultation with the user agencies. These procedures
have been particularly important in facilitating adjustment to reduced
staff levels when the demands on the. Foreign Service were increasing.
The priorities system adopted involves assignment of a numerical
rating, on a scale from 1 to 5, for every CERP reporting requirement and
every "spot" report requested, according to its relative importance or
urgency, The highest priority, a rating of "1" which calls for immediate
action by the reporting post, is authorized very infrequently and only
for matters of the greatest urgency. The following tabulation shows the
distribution according to priority categories of all CERF reporting re-
quirements in. effect on July 1, 1955, and of all spot requests trans-
mitted to reporting posts during the fiscal year ended June 30, 1955:
Priority
CERP Requirements
Spot Requests
Category
Imes
ercen
er
Percen
1
2
675
4,9
198
1,2
3
8,369
60,7
2,598
15.3
4
3,091
22,4
2057
13.9
5
1,657
12.0
11,610
6803
(None)
?~
??
220
103
Total
13,792
100.0
16,8987
10010
The "alert" list in the CERP for Japan, for example, includes 41
items, covering such topics as "cartel formation," "shifts in rela-
tive importance" of various agencies "in determining fiscal, exhange
control, monetary, and other financial policies," "progress of land-
reform program," "problems of intensified competition in ocean ship-
ping," and "notable motion-picture industry activities and problems
affecting the distribution of United States films and the remittance
of earnings thereon."
2/ Spot requests transmitted without prior clearance in the Division of
Foreign Reporting of the Department of State, which is responsible
for assignment of priority ratings.
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It appears from this tabulation that the lowest priority ratings
(1. and 5) are used for a much smaller proportion of CERP reporting re-
quirements than of spot requests- 34.4 percent for the former and 82.2
percent for the latter. Inasmuch as the bulk of the spot requests
transmitted are for the Department of Commerce, these figures may pro-
vide a clue to at least some of the dissatisfaction expressed by busi-
ness users with the adequacy of our present commercial intelligence
services. It should not be inferred, however, that the priority rating
is the only factor affecting the rate of progress in completing reporting
requirements, and that the lowest-priority items are always at the bottom
of the list in the work schedules at reporting posts. Because typically
they are less difficult and time-consuming,.and because regulations re-
garding security of classified information are less likely to preclude
their being entrusted to "local" personnel, many spot requests can be
handled more expeditiously than CERP reporting requirements.
Other improvements.--Another positive step toward improvement in
foreign reporting operations has been the development of reporting
guidance and instructions for inclusion in the Foreign Service Manual.
Such material is designed to promote efficiency by teaching reporting
personnel better techniques for the preparation of reports. In addi-
tion to "general instructions," materials have been prepared covering
technicues of preparing reports on such special topics as petroleum,
civil aviation., national income and gross national product, balance
of payments, iron and steel, forestry and forest products, private in-
vestment, and other subjects on which there is a substantial volume of
reporting required.
Steps have also been taken by the Division of Foreign Reporting
to reduce the reporting workload imposed on the Foreign Service by es-
tablishing standards or criteria for approval of requests for reports
before they are sent out to the field,, By such means, it is possible
to avoid duplication or unnecessary work by screening out in advance
requests for data which are already available in some form, requests
for data which should more properly be collected through other than
Foreign Service channels, unreasonable or unrealistic requests, etc.
Improved efficiency has been sought also through introduction of
new methods and procedures for evaluation and appraisal of reporting,
and for checking on compliance and level of field reporting activity.
Following introduction of the CERP system, detailed and intensive evalua-
tion studies were undertaken on a regular basis to ascertain the quality
of reporting under the system by individual. Foreign Service posts. These
evaluation studies have not only served to point up weak and strong points
in the Foreign Service, but have revealed faults in the reporting require-
ments sent out to the field. Such comprehensive studies are supplemented
by a system of regular monthly compliance surveys, and by improved pro-
cedures for appraisal of individual reports.
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On balance, it is believed that the action taken by the Department
of State under Executive order 10249 has appreciably advanced the co-
ordination and improvement of foreign economic reporting. The adminis-
trative arrangements put into operation by the Department of State have
been a major factor in the optimum utilization of limited staff resources.
These arrangements permitted, for example, an orderly reduction of 25
percent in the number of reports requested from abroad between December
1952 and December 1954, in response to reductions in Foreign Service
staff.
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II. GOVERNMENT USE OF FOREIGN SERVICE REPORTS
In the period since World War II9 foreign economic matters have
become of much greater concern to the United States Government, and the
demand for and use of information secured from abroad has greatly ex-
panded. The organization of the Government is such that a large number
of agencies are concerned with various aspects of United States foreign
economic policy or, at the minimum, with the effect of conditions abroad
on domestic developments which relate to their responsibilities.
Obviously the preparation of reports tailored to the particular
needs and interests of each agency would result in many duplicating in-
quiries and avoidable reporting burdens for Government ministries abroad.
The increased number of reports would require additional staffs to supply
the information. Thus it is basic to a system of foreign economic report-
ing that reports be so planned that they will meet the needs of several
agencies at one time. Any given report may not be wholly of interest to
one agency or organized to meet that agency's needs precisely, but rather
will be planned to meet the needs of all interested agencies to the maxi-
mum extent possible. A general economic report such as an Annual Economic
Review, for example, will have a distribution of 90 to 100 copies within
the Government, and other reports of general interest have a distribution
as high as 70.
Each agency, of course, utilizes a specific report in the light of
its own needs. An agency may state that a particular report does not
meet its needs entirely or is in part superfluous to its requirements.
It is essential, therefore, that the report be evaluated from the pers-
pective of the Government as a whole, taking into account the interests
of all agencies whose responsibilities are affected.
The succeeding parts of this chapter discuss the end use of foreign
service reports by departments or agencies which are the principal govern-
mental users of the reports. The discussion will be limited to uses which
are made in the interest of Government, such as for policy-making purposes,
and will exclude discussion of information which is secured merely for
dissemination to private groups in the United States. This latter use is
discussed in a subsequent chapter of the report.
Department of State
By and large, the State Department is primarily interested in com-
pletely up-to-date information on the latest developments and current
problems which may affect current economic policy decisions. For that
reason emphasis is placed, for State Department use, on short telegraphic
reports on the latest developments and current attitudes of significant
foreign personages. The Department is a secondary user of much of the
background reporting which is done by the Foreign Service, especially
commodity and commercial reporting. It relies to a very great degree on
the other agencies of the Government for the primary preparation of
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necessary background and statistical information. For example, to the
maximum extent feasible, the State Department relies on compilations
prepared by the Department of Agriculture on foreign agricultural com-
modities, and its own staff makes only such rearrangements of the data
as are necessary for its own uses.
