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enough here that with some proper amendments it would enable them to handle this in some other way.

Senator FULBRIGHT. That is all I am getting at. I am not insisting on any particular way, but I think they are here and you are for consultation, and I think it is a good idea for this Government to make some gesture of approval.

Just how you do it, I am not dogmatic by any means about that, but we have put it in the law, recognizing the importance of it. I would like to see what the administration feels on that.

Mr. STASSEN. I will consult the Secretary of the Treasury and the Secretary of State and advise you of their reactions to it.

Senator FULBRIGHT. I want to pass on to one other matter. The CHAIRMAN. Before you get through with that, I think I should make it plain, of course, it was Monnet's idea. Out of the facts he gave us, Bill saw the opportunity, he thought, where we could be of some help. I agree fully with Senator George that we cannot mix this in here.

I think it would jeopardize the bill in the first instance, and I doubt very much whether this is the time, with the conditions as they exist in France, for us to be trying to tell them to come on board boys, we'll do a little more for you.

I think we had better stiffen up a little bit and let them know of the conditions. As I said so many times, the cookies in the cookie jar are getting pretty thin.

I do think there is a possibility here if the loans can be obtained— and they ought to be obtained as a matter of business right over there. And I think they can get it. Besides that, I think they have arranged a plan whereby they can tax, and each year they will create a surplus which they can use for this very thing.

NO SPECIFICS ON ISRAEL AND THE ARAB COUNTRIES

Just one other thing on this very subject. Dr. Wilcox called my attention to the fact that Senator Mansfield was insistent if it were possible to get from you the amounts that you think should go to the individual Arab countries. Are you ready to do that, or lump it all?

Mr. STASSEN. We are not ready to go into specifics on individual Arab countries.

The CHAIRMAN. And that is true of Israel, too, isn't it?

Mr. STASSEN. Yes: except the illustrative approach that we think of Israel in terms of approximately one-half of what goes into the area, but the whole thing is illustrative and dependent on the working out of the situation in the area.

The CHAIRMAN. They are all imponderables.

Mr. STASSEN. In other words, the Secretary of State is moving toward a regional peace, and in order to move in that direction. he has got to have the maximum of tools and flexibility in moving that

way.

That includes the expansion of opportunities for the Arab refugees to get on some new land and it includes the matter of the degree of economic assistance to each of those countries that might or might not be given.

The CHAIRMAN. Senator Smith said he had another question.

U.S. ROLE IN THE INDIAN 5-YEAR PLAN

Senator SMITH. I wanted to ask you specifically, if I might, about the Indian situation. The reason I ask you is this.

I understood from some communications I received that Ambassador Bowles before he left India had given certain representations as to the aid to be given India under the 5-year plan, a very large amount of money.

When Ambassador Allen went out he jocularly said the first job would be to break the news we would not be able to contribute as heavily as we had in the past. I am wondering how you visualize this 5-year plan and what part we play in this program now.

Mr. STASSEN. What we anticipate in the 1954 program is something in the order of 80 million of economic support of the 5-year plan and something in the order of 30 million for technical assistance, a total of 110 million. That is much less than has been spoken of. Senator GEORGE. It is spoken of as 200 millions.

Mr. STASSEN. It is spoken of as 200, 250. We do not feel that we are justified in going that far.

We do feel that it is desirable to back the 5-year plan in a moderate degree, and that we can well spend for U.S. objectives about 110 million, in the next fiscal year.

1

Senator SMITH. What about supporting those so-called pilot plans, the plans that Mr. Ghosh and others have. Have you considered that as part of the picture?

Mr. STASSEN. Some of that can be done if the Government of India moves that way.

Senator SMITH. That is all I had on that point.

SURPLUS FARM COMMODITIES

Senator FULBRIGHT. Are you familiar with this proposal that the American Farm Bureau Federation has been circulating? Have you ever run across the idea on the use of surplus farm commodities in this program?

Mr. STASSEN. Yes, to some extent.

