SPECIAL MILITARY PROCUREMENT IN BRITAIN AND FRANCE

Mr. EICHHOLZ. Then on line 1, page 3, we have these two special authorizations which you have heard testimony on, for the financing of special military procurement on Britain and in France. This is not, strictly speaking, offshore procurement in that the United States will not be a purchaser, will not take title to the equipment. It will merely reimburse the British and French on account of their own procurement contracts for aircraft in the case of the British, and for artillery and ammunition in the case of the French.

Senator HUMPHREY. Is this just a partial reimbursement or are we taking care of the whole check?

Mr. EICHHOLZ. No, the whole check-no; but only to the extent of $100 million in each case.

Senator HUMPHREY. What is the European portion?
Mr. EICHHOLZ. I will get those figures.

Senator LANGER. What is the total amount of that?

Mr. EICHHOLZ. I can get you that figure. I don't have it with me. Senator GREEN. May I ask what the significance of the parenthetical remarks, the two parenthetical remarks in line 22, is? Mr. EICHHOLZ. Line 22?

Senator GREEN. Page 2, line 22.

Mr. EICHHOLZ. The first parenthesis is on line 21 and is merely descriptive of Section 302 (a).

Senator GREEN. My question was as to those in line 22, you have got two there.

Mr. EICHHOLZ. There are two separate ones, Senator. The first parenthesis, which begins on line 21, is descriptive of what the section is about, and the next parenthesis limits the application of this authorization only to Formosa and Indo-China. You see, Section 302 (a) of the Mutual Security Act deals with economic assistance in the Far East, generally.

Senator GREEN. I want to get the meaning behind it.

Suppose you struck them out, would it have the same meaning? Mr. EICHHOLZ. Substantially.

Senator GREEN. What is the difference?

Mr. EICHHOLZ. I agree with you, Senator Green, this is not too happy a solution, and I think we can adjust that.

Senator GREEN. I am always suspicious of these double meanings and I would like to have a knowledge of why we cannot strike out both of those parentheses.

Mr. EICHHOLZ. Well, to prevent it being a double meaning, there being a double meaning, we have divided them into two parenthetical expressions.

Senator GREEN. "Relating to defense support, economic and technical assistance" and "For the National Government of the Republic of China and the associated states of Cambodia, Laos, and Vietnam." Mr. EICHHOLZ. That means for the support of the National Government of China.

Senator GREEN. Then why can't you strike out the marks?
Mr. EICHHOLZ. I believe we could.

Senator GREEN. I move they be stricken out. They are very misleading.

Senator SMITH. Have we gotten to the changes yet?
Senator GEORGE. We are not marking it up yet.

Senator GREEN. We are not?

Senator GEORGE. No.

Senator GREEN. Well, then, somebody make a note of that.

COULD WE GET A COUNTRY BREAKDOWN?

The CHAIRMAN. Section 541, page 2, I was wondering from a standpoint of explanation on the floor and elsewhere, if and where you could you could not put in brackets the respective amounts that are allotted to the various countries, instead of having it in bulk at the top, $984 million.

Mr. EICHHOLZ. I am afraid it would be a very long list, Mr. Chairman, because it includes all the European countries and it includes two Asian countries.

Senator LANGER. Why shouldn't the Congress know that? Why shouldn't there be an itemized list? What harm will it do?

Mr. EICHHOLZ. There will be an itemized list in your committee report, presumably.

The CHAIRMAN. Yes, you could do that all right, but for instance, when you said "for the National Government of the Republic of China," the question was just asked about that. There would be no objection to putting it in if you have a definite figure or if you want it definite; or, if you want it for the whole area so that you can switch it back and forth, that's all right, but where you feel you can it seems to me it would simplify the presentation. Otherwise we will get into quite a

PROGRAMS ARE ILLUSTRATIVE ONLY

Mr. EICHHOLZ. The difficulty with that, Mr. Chairman, is you specifically allocate it in the bill, allocate the amounts for each country. As you realize the programs that we present to you are illustrative only.