However, not all of the research product required for foreign policy
purposes can be secured from other Government agencies who have their
own particular needs and uses. Consequently, the State Department has a
research arm headed by the Special Assistant for Intelligence. Under the
Special Assistant for Intelligence there is in Office of Intelligence and
Research (OIR) which prepares special research studies at the request of
other parts of the Department of State. The Office of Intelligence and
Research is divided into geographical divisions, which are responsible
for the preparation of special studies dealing with particular countries
or regions; and a Division of Functional Intelligence, which is responsi-
ble for special commodity studies anal for special studies in such fields
as population and labor. In the preparation of these reports the office
of Intelligence and Research uses almost every kind of eco nomitr report
but especially such reports as the following: monthly economic reports,
quarterly economic and financial reviews, annual economic reports or
financial reviews, balance of payments information, fiscal data, trade
data, national income and product statistics, and any other information
which may be helpful to a knowledge of the economic weakness, strength,
or potential of our allies, the neutrals and our potential enemies.
The Special Assistant for Intelligence is also responsible for
keeping the Secretary and other key officials of the Department fully
informed with respect to any foreign developments which may affect
United States foreign policy. In carrying out this responsibility the
Special Assistant for Intelligence daily briefs the Secretary and other
key officials on the significant developments of the previous twenty-
four hours.
Each of the three offices which comprise the Bureau of Economic
Affairs requires information from abroad, obtained through the Foreign
Service. .The Office of International Financial and Development Affairs
is responsible for recommendations on United States policy with respect
to development and financial affairs. The Office represents the Depart-
ment of State on the National Advisory Council on International Monetary
and Financial Problems (NAC), and is responsible for departmental liaison
with the Export-Import Bank, the International Monetary Fund, and the
International Bank for Reconstruction and Development. It is responsible
.for preparation of appropriate position papers instructing United States
delegations at meetings of international organizations. In order to.carry
out these responsibilities, this Office must utilize all available infor-
mation specifically relating to foreign balance of payments, exchange
rates, the exchange rate control systems, and trade patterns, as well as
general economic information and statistics indicative of the growth and
potential of foreign economies.
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The Office of International Trade and Resources is responsible for
United States foreign policy with respect to commodity agreements, the
disposal of foreign agricultural commodities and the administration of
the General Agreement on Tariffs and Trade (GATT). In connection with
its responsibilities for foreign commodities and resources the Office
relies largely on statistical tabulations of other agencies. It does
require special reports which may be pertinent to specific problems
which arise from time to time. In connection with the GATT and other
aspects of U. S. foreign trade policy, the Office requires information
bearing on discrimination against United States products, export subsidies,
systems of trade controls, bilateral trade agreements and other action
which may be indicative of a violation of the provisions of the GATT.
This Office is also responsible for such aspects of East-West trade con-
trols as have been delegated to the Department of State and follows closely
the data on East-West trade prepared by the Department of Commerce, the
trade control systems of the various countries and, in addition, requests
special reports when it appears that there has been a diversion of non-
United States origin strategic commodities contrary to international
agreements.
The Office of Transportation and Communications Policy is respon-
sible for interpretation and application of United States policy in
connection with meetings of international bodies dealing with these
problems. It also has responsibilities in connection with the negotia-
tion of specific bilateral and multilateral agreements on such matters
as trade routes, allocation of communications bands and merchant marine
matters. This Office is particularly interested in obtaining information
on discrimination against U. S. carriers, transportation of passengers
and freights total tonnage and passengers carried by foreign lines, the
size of foreign fleets, new construction of commercial airliners and
vessels, the extent to which fleets are being used and other information
indicative of the relative position of United States carriers. Much of
the information required by this Office is secured from foreign publica-
tions, but a number of special requests dealing with specific problems
are initiated by the Office.
The regional bureaus of the Department of State are especially
interested in current developments affecting foreign policy. They rely
for background information on reports prepared in the Office of Intelli-
gence and Research or in other government agencies and also initiate
special requests when specific problems arise calling for additional
information.
International Cooperation Administration
The International Cooperation Administration, now a part of the
Department of State, has its own personnel abroad. However, it is the
policy of ICA to make maximum possible use of information collected by
the Foreign Service. Consequently, ICA does not undertake to collect
general economic information but obtains directly only detailed, parti-
cularized information pertinent to specific problems or projects on which
it may be working at a given times
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The ICA uses a great deal of the economic information collected by
the Foreign Service, especially information on such subjects as national
income, balance-of-payments, budgets, taxes, fiscal operations, monetary
controls, etc. This information is used by the individual country desk
officers and by the Office of Trade, Investment and Monetary Affairs in
determining appropriate levels and types of aid for each country. To a
limited extent, ICA is a user of commodity and industry information in
countries where rehabilitation of the industrial structure is considered
a significant problem. Labor problems are followed by the Office of Labor
Affairs.
Much of the information which ICA secures from the Foreign Service
is assembled, adjusted and published in periodical issuances of the ICA
Statistics and Reports Division. For example, the "Far East Data Book"
contains all of the available significant economic indicators for each
of the Far Eastern countries. This information is a handy compendium
used not only by the individual desk officers and others in ICA, but also
throughout the Government by persons working on particular areas or
countries.
Intelligence .Agencies
The term "Intelligence Agencies" is usually applied to the Central
Intelligence Agency and the intelligence arms of the State, Army, Navy
and Air Force Departments. These agencies are important users of almost
all types of economic information from abroad, although their interest
is much broader than the economic.
The CIA receives automatically copies of almost every economic des-
patch prepared by the Foreign Service, and within CIA these despatches
are reviewed and portions which are of interest to the agency are retained
and correlated with other sources of information.
The intelligence arm of the State Department is under the Special
Assistant for Intelligence, as already indicated. The State Department
is interested in any kind of information which will lead to more reliable
estimates of the situation abroad in individual countries and in parti-
cular regions.
The interests of the intelligence arms of the Army, Navy and Air
Force are more specialized and are focused on particular fields of
economic information. For example, the Navy is greatly concerned with
production and trade in petroleum, while the Army is particularly in-
terested in transportation and communications, and the Air Force has
very great interest in civil aviation matters.
Treasury Department
The Department of the Treasury chairs the National Advisory Com-
mittee for International Monetary and Financial Problems, composed of
representatives of the Departments of Treasury, State, Commerce,
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International Cooperation Administration and the Federal Reserve Board.
This Committee is responsible for considering new and special policy pro-
blems which arise in the financial and monetary field, and for instructing
the United States Director of the International Monetary Fund (IMF) and
the United States representative to the International Bank for Reconstruc-
tion and Development (IBRD). Among problems typically considered area
desirability and terms of loans to foreign countries; convertibility;
assistance through IMF; granting of stabilization credits; and financial
terms of agreements for the sale of agricultural products abroad.
In order to carry out its responsibilities in this area the Treasury
Department depends on the Foreign Service for information on the general
economic situation in each country abroad and, more especially, for the
securing of essential financial statistics. The statistics include
balance-of-payments data, budgets, fiscal revenues and expenditures, gold
and foreign exchange holdings of foreign governments, exchange rates, and
such general statistics as national income and gross national product.