Senator FULBRIGHT. What is your reaction to that?

Mr. STASSEN. Well, I think that a considerable part of American farm products have been purchased through the advantage of the foreign exchange that has been developed in these countries through the program; that in such instances as the Pakistan wheat situation you can make a direct use of a commodity, that if it is not surplus, at least is in rather bountiful supply, to wit: Wheat.

I do feel that you have to keep the two things somewhat separate. You cannot necessarily give the countries the assistance they need in the form of surplus farm products.

Senator FULBRIGHT. Not in all of them, but as I understood itI may be wrong, I read it very hurriedly-take Pakistan as an example, if you could use the wheat and sell it for local currencies, that then you could use the local currencies for the internal development which would relieve the program here, I mean the appropriations that you might otherwise have to have if you didn't combine

1 Sudhir Ghosh, Director of India's Faridabad integrated community development project.

the local currencies that you would acquire from the wheat. Is that correct?

Mr. STASSEN. Well, it is contemplated that the local currencies would be used for internal purposes, and that has been the situation you see, in the past instances in Europe where we have extended a grant of aid which they have then used in the terms of purchasing U.S. farm products. That has developed a counterpart within the country that has been utilized in rebuilding their industrial complex.

Senator FULBRIGHT. Do you need any authority in this bill that has been presented to carry out that proposal, assuming that it has merit? Is there anything that should be done?

Mr. STASSEN. Well, the only thing that should be pointed out here is that the major part of our program is, and I think properly so, defense material and military items, and therefore, that is something different than wheat and cotton, but we do have a reasonably substantial item in here for

Senator FULBRIGHT. One point obviously, which is something I don't like to publicly talk about. I don't want to give the impression that this is an effort simply to unload unwanted surpluses, but nevertheless one of the motives in it is certainly to relieve ourselves of certain commodities which they believe at least are going to be very embarrassing unless there is a crop failure or something. They thought that some method might be worked out, since the Government already owns these commodities and they may be faced with spoilage or loss, that some good could be gotten out of them. That was, I think, fundamentally the proposal of the Farm Bureau. Mr. STASSEN. In the instance of the Pakistan wheat, that is definitely so.

Senator FULBRIGHT. All I wanted to do was bring the matter up. Mr. STASSEN. Since the United Kingdom does need some of these products, we are more or less pinning down a part of the United Kingdom aid that it must be used for these kinds of products, so we are doing as much of that in the present bill as we feel we can. I think it would require a larger appropriation

Senator FULBRIGHT. That is the part of it on which I wasn't clear in my mind as to exactly how it would be handled. The idea is good. I am not talking about the mechanics. I was wondering if there was anything that could be done about it.

The CHAIRMAN. There is a call for the absentees. If there is nothing further we had better recess this meeting.

There is a meeting tomorrow at 9:30 to continue with Monnet and his colleagues. At 10:30 we will have the explanation of the MSA. I would like to have as many of the committee here as possible so we can get the overall idea, and next week we will start marking up MSA.

We want to thank you again. Governor, for giving us a good class in MSA instructions. How is that?

Mr. STASSEN. No class. Senator. Will you care for copies of these charts on a small scale? We can make them up if vou wish them. Senator GEORGE. I think it would be very helpful.

Mr. STASSEN. Thank you very much, Mr. Chairman and Senators. [Whereupon, at 4:20 p.m., the committee adjourned.]

MUTUAL SECURITY ACT-Continued1

FRIDAY, JUNE 5, 1953

UNITED STATES SENATE,

COMMITTEE ON FOREIGN RELATIONS,

Washington, D.C.

The committee met, pursuant to call, at 10:30 a.m., in the Foreign Relations Committee room, U.S. Capitol, Senator Alexander Wiley (chairman), presiding.

Present: Senators Wiley (chairman), Smith of New Jersey, Hickenlooper, Langer, George, Green, Fulbright, Sparkman, and Humphrey.