The CHAIRMAN. I understand then there is not any specific amount for any particular country, there are only approximate amounts? Mr. EICHHOLZ. They are only approximate and illustrative. The CHAIRMAN. That is why you can't do it, so all right. Senator SPARKMAN. Mr. Chairman, I don't quite understand why they have to be approximate, why they have to be illustrative.

In the past, as I recall, the specific amounts were given and I know once, maybe twice, we provided a flexible—

The CHAIRMAN. I remember that.

Senator SPARKMAN. A flexible clause to allow the transfer, but at least we knew what was anticipated.

Mr. EICHHOLZ. Senator Sparkman, except in very exceptional instances such as the authorization for Spain, we have never broken down authorizations by area in the bill, in those authorizations, by countries.

Senator SPARKMAN. Not in the bill. I am talking about in the testimony before us, or in the report, and the thing I am getting at here is that you say even the amounts that have been given to us

in the committee are not firm amounts, that they are simply approximate amounts.

Now, it seems to me the committee ought to know whether it is in the bill or not, as close as we can, the amount that is planned for each individual country, and if it is necessary to make some changes or transfers, let us do it under a formula laid down in the bill as we have in the past.

Mr. EICHHOLZ. This is exactly what we have done in the past, Senator. Each year you have been given illustrative approximate amounts by countries, and firm requests by areas, because those illustrative amounts reflect our best judgment as of now, but it is very difficult in the light of quickly changing circumstances to make a firm request, country by country.

The CHAIRMAN. May I have your attention, please. The revised. committee print will now be circulated, and the other one picked up. This just came in.

Senator HUMPHREY. May I ask a question, Mr. Chairman.

Mr. CHAIRMAN. This new one is dated June 4, we are getting the new one, so I will ask that the old one be picked up.

[At this point, the committee turned briefly to a discussion of the administration's decision to organize the authorization request by functional categories rather than by geographic region as in the past. It then returned to a section-by-section reading of the bill.]

The CHAIRMAN. Now that you covered 102, proceed to section 304, read it and give us the benefit of your dissertation on it, and we will proceed in that way.

ITEMS FOR THE INDOCHINESE WAR

Mr. EICHHOLZ. Section 304, Mr. Chairman, is substantially the same as section 102, the same scheme. It will enable us to finance French contracts for military items, or any items required by military forces in the prosecution of the Indochinese war.

The only substantial difference between this and section 102 is that it will include anything which can be used by military forces, such as common use items like petroleum and such other articles. The CHAIRMAN. You didn't read it. Now, you can read the next section and then comment.

SPECIAL WEAPONS

Mr. EICHHOLZ [reading].

Chapter III-Mutual Special Weapons Planning.
Section 301 Authorization of Appropriation.

Amend the Mutual Security Act of 1951, as amended, by adding the following new section:

"Section 542. There is hereby authorized to be appropriated to the President for the fiscal year 1954 not to exceed $250,000,000 for the purpose of furnishing special weapons to nations eligible to receive military assistance under this act or to the international organizations referred to in Section 2(b) (A) and 2(b) (C) of this act: Provided that, prior to the obligation of funds for this purpose, the President shall determine that such obligation is in the security interest of the United States and is in furtherance of the policies and purposes of the Mutual Defense Assistance Act of 1949, as amended: And provided further,

that, prior to the transfer of such weapons, the President shall determine that (a) the recipient is adequately prepared to safeguard the security of such weapon; (b) that the transfer of such weapons will be in the security interest of the United States; and (c) that such transfer will further the purposes and policies of the Mutual Defense Assistance Act. Nothing contained in this section shall alter, amend, revoke, repeal, or otherwise affect the provisions of any law restricting, limiting, or prohibiting the transfer of any such weapons. Notwithstanding any other provision of this act, funds made available pursuant to this section may be used only for the purpose of this section."

SUPPORT FOR THE FRENCH EFFORT IN INDO-CHINA

Senator LANGER. Can we go back to section 304 for a moment? The CHAIRMAN. All right.

Senator LANGER. I would like to ask the witness how they arrived at this $400 million.