In addition, the Treasury Department must secure information on the general
system of taxation, the effectiveness of the tax system and its incidence,
systems of exchange control and trade controls, the regulations of central
banks, the relations of central banks to finance ministries, the type and
effectiveness of fiscal controls, the attitudes of important officials
toward trade, monetary and financial matters and other similar data.
The Treasury Department is responsible for the administration of
our system of foreign assets control. In this connection it is parti-
cularly interested in the systems of control adopted by various countries,
the movement of capital, gold movements, and any information which may
indicate that our foreign funds control regulations are being violated.
The Treasury Department is also responsible for administering the
customs of the United States and initiates detailed investigations of
the cost of production to producers of particular commodities for which
entry into the United States is sought. In order to determine the
appropriate customs classification of the article and consequently the
appropriate rate of duty, information on the product composition of such
commodities and their origin is also secured. Some of these special
studies are made by Treasury personnel, bunt; many must be prepared by the
Foreign Service.
The Treasury Department also administers the system of counter-
vailing duties in those cases in which it appears that foreign countries
are subsidizing the export of particular commodities in such a way as to
harm domestic producers. In such cases, the Treasury secures information
on the system of subsidy being used, and the amount and character of any
special exchange rates or special rebates given to foreign exporters in
order to facilitate competition with the United States products.
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The Treasury Department has a number of Treasury representatives
abroad who report to the Department of the Treasury. These Treasury
representatives are located in such key centers as London, Paris, Rome,
Beirut, Tokyo, Manila and Rio de Janeiro. To the extent that they can,
these Treasury representatives assume the responsibility for preparing
Foreign Service reports required by Treasury. However, since they are
few in number, by far the greater part of financial information from
abroad secured by our government is collected by the Foreign Service.
Department of the Interior
The Department of the Interior is only indirectly concerned with
foreign economic policy. Nevertheless, its interest is substantial and
it is classified as an important user of Foreign Service economic reports.
Its interest lies particularly with resource commodities such as minerals,
metals, fuels and fish in which the United States is concerned with in-
creasing or decreasing dependence upon foreign supplies. Specifically,
the Secretary of the Interior is responsible for the collection and pres-
entation to the Office of Defense Mobilization (0DM) of data relating to
supplies from domestic and foreign sources in relation to United States
requirements for these products.
The Bureau of Mines is the largest single user within the Depart-
ment of the Interior of Foreign Service economic reports. It obtains
extensive information on metals and mineralp from the Foreign Service
through its annual "Mineral Production Statistics Questionnaire," which
is sent to almost every country and territory of the free world. This
questionnaire collects statistics on quantity and value of production
of every mineral known to be produced in any quantity in each country.
The statistics received in this manner are summarized and collated pri-
marily for presentation in the Minerals Yearbook. Although the Minerals
Yearbook is used to a great extent by industry, it is also considered aan
indispensable reference source by officials of the Government concerned
with minerals and related matters, especially in the Department of State,
the Department of Defense, ICA and CIA.
In addition to the annual data which are made available in the
Minerals Yearbook, monthly and quarterly information is obtained on
impor ant minerals in selected countries. For example, the Bureau of
Mines requests monthly and quarterly data on production and trade in
petroleum. These data are used for ODM purposes and are also made
available to the Navy, the State Department and other Government agencies
concerned with petroleum problems.
In addition to its concern with data on minerals production and
trade, the Bureau of Mines is interested in such matters as the develop-
ment of new petroleum fields, new minerals discoveries and technological
advances. Such data are essential for the purpose of developing estimates
of future foreign supplies. This information is provided by the Foreign
Service in occasional reports prepared as significant developments occur
or in the annual minerals reports prepared by most posts.
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The Foreign Service also collects information for the Fish and
Wildlife Service. These data are provided on a current basis for
business uses and are used by the Fish and Wildlife Service in order
to follow trends in international production, consumption and trade,
and to develop and protect United States markets for fishery products.
The information also becomes important in connection with peril-point
and other investigations of the United States Tariff Commission. The
Fish and Wildlife Service is also concerned with new fishing grounds,
size and type of fishing fleets, and new types of fishing gear and
equipment--factors which are important in preparing estimates of probable
future fish supplies.
Department of Agriculture
In analyzing the uses of Foreign Service data within the Department
of Agriculture, it is difficult to distinguish between the collection of
information for private use and for governmental uses. The primary
mission abroad of the Department of Agriculture is to encourage and pro-
mote the marketing of U. S. agricultural commodities, particularly those
which are in surplus supply. Obviously the collection of data on produc-
tion, consumption, trade, and prices of agricultural commodities is in
the interest of the farm community in order to give it information neces-
sary for carrying out a vigorous program. On the other hand, it is
equally in the interest of the Government to secure such information since
the more successful the export of agricultural commodities, the more
vigorous will be the health of the farm economy and the less burdensome
will be the problems relating to surplus disposal.
In addition to the general interest in a vigorous disposal program,
the Department pf Agriculture requires information from abroad for
carrying out specific statutory responsibilities. Pursuant to Section 22
of the Agricultural Adjustment Act, whenever the Secretary of Agriculture
has reason to believe that any article is being imported into the United
States to an extent sufficient to interfere with the execution of domes-
tic programs, he is required to advise the President. The President, in
turn, is required to seek an immediate investigation by the Tariff Commis-
sion. These Section 22 actions are particularly pertinent to such commo-
dities as almonds, walnuts, filberts, peanuts, tong oil, flaxseeds, dates,
figs and prunes. The Tariff Commission uses information supplied directly
not only by the Department of Agriculture but also by other sources, in-
cluding reports from the Foreign Agricultural Service and the Foreign
Service of the United States.
Similarly the Department of Agriculture is primarily responsible for
the administration of surplus disposal, pursuant to the Agricultural Trade
Development and Assistance Act of 195 (P.L. 480, 83rd Congress). In
order effectively to administer this act the Department requires extensive
information from abroad on agricultural production, trade, consumption
and prices. The Department must not only determine the amount of agricul-
tural commodities which a given country can consume but must also determine
that the P.L. 480 program will not interfere with normal United States
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marketing and the usual marketings of other countries. In adminis-
tering this Act the Department of Agriculture uses information addi-
tional to strictly governmental statistics; for example, it seeks
information on a country's national income and gross national product,
its pattern of trade, its population, its balance-of-payment position
and other related data which are indicative of present and potential
capacity to consume agricultural commodities.
While the agricultural information used by the Department of
Agriculture is now collected entirely by Agricultural Attaches re-
cruited and appointed by the Department of Agriculture with the
approval of the Department of State, it is still true that the
Department is a user of information secured by the Foreign Service
of the United States. As indicated above, in administering P.L. 480,
the Department of Agriculture must have a wide knowledge of the econ-
omy of each country before proposing a P.L. 480 disposal program.
Reciprocally, the reports prepared by the Foreign Agricultural Service
are used by other Government agencies, such as the Department of State,
the ICA, the Department of Defense and the Tariff Commission.