Also present: Robert B. Eichholz, Office of Director for Mutual Security; Sam Efron, Assistant General Counsel, Department of Defense; Col. Paul Gavan, chief, Liaison Division, OMA, Office of the Secretary of Defense; J. P. Furman and O. S. Gray, Legal Advisers Office, Department of State; John O. Hally, General Counsel's Office, Treasury Department; Edwin M. Martin, Special Assistant for Mutual Security Affairs, Department of State; and Norman Paul, MSA.

Dr. Wilcox, Dr. Kalijarvi, Mr. Holt, Mr. Marcy, and Mr. O'Day of the committee staff.

[The Committee met again with M. Jean Monnet at 9:30 a.m. Then at 10:30 it began its markup of the Mutual Security bill.] The CHAIRMAN. The meeting will come to order, please.

We are very happy to see you here, sir, and you will take this bill and without going too much into detail, just give us the picture as it is outlined now in this new print, and if any questions are to be asked by the Senators present, you can make yourself available for that purpose.

ORGANIZATION OF THE BILL

Mr. EICHHOLZ. Mr. Chairman and members of the committee, I think first that I would like to make just a preliminary comment on the form of this bill.

As usual, it is a series of amendments to our basic legislation, the Mutual Security Act, Mutual Defense Assistance Act, and remaining provisions of the Economic Cooperation Act.

We have introduced one new feature. For the convenience of the committee who in past years very often felt that it was difficult to tell from the form of the bill just how much money was being authorized for each category of assistance, we have grouped each category together into a separate chapter, but the authorizations themselves fit in integrally into our basic legislation.

1 See notes, p. 407.

MILITARY END ITEM ASSISTANCE

Now, on page 1, chapter 1, is added a new section to the Mutual Security Act which covers a global authorization for military end item assistance. The global figure is on page 2, line 2, $3,681,523,000, which is then further broken down by titles of the Mutual Security Act by geographic area.

The CHAIRMAN. I thought the original figure was 3.8, wasn't it? Mr. EICHHOLZ. Yes, sir. These new figures take account, Mr. Chairman, of the $354 million saving.

The CHAIRMAN. That is what I was going to ask.

Senator HUMPHREY. What?

Mr. EICHHOLZ. $354 million saving that was mentioned to the committee at the last meeting which arose from

The CHAIRMAN. Carryover?

Mr. EICHHOLZ. Yes, sir. We are able in the carryover to program some of the items for which we normally would have needed further authorization of funds, because there had been savings in programing this year.

Mr. Hally outlined that last week. Due to lower prices on contracts, due to certain requirements that were no longer necessary, there was that saving.

Senator SMITH. Are the figures on top of page 2 added up to make the $5.8 billion of the total bill?

Mr. EICHHOLZ. No, Senator Smith. The figures in Section 540, the figures on page 2, lines 7, 8, 9, and 10, when added up, make the figure in line 2.

Senator SMITH. I see.

Senator SPARKMAN. That is military

Mr. EICHHOLZ. This is military end items.

Senator HUMPHREY. Does that include offshore procurement? Mr. EICHHOLZ. Yes, sir.

Senator SPARKMAN. That is the same figure Mr. Stassen gave us yesterday afternoon?

Mr. EICHHOLZ. Yes, sir.

Senator SPARKMAN. Mr. Chairman. is there available the basic act, are there copies of that that we might follow?

Mr. HOLT. Yes, sir.

Senator LANGER. Might I have one also?

MUTUAL DEFENSE FINANCING

Mr. EICHHOLZ. Chapter 2, page 2, line 12, Mutual Defense Financing, includes all items of assistance to further military aid. It includes the old category of defense support in Europe, and in Asia. in Indo-China and Formosa. It also includes economic assistance in Europe to certain special occupied area, such as Trieste, Austria and Berlin.

Senator HUMPHREY. By the wav, how much is in there for the National Government of the Republic of China?

Mr. EICHHOLZ. I am not sure. We will get that for you.
Senator HUMPHREY. Well, we can come back to it.

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