Mr. EICHHOLZ. Senator, I don't think I am qualified to answer that. I am a lawyer, and the programing is somewhat out of my field. There has been testimony on that subject. This was a figure which was tentatively agreed to, subject to the disposition of the Congress. It was tentatively agreed with the French at the last NATO Council meeting.

Senator LANGER. What does the United States get for this $400 million?

Mr. EICHHOLZ. Well, Senator, as you know, the Indo-Chinese war has been a great drain on the French resources. More French resources have gone into the prosecution of the Indo-Chinese war than the aid they have gotten under the Marshall plan. The area of Indo-China is considered to be vital to the security of the United States. In order for the French to be able to continue effective military operations in that area, they will need help. They will need help from us, and this is the form in which it was considered best to provide that help.

Senator LANGER. How much has any other nation put up? Do they match this $400 million, or do we pay for it, pay for the whole war?

Mr. EICHHOLZ No. The French themselves have been paying a a major part of the cost of this war.

Senator LANGER. Where can I get those figures?

Mr. EICHHOLZ. They can be supplied to you, sir.

Senator LANGER. Thank you, Mr. Chairman.

Senator HUMPHREY. May I ask this question What would happen now if the French should enter into peace negotiations, which they are apparently talking about, with this change of government, and the Indo-Chinese war should be buttoned up, or be over? Would the $400 million then revert back to the Treasury?

Mr. EICHHOLZ. If there was no Indo-Chinese war, these funds I would not be used.

Senator HUMPHREY. In other words, what I am getting at, these funds would not revert to the French to pick up some of the loss that they have had in the Indo-Chinese war, I realize they have had a terrific responsibility.

Mr. EICHHOLZ. The commitment of the French, subject to the approval of the Congress, was to finance their military procurement

for the Indo-Chinese was to this extent-the commitment to the French, I should have said-if there were not that to finance, then obviously we would not be called upon to make this outlay.

Senator LANGER. I am interested in the Senator's question.

What does it say in this bill, where does it say that in this bill? Mr. EICHHOLZ. Well, Senator, this authorization is specifically directed to the Indo-Chinese war. Now, technically if there were not an Indo-Chinese war, it would be possible, as a technical legal mater, to use these funds elsewhere; but I can scarcely imagine that we would do so.

Senator LANGER. Who decides, in line 18, the President of the United States decides that this money is necessary for the support of the forces in Indo-China, or is that decided by the parliament of France?

Mr. EICHHOLZ. That is decided by us, sir.

The CHAIRMAN. "May make available," the statute says.

Mr. EICHHOLZ. That is right.

Senator SPARKMAN. I notice in the next section, the last sentence limits that to $250 million for the purpose stated in that section. Senator HUMPHREY. That is right.

Senator SPARKMAN. Why should that not be true for 304?

Mr. EICHHOLZ. Well, Senator Sparkman, as you know the French and British, quite a number of countries that were assisting have global responsibilities. It is somewhat difficult in all cases to be absolutely sure just what will be the requirement of each segment of those countries' global responsibilities.

It might be, for instance, that you would have a brush fire break out in some other area in which the French have a primary responsibility, and we would like to be in a position to do the necessary, while there was still time to do the necessary.

A SPECIAL WEAPONS FUND

So far as the special weapons are concerned, Governor Stassen, as you will recall, testified at some length on that one morning. This is conceived as a special weapons fund, or a special fund which, if it is not used for this particular purpose, will not be used at all. What he had in mind was cases such as this, that some small country might devise a new weapon which was not in a position to finance with its own resources. There might be an agreement between the United States and that country under which we would undertake the development and the production of that new gadget to make it available to ourselves, and to NATO forces in a common interest.

If there are no such occasions, then we would not wish to use the money for anything else.

PSYCHOLOGICAL ASPECTS OF THE INDO-CHINA SITUATION

Senator HUMPHREY. Have you given any thought to this possibility in section 304. You dictate $400 million, as the President may deem necessary for procurement of equipment, material and services with which to prosecute the French activity in the

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