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Department of Commerce
The Department of commerce is known as an extensive user of Foreign
Service reports for the purpose of disseminating information to the busi-
ness community through a large number of publications and services. It
is also an important user of foreign economic, information for Government
purposes8 in administering controls and regulations for which it is it-
self responsible or in serving other Government agencies.
One of the significant uses made by Commerce of foreign information
is in the administration of export control regulations. The export
control function is centered in the Office of Export Supply in the
Bureau of Foreign Commerce (BFC). However, the Office of Intelligence
and Services, also in BFC, although primarily concerned with services to
business, is responsible for collection and collation of a good portion
of the information used by the Office of Export Supply. The Office of
Intelligence and Services makes use of World Trade Directory (WTD) re-
ports in securing background information on consignees or end-users of
United States commodities. This Office also initiates so called end-use
checks, more familiarly called "extran" (export transaction) checks, to
learn the intended or actual use of particular commodities. I total of
1,159 of these export transaction checks were requested of the Foreign
Service by BFC in the fiscal year 1953-54. This means that about one
out of every fourteen of the "spot requests" to the Foreign Service
originating in BFC were of this type. The Office of Export Supply,
through its export control investigation staff, also originates requests
for reports. These requests call for detailed information where it is
believed that the export control regulations may have been violated.
In addition to information on specific transactions, Commerce
requires information of a more general character to appraise the effecti-
veness of export controls maintained by our allies. Such data include
information on foreign control regulations, East-West .trade agreements,
potential foreign market difficulties and resulting pressures to ease
export controls, activities in free ports and trans-shipment ports, and
Soviet demands for particular types of goods and Western efforts to meet
these demands.
As contrasted to the very specialized reports requested for export
control purposes, the Office of Economic Affairs in the Bureau of Foreign
Commerce is a significant user of almost all types of Foreign Service
reports of a general economic nature. This Office is organized by area
divisions and in addition has an Economic Analysis Division. The area
divisions follow very closely all aspects of the' economies of the countries
in their fields of interest, and are particularly interested in the monthly
economic reports and the quarterly and annual economic and financial re-
ports. These reports on economic conditions in foreign countries are
examined for background information needed in answering business inquiries
and in serving needs of Commerce and other Government agencies for data
on conditions abroad, in discharge of responsibilities for various parti-
cular phases of foreign economic policy.
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In addition to general economic reports, the Office of Economic
Affairs needs certain specialized information in order adequately to
represent the point of view of the Department of Commerce in the dis-
charge of specific responsibilities. Among these specific matters are:
foreign tariffs and trade controls, and foreign government legislative
practices and procedures affecting U. S. trade interests in foreign
countries. Data on foreign tariffs and trade controls are used, for
example, in connection with U. S. tariff negotiations under the Recip-
rocal Trade Agreements-Act. Also, in order to assist in the formulation
of our foreign investment policies, the Office of Economic Affairs
requires information on the laws, administrative practices and policies
of other countries relevant to the establishment of U. S. branch fac-
tories and subsidiaries abroad and other factors affecting the climate
for private foreign investment.
The International Economic Analysis Division in the Office of
Economic Affairs, BFC, assembles and tabulates in great detail statis-
tics on, trade with the Soviet bloc by all of the nations of the free
world. This information is made available to the Congress and is used
by the Department of State, the Department of Defense, the CIA, and ICA
in making policy determinations with respect to trade with the Soviet
bloc. The statistics serve to show, for example, whether trade with
the Soviet bloc as a whole is increasing or decreasing, and, when
analyzed in further detail, to show which commodities are being shipped
in increasing or decreasing quantities and from what countries. Such
information serves as a check on the efficacy of particular control
devices and indicates when new techniques are required.
In addition to the statistics on trade. with the Soviet bloc, this
Division also compiles extensive foreign trade statistics for a variety
of other purposes including Government use.` It serves the other divi-
sions in the Office of Economic Affairs which in turn must answer busi-
ness and official inquiries on trends and changing patterns of world
trade. The data compiled by this division are used also by the Depart-
ment of State, ICA, the Tariff Commission, the Treasury Department and
other Government agencies for a wide variety of official purposes. For
example, in following the efficacy of the European Payments Union (EPU),
the Department of State, ICA, and the Treasury Department, as well as
the Commerce Department, need to know whether intro-regional European
trade is increasing, decreasing or remaining constant. Similarly, in
gauging the effects of particular developments affecting countries in
the sterling area or other currency areas, it is important to know the
trends of trade within these areas as well as between these areas and
other parts of the world.
The Office of Business Economics in the Department of Commerce is
another important (though less extensive) user of Foreign Service reports.
The Balance of Payments Division, for example, follows the balance of
payments position of the United States vis-a-vis the other countries of
the world. For this purpose it collects original data from many sources,
including the balance of payments statements of other countries, which
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are used not only as a primary source but to verify figures obtained
from within the United States. The balance of payments statistics
produced by this Division are used in conjunction with foreign trade
statistics in following movements in particular currency blocs as well
as in individual countries vis-a-vis the United States.
The Maritime Administration, now a constituent part of the Depart-
ment of Commerce, is a specialized user of Foreign Service reports in
carrying out its responsibilities for subsidizing United States shipping
lines. It must develop statistics on the operating costs of competing
foreign lines. Within the Foreign Service, there are Maritime Attaches
stationed in strategic maritime centers abroad (London, Paris, Rome, Rio
de Janeiro and Tokyo). These attaches devote a major proportion of their
time to collecting and reporting information on operating and maintenance
costs of foreign lines, as well as construction cost data needed for sub-
sidy determinations in particular cases involving construction of ships
by domestic lines. The Maritime Attache is responsible for reporting on
the whole region in which the center at which he is stationed is located.
In addition, however, non-specialized Foreign Service officers are called
upon from time to time to secure supplementary information. For example,
the Maritime Administration sends out tri-annually a questionnaire on
prices of ships stores and maintenance equipment. This questionnaire is
sent to a large number of posts not covered by Maritime Attaches. Simi-
larly, the Foreign Service is instructed to report on collective bargain-
ing and wage agreements between maritime unions and foreign lines so
that the Maritime Administration will have necessary information on
foreign labor costs available to it.
The Business and Defense Services Administration (BDSA) in the
Department of Commerce sponsors the collection of information primarily
about developments affecting particular industries and commodities for
use by business men. BDSA, however,: is also charged with responsibility
for advising the Office of Defense Mobilization on mobilization planning
matters. In this connection BDSA uses information from abroad on
developments in industries producing goods having strategic importance.
The BDSA also has responsibility for allocation of goods which are in
short supply in the United States. This function is now dormant but in
the past a considerable volume of Foreign Service reporting had to do
with information on requirements of foreign countries for scarce commodities,
Another specialized user of information from abroad in the Depart-
ment of Commerce is the Civil Aeronautics Administration (CAA). The Civil
Aeronautics Administration has representatives abroad to observe the
suitability of foreign airports for use by various types of airplanes.
However, such observation is supplemented by the Foreign Service, especi-
ally in localities not covered by CAA personnel, and Foreign Service posts
are called upon to transmit information on individual accidents as well
as statistics on accident rates and suitability of airports in terms of
length of run-ways, adequacy of lighting, etc.
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The Public Roads Administration also is a minor user of Foreign
Service reports and asks the Foreign Service to secure foreign publi-
cations and maps on road networks. Also information on types of
surfacing used and length of life in various climates is utilized in
order to further Public Roads research on the best types of road sur-
facing under various climatological and road-use conditions. The
Public Roads Administration is called upon to provide expert advisers
to foreign governments in connection with road building programs; for
example, it has been closely involved in the planning and development
of the Pan American Highway.
Department of Labor
The Department of Labor is an important user of foreign service
reports in a relatively restricted area. In order to advise the
Department of State with respect to foreign labor policies, to carry
on its own liaison responsibilities with such bodies as the Inter-
national Labor Organization (ILO), tv provide information on foreign
labor conditions to other Government agencies and to labor organiza-
tions, the Department requires information on foreign wages, hours,
working conditions, cost of living, labor union organization, labor
union membership, work stoppages, important personages in the foreign
labor field, relationship of labor to government, and on other matters
which are indicative of the position, status, importance and condition
of labor in foreign countries.
In connection with its responsibility for advising on the effect
of tariff reductions on American labor, the Department of Labor has
representatives on trade negotiatio4committees. To enable these
representatives to function effectively, it is necessary for the
Department of Labor to have information on foreign labor costs and to
be able to estimate the probable effect of trade concessions on United
States employment in specific industries.
The Department of Labor nominates candidates for approval by the
Secretary of State as Labor Attaches. At the present time there are
approximately 31 Labor Attaches and.Assistant Labor Attaches in the
Foreign Service. These Labor Attaches are regular Foreign Service
Officers, members of the embassy team, but particularly skilled and
knowledgeable with respect to labor matters. They are expected to
advise the chief of mission abroad as well as the departments in
Washington with respect to foreign labor conditions, problems and
issues.
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III. BUSINESS USES OF FOREI( SERVICE REPORTS
Business needs for commercial intelligence and economic information
from abroad are not fundamentally different from those of Government.
In fact most of the economic reporting dune by the. Foreign Service is
designed to serve needs of both Government and business., pened and it is not
possible to isolate to any great externt rep
that serve primarily the needs of one or the other. This is particu-
larly true of the Foreign Service economic (CERP) reports, of which more
than 57,000 were received during 1954. The specifications for these re-
ports reflect expressed needs of Gent agencies for economic infor-
mation from abroad. In requesting such motion, however, the Govern-
ment agencies take into account not only their own needs for administra-
tive and policy functions, but also those of the public, including busi-
ness, which looks to them for information about conditions abroad. Thus
the Foreign service economic reports received by the Department of com-
merce serve not only the needs of the Department in connection with its
direct administrative responsibilities such as export controls, as de-
scribed in the preceding chapter, but are made available directly to
business through publication in Foreign Commerce Weekly or other publications, or indirectly through many services to bus ess which are based
upon them.
Foreign Service reports are the basis for information and services
provided to the public by several agencies, including the Foreign Agri-
cultural Service of the Department of Agriculture, the Bureau of Foreign
Commerce of the Department of Commerce, the Bureau of Mines and the Fish
and Wildlife Service of the Department of the Interior, and the office
of International Labor Affairs and the Division of Foreign Labor Condi-
tions of the Department of Labor. In terms of the objectives of this
end-use study, the services to business provided through the Bureau of
Foreign Commerce of the Department of Commerce were considered to be the
most important and were selected for the most intensive scrutiny. It is
in this area that non Government uses of Foreign Service reports are
most readily identified and appraised; and it is this area that accounts
for the bulk of the "spotn reports called for from Foreign Service posts.
in 1954 more than 85 percent of the 15,762 spot report requests trans-
mitted to Foreign Service posts were for the Department of Commerce;
most (9,593)tof these were for World Trade Directory reports (TD's).
BFC Services to Business
More than half a million requests from business for foreign eco-
nomic arid commercial data were handled by the Bureau of Foreign Commerce
(BFC) and field offices of the Department of Commerce in 1954. ?cif orma
tion from Foreign Service reports was used to answer more than two-thirds
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of these requests, or about 343,000 in 1954, according to actual
records maintained by the Department of commerce. 1/
Business requests for commercial intelligence and other eco-
nomic data from abroad deal with a wide range of subjects. The
largest single category consists of requests for names of firms en-
gaged in particular kinds of business in individual countries abroad
(so-called "trade lists"), which are used as a starting point in es-
tablishing trade connections for selling (or buying) merchandise
abroad. Almost as numerous as trade list requests are requests for
information about particular firms abroad, such as ownership, exact
lines of business handled, general reputation and performance record
(details provided in the so-called WTID"s, or World Trade Directory
reports), used to check on status and reliability of prospective
trade connections. VM reports and trade lists, it should be noted,
are sold at $1.00 each. These two categories of requests, together
with inquiries on foreign customs regulations, tariffs, exchange and
commodity controls and the like, account for nearly half the total
volume of the Commerce Department's direct services to business based
on Foreign Service reports. The remainder deal with such matters as
general economic conditions in foreign countries, foreign investment
and trade opportunities, patents and trade marks, import and export
statistics, fairs and exhibitions, shipping and transportation,
travel, insurance, and similar topics.
Dissemination and use of information from Foreign Service com-
mercial intelligence and economic reports through publications issued
by the Department of Commerce constitute an even more extensive and
voluminous category of end-use of these materials by business than
direct services in response to specific inquiries and requests, Every
Foreign Service economic report received in the Bureau of Foreign
Commerce is screened for material of interest to the business commu-
nity suitable for publication in Foreign Commerce Weekly, in a "World
Trade Information Service" report, In the series or reports on foreign
investment in various countries, or in other non-periodic Commerce
publications. The bulk of the material in Foreign Commerce Weekly,
comprising more than a thousand pages in the course of a year, is
drawn from Foreign Service economic reports. This periodical alone
has a paid circulation of more than 9,000 every week, or close to half
a million copies per year in the aggregate, Non periodic publications,
being more specialized in content (e.g., "Investments in Pakistan,"
"Establishing a Business in Liberia," "Basic Data on the Economy of
New Zealand," "The Insurance Market in Argentina," Trademark Protec-
tion in Japan," "Preparing Shipments to Lebanon," "Import Tariff System
1/ See the report on "End-use of Foreign Service Reports" submitted
on behalf of the Bureau of Foreign Commerce, U. S. Department of
Commerce, February 10, 1955, in response to a request of the Senate
Committee on Appropriations. More detailed data on BFC services to
business are contained in that report, and specimen copies of For-
eign Commerce Weekly and other Department of Commerce publicatTons
presenting material from Foreign Service reports are pended to it.
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of India," "Electric Power Situation in Spain," etc.), are not as
widely used as Foreign Commerce Week3 . Nevertheless, the number
of such reports sol during the course of a year is fairly substan-
tial in the aggregate; and receipts from such sales are in excess
of $100,000 per year.
How and by Whom Reports Are Used
It is clear from the foregoing that information from Foreign
Service economic reports is used extensively by the business commu-
nity. This fact, however, throws no light on the question of how
the data are used by business firms or what parts of the business
community are concerned. As one approach to this question, an exami-
nation was made of the activities of field offices of the Department
of Commerce, where services are provided directly to individual busi-
nessmen. Monthly reports sent in to the Department of Commerce by
each of its field offices regularly include typical examples of such
services rendered, presenting such details on individual services as
they name of the person or business firm served, exact nature of the
3wnfticn or service provided, and in many cases why the service was
requested or what purpose would be served by it, These examples pre-
sent an illuminating picture of ways in which Foreign Service commer-
cial and economic reporting serves practical needs of business. It
was considered worth while, therefore, to transcribe a representative
cross section of them for use in this report, and excerpts from such
reports for a typical month are presented in Appendix A.
The records of actual cases reported in Appendix A could not be
analyzed quantitatively in terms of such factors as size of business,
or even the total volume of services provided in certain categories
which are illustrated by the examples, because not all the data essen-
tial for such purposes were recorded. The cases described, however,
are believed to be generally typical of the Commerce Departmentts serv-
ices to business based on information from Foreign Service reports--
i.e., the total of 343,000 cases in 1954 mentioned above.
To throw further light on the question of the kinds and sizes of
business represented among users of these services, a mail questionnaire
survey was undertaken by the Bureau of the Budget in collaboration with
its Advisory Council on Federal. Reports. The results of this survey
are summarized in the following paragraphs, and excerpts from replies
received are presented in Appendix B.
An attempt was made in the questionnaire survey to canvass a
representative cross section of business firms and organizations en-
gaged in foreign trade or otherwise concerned with general economic
conditions or particular trade and investment opportunities abroad.
Questions were asked on kind of business or activity, number of employ-
ees, uses made of trade lists and RTD reports and opinions on the prices
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that should be charged for these services, other Government publicat
tions or services based on Foreign Service reports utilized, and
alternative nongovernmental sources of similar information.
Distribution of the quuestiomnaire was accomplished with the coop-
eration of local chambers of commerce in various parts of the country.
Each local chamber which agreed to participate specified the number of
copies of the questionnaire needed to cover a representative cross sec-
tion of business firms in the community, and then undertook the actual
distribution in its area. (All replies, however, were mailed directly
by respondents to the offices of the Advisory Council on Federal Reports
in Washington.) Such distribution was supplemented by direct mailing
from Washington to selected lists of business firms and organizations
considered likely to have an interest in foreign economic and commercial
intelligence services provided through other agencies than the Depart-
ment of Commerce--i.e., the Foreign Agricultural Service, the Bureau of
Mines, the Fish and Wildlife Service, and others.
Nearly 800 replies to the questixinaire were received; and 782,of
these were found usable (others simply returned the questionnaire and
indicated that it did not appear to be applicable to them), Of the 782,
all but 123 indicated some use of Government services based on Foreign
Service economic or commercial intelligence reports. 1/ The accompanying
table shows the kind of business and size of firm (by number of employees)
of all respondents to the questionnaire identified as users of these
Government services, and those reporting no use of the services.
These data show that a very large proportion of the business users
of information from Foreign Service reports are small business firms--
76 percent, or more than three-fourths of the total, having fewer than
500 employees; and nearly three-fifths (58 percent) having fewer than
100 employees. Replies to the questionnaire indicated, moreover, that
small business firms are much more dependent on these services than large
firms. Many large firms have their own representatives or agents abroad
on whom they rely for information or to establish trade connections.
They buy trade lists and WM reports, and subscribe to Foreign Commerce
Wee and "World Trade Information Service" reports; but they also use
services of private organizations, such as Dun & Bradstreet, much more
extensively, and tend to regard Government services in this field merely
as supplementary sources of information. Small business firms, on the
other hand, are often completely dependent on trade lists or WTD reports
as the sole source of leads to possible trade contacts in other coun-
tries, and so stated in their replies to the questionnaire. This is
1/ The number of non-users among respondents is not considered signifi-
cant because it is assumed that a larger proportion of non-users than
users failed to reply to the questionnaire. The response rate of over
10 percent which was achieved without follow-up is considered to be
more than satisfactory for this type of survey.
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Number of business firms
(by kinds of bus nh ess and size) reporting use or non-use
of Government services based on Foreign Service reports
Kind of business (by size) Users Non-users Total
7btai (all kinds of business) 659 123 782
Fewer than 100 employees 385 67 452
100 to 499 employees 116 41 157
500. or more employees 158 15 173
Manufacturing 301 81 382
Fewer than 100 employees 79 31 110
100 to 499 employees 91 35 126
500 or more employees 131 15 146
Importingo.exportin g, dealers, agents.,_ shippers, etce 243 27 2tO
Fewer than 10 employees 155 27 182
10 to-99 employees 73 -- 73
100 to 499 employees 96 9
500 or more employees 6
Banks,.insurance companies, credit agencies, etc. 23,
Fewer than 100 employees --
100 to 499 employees 10
.500 or more employees 13
Printing and publishing 17
Fewer than 100 employees 10
100; to 499 employees 3
500 or more employees 4
Trade associations 27
Miscellaneous (research, engineering, public relations,
ver i ng, port and development agencies, etc.) 48
Fewer than 10 employees
10 to 100 employees
100 to 499 employees
500 or more employees
23
18
3
4
6
29
16
13
19
12
3
4
30
13 52
4 45
-- 3
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especially true of firms just getting established,, Just entering the
foreign market, or attempting to expand their foreign business into
additional countries.
Except for the relatively greater degree of dependence on these
services by small business, no very significant differences were dis-
closed in replies to the questionnaire among different kinds or sizes
of business as to their uses of commercial intelligence or economic
data supplied by the Government on the basis of Foreign. Service re-
ports, Users in all size groups and all kinds of business gave gener-
ally similar answers to the questions asked, roughly the same propor-
tions in all groups praising or expressing dissatisfaction with the
quality of Government services in this field, reporting according to
the same patterns on uses made of the services, and showing approxi-
mately the same range of opinions on the prices charged for the serv-
ices. Small minorities in nearly all size- and kind-of-business groups,
particularly among the respondents identified as non-users, expressed
disapproval of the services now provided; some compared these services
unfavorably with the commercial intelligence and trade promotion activ-
ities of other countries; and a few urged the view that Government serv-
ices of this type should be discontinued altogether or turned over to
private enterprise.
Among the more than 500 business users of trade lists and WTDis
who replied to questions concerning the prices charged for these serv-
ives, about 74 percent think they should be kept at the present price
of $1.00 each; about 12 percent consider the present price too high;
and nearly 1)1 percent consider the present price too low. The latter
group includes a small number who suggested that the prices charged
should be based on cost. It may be significant that, although no ques-
tion was asked on the point, 25 users volunteered willingness to pay
higher prices for trade lists and '[ ITD1s if the service could be improved.
The character of the comments made on various points in replies to
the questionnaire proved to be more illuminating in many ways than the
factual answers to specific questions, and they were considered to merit
more substantial treatment than is possible in a brief review or analyt-
ical summary. They are therefore reproduced in the form of excerpts for
presentation in Appendix B to this report.
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IV0 OTHER SOURCES OF FOREIC 1 ECONOMIC INFORMATION
although,, as stated above, no other sources of information
about economic conditions abroad that are available to Government
agencies and business were found to provide practical alternatives
to Foreign Service reporting, it would be incorrect to infer that
no other sources exist for any kinds of foreign economic information.
Some types of information about foreign countries can be obtained
readily and without cost from the embassies and consular offices
maintained in the United States by the countries themselves. As
noted above, many large corporations, notably large banks and manu-
facturing companies with subsidiaries abroad, receive information
directly from their own representatives or agents in other countries.
The United Nations and the specialized agencies affiliated with it,
as well as a number of other intergovernmental and nongovernmental
agencies and organizations, compile and publish information, espe-
cially statistical data, on economic conditions in various countries.
News services and some periodical and book publishers have foreign
correspondents at strategic locaticais abroad. Some private organi-
zations and firms operate commercial intelligence services on a busi-
ness basis, typically dealing with only specialized types of informa-
tion, such as credit ratings.
The various types of services represented among these alternative
sources of foreign economic information were examined carefully with a
view to appraising their suitability and adequacy for the purposes for
which data from Foreign Service reports are used by Government agencies
and business. This examination covered the statistical yearbooks and
current statistical bulletins, as well as special reports and other
nonperiodic publications, issued by the United Nations and other inter-
national organizations; business information services and publications
of such nongovernmental organizations and agencies as the Chamber of
Commerce of the United States, Dun & Bradstreet, Bureau of National
Affairs, Hemisphere Business Services, McGraw-Hill., and others, includ-
ing a number of trade associations; data on foreign economic conditions
published in such newspapers as the Journal of Commerce, New York Times,
and Wall Street Journal; statistical year oo s and current stat stical
bull. ins o many o reign countries; material on foreign economic con-
ditions included in the bulletins published by a number of the larger
banks; and various other sources.
Some of these services and publications are very valuable and are
used extensively in both business and Government, as general background
information on foreign economic conditions, spot news about particular
developments abroad, and indications of factors affecting foreign trade
and investment. If such services did not exist or were less readily
available, the demands for economic reporting by the Foreign Service
would be greatly increased. For most purposes these services were
found to be complementary or supplementary to Foreign. Service economic
reporting, rather than competitive or truly alternative sources. The
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extent to which one can be substituted for another is limited more
or less strictly, depending on the kind of purpose to be served.
This can best be illustrated by reference to specific examples.
If a business firm or a Government agency is concerned with the
economic situation in a particular country, but needs information of
only a fairly general character (such as general levels of employment,
production, external trade, national income, prices, etc.), most of
the data needed could be found in the Monthly Bulletin of Statistics
published by the United Nations. Useful material would so be found
in news items and special articles in the daily press and business
journals, such as the annual economic review and outlook for the year
ahead in the New York Times. For more detailed data on a particular
commodity or industry., Now-ever., or for more precise analysis of the
effects of a particular development affecting trade relations or pros-
pects, such sources would not be adequate. In the case of a Government
agency concerned with trade promotion, tariff negotiations, or spe-
cific loan or investment matters, there is no substitute for the kind
of analytical reporting based on direct observation that is performed
by our Foreign Service. Such analytical reporting does not duplicate
any service available from other sources. Even the routine submission
of repetitive statistical data by the Foreign Service, which overlaps
to some extent the compilation of similar data by international organi-
zations such as the United Nations, does not involve serious duplica-
tion; under the "CERP" instructions, this kind of reporting is largely
limited to transmittal of copies of publications, and these are needed
because they contain more detailed tabulations of data than the inter-
national organizations are able to present in their summary tables.
The user of foreign economic data who is concerned with a very
specific problem--such as a manufacturer wishing to establish trade
connections in a particular country to sell his goods, or a Government
official charged with responsibility for strategic trade controls--
needs more than statistical data or general economic analyses; he
needs names, addresses, facts and figures about individual firms or
traders. A prospective foreign trader may need merely to be on the
alert for specific trade or investment opportunities, which might
come to his attention in the pages of Foreign Commerce Weekly or
through one or more private sources available to h1m; and even though
there might be some duplication of leads from different sources, the
extent of the duplication would not be sufficient to warrant the risk
of losing valuable information which might be involved if one of the
sources were eliminated. He would find no completely adequate sub-
stitute from private sources for trade lists; and the kind of infor-
mation about the general reputation and reliability of particular
firms provided in ITD reports is very useful to him even though he
must supplement the information from other sources in order to ap-
praise a credit risk. The Government official using such data may
need facts not provided by any private business service or credit
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agency, such as facts about compliance with export control regula-
tions; and even if the facts needed could be ascertained from private
sources they might have to be documented officially for use in enforce-
ment proceedings.
In summary, the various sources of foreign economic data and
commercial intelligence all fill real needs of business or Government,
or both; and the curtailment or elimination of any important part of
such services would handicap the United States in its economic and
trade relations with the rest of the world. The nongovernmental
sources referred to above, even though they all provide information
about foreign countries, are not duplicated by and are not directly
competitive with, except to a limited extent, economic reporting by
the United States Foreign Service. Most of them cover only limited
areas, either of subject matter or territory or both. None of them
can compare with the U. S. Foreign Service as to geographic or sub-
ject matter scope, or as to depth and breadth of reporting; and none
can be regarded as an adequate substitute except in respect to a few
specialized areas of information. In a broad general sense, therefore,
the question whether other sources are available for providing the
same or substantially similar kinds of information or service can
only be answered negatively. 11th respect to the areas in which
Foreign Service reports duplicate, overlap or complete with other
services: notably credit information and certain other specialized
types of commercial intelligence-the extent of the duplication ap-
pears to be slight; and the cost to the Government of these marginal
items can be said to be much more than counterbalanced by the value
to small business of the services based upon them.
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V. USER CHARGES FOR FOREIGN REPORTS
If the information obtained through Foreign Service reports is as
valuable to users as our study indicates, the question may well be asked
whether the cost of providing the service cannot be defrayed by imposing
charges on the users at a level sufficiently high to make the activity
self-supporting. That such a scheme would not be totally unrealistic
is shown by the success of a number of private enterprises in operating
commercial intelligence and related business services at a profit. In
fact, however, there is no simple answer to the question. Most of the
information in Foreign Service reports is gathered to support Government
agency programs and policy-making functions, and would have to be gathered
for these purposes whether or not there were also private users. Even the
World Trade Directory reports and Trade Lists, which serve business needs
obviously and directly, are also used by the Government in administration
of export controls and in other ways. Who, then, is to be charged for
what services, and how much?
It is the general policy of the administration to charge fees for
Government services which are of a special, direct benefit to limited
groups of individuals and organizations. Thus a fee is charged for a
search of census records for information about a particular person; for
making special tabulations of census data for copies of printed publi-
cations or for making copies of records and other material not available
in published form.
The Bureau of the Budget has issued specific instructions to the
Federal agencies concerning fees for certain kinds of services such as
licensing, registration, and copying records. The instructions call for
the fees to be fair and equitable. They are to be based on the direct
cost of furnishing services, including an appropriate share of the ori-
ginal cost of equipment used (depreciation):, plus an additional amount
(not less than 15 percent) for overhead and cost of collecting the fees,
The value to the recipient is also to be taken into account in deter-
mining the level of charges.
Government publications based on Foreign Service reports, such as
Foreign Commerce Weekly, booklets on investment opportunities abroad, and
the like, are sold by the Government Printing Office at a price which
is calculated to defray only the costs of. printing plus a 50 percent
markup. This price policy which disregards costs of collecting or editing
information is determined by statute (W USC 72a), rather than by the
agencies preparing the reports. This statute does not apply to publica-
tions printed and distributed by the agencies themselves nor to furnish-
ing information or copies of records.
Perhaps a price could be charged for information drawn from foreign
economic and commercial reports which would make the reporting activity
self-supporting. Certainly, the charges now made do not cover the full
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cost to the Governments For example, sales of Trade Lists and World
Trade Directories accounted for only $62,000 of general Treasury
receipts last year--an amount which obviously bears no relationship
to such costs as the pro-rata share of salaries of Foreign Service
personnel who collect the information. A price that would cover all
costs, however, might be considered unfair in view of the fact that
the reports are used in Government operations as well as by business.
Nevertheless, there is room for improvement within the framework
of present policy. The user charge of $1x00 per copy now imposed for
Trade Lists and World Trade Directory reports has remained fixed for
more than two decades, while the general level of prices in the same
period has approximately doubled. This factor alone would suggest a
reexamination of existing practice. While it is beyond the scope of
the present survey to develop specifications for a new pricing formula,
we recommend-that agencies providing such services take action promptly
to devise a uniform and reasonable formula for updating their existing
user charges, taking account of changes in the cost to the Government
of making the information available and of the value of the services to
users.
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VI. DETAIL, FREQUENCY AND COVERAGE OF FOREIGN REPORTS
One objective of the Bureau's survey was to determine whether the
amount of detail, the frequency, or the extent of geographic coverage
of needed Foreign Service reports can be reduced without seriously im-
pairing their value to users. In a survey of foreign reporting made
by the Bureau in 1950, numerous instances were found in which excessive
and unnecessary burdens of reporting were imposed on the Foreign Service
through failure to limit requests to the minimum levels of detail, fre-
quency and geographic coverage actually required. Monthly and quarterly
reports were demanded when only annual data were actually needed. Re-
ports from all countries were called for when data from only the more
important ones would have sufficed. The amount of detail requested often
substantially exceeded actual requirements.
It appears, as noted previously, that the procedures established
since 1951 within the Department of State through its Division of Foreign
Reporting have been highly effective in curtailing excessive and un-
necessary reporting demands upon the Foreign Service. The institution
of the Comprehensive Economic Reporting Programs, the establishment of
a system of priorities, the development of revised reporting instructions
and new reporting guidance materials, and other improvements instituted
under Executive Order 10249 have all been directed specifically toward
solution of this problem; and the results achieved have been commendable.
With the limited amount of time and staff the Bureau was able to
devote to the present survey it was not possible to make the kind of
intensive, detailed examination of a sufficiently large sample of the
reports received that would be needed for a fully independent objective
evaluation of the effectiveness of existing procedures of the Division
of Foreign Reporting. As far as our investigation could be pursued,
however, no glaring inadequacies were disclosed, and the tenor of the
criticism encountered almost invariably reflected dissatisfaction with
curtailment of reporting.
It should be noted that the transfer of the Agricultural attaches
to the Department of Agriculture removed a large segment of our foreign
economic reporting activity out from under the control procedures and
coordinating mechanisms established in the Division of Foreign Reporting
of the Department of State. What has been said above as to the effecti-
veness of such procedures in eliminating duplication and curtailing
excessive reporting demands should be considered as applicable now only
to the areas of foreign economic reporting still remaining under the
administrative jurisdiction of the Department of State. It is understood
that the Foreign Agricultural Service of the Department of Agriculture is
alert to the needs for control and coordination and is developing pro-
cedures comparable or parallel to those instituted by the Department of
State for the same purposes. Reporting instructions are being revised
and other steps are being taken to adapt and focus foreign economic re-
porting activities in this field more directly on problems that are
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currently of concern to the Department of Agriculture. It has already
proved possible in some cases to reduce the volume or frequency of some
required reports on agricultural commodities, and further efforts are
being made to streamline routine periodic reporting in order to permit
greater emphasis on analytic reporting related to significant current
objectives or problems. In view of the relatively short period of time
that has elapsed since the transfer of Agricultural Attaches from the
Department of State to the Department of Agriculture, however, it would
be premature to draw conclusions as to the effectiveness with which
./Agriculture has met or will meet the kinds of problems that continue to
arise in administration of foreign economic reporting activities.
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VII. THE VOLUME OF FOREIGN REPORTING NEEDED
Although the question of how much of the Government's resources
should be devoted to foreign reporting services was not explicitly
considered to be within the scope of the Bureau's study, the need to
provide a firmer factual basis for policy decision on this question was
at least implicitly.one of the central objectives. The question cannot
be answered categorically or in isolation from other questions. Foreign
reporting services are not an end in themselves, but must be considered
as means to other ends. They are supporting services, or tools, by means
of which other activities or functions can be performed effectively.
To some activities of both Government and business the reports are essen-
tial; in other cases they merely permit more efficient or effective per-
formance. But in any case the answer to the question of how much economic
information the Government should obtain through the Foreign Service must
depend on the level of activity provided for in the programs for which
the information is used.
Accepting the level of resources now available to agencies of the
Federal Government for programs involving a need for foreign economic
information, it seems clear that some expansion of the resources available
for foreign reporting services is justified. Needs are not now being
fully met for foreign economic information that is essential to the
effective performance of important Government functions, including
Government services to business that are based on economic and commercial
intelligence from abroad.
Finally, the conclusion can be drawn that any further attrition in
the ability of the Foreign Service to meet the reporting demands arising
out of genuine needs of Government and business for economic information
about the rest of the world, whether by further reductions in appropria-
tions or otherwise, can only lead to continued or increased pressures
for the establishment of separate or supplementary services which almost
surely would prove less efficient and more expensive to maintain.
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