Senator FERGUSON. I will say that I feel the same way as Senator George.

Senator GEORGE. I think all members of the committee understood that.

REPEAL OF THE BENTON-MOODY AMENDMENTS

Senator TAFT. Mr. Chairman, there is one matter which does deal with authorization which I would like to bring up. I apologize for not having been here, and I don't know, certainly I would bring it up on the floor if the committee feels it has gone too far to bring it up here. That is the repeal of the so-called Benton-Moody amendments.' I don't know how much consideration was given to that. Senator GEORGE. We didn't give any specific

Senator TAFT. The Benton-Moody amendments are in the act, and by continuing the act, you continue it. To eliminate them an additional amendment-it is just in our bill. We haven't in this bill said "Yes" or "No" or anything else as far as that is concerned, except insofar as we continue the act.

Now I have read three of these mutual security program evaluation team reports. All of them without exception recommend repeal of the Benton-Moody amendments without question, and they are strong in their view. I see no reason why we shouldn't follow them. The repeal of those amendments was recommended by Secretary Sawyer after his commission returned, before the present administration came in, so it isn't a partisan proposition. This is the French report. It says:

3

"The difficulties presented by the current attempt to implement the Benton-Moody amendments are a concrete example of how the good will engendered by the help given France may be lost. Under these amendments the United States proposes to make $30 million available to France"-and so forth-"on conditions"-and it states them all "make adequate provision to assure the benefits of increased production and productivity are equitably shared among consumers, workers and owners and supported by such additional measures as prove necessary and feasible to encourage price competition, free trade unions and otherwise further the objectives of the program."

In effect, as I remember the original amendment, I got the theory that we were practically going to say to these people, "You have got to cut out your cartels, and unless you adopt an American antitrust law, you are not going to get any of this help." There are three pages of the discussion ending up:

The Benton-Moody amendments antagonize French labor, French government officials and French management. We endorse the recommendation made

1 Section 516(a) and the first phrase of sec. 516(b) of the Mutual Security Act of 1951, as amended, and sec. 115 (k) of the Economic Cooperation Act of 1948, as amended, popularly known as the Benton-Moody amendments, were concerned with the encouragement of free enterprise, the discouragement of cartel and monopolistic practices, and the equitable sharing of the benefits of increased production and productivity between workers, consumers, and owners. The Mutual Security Act of 1952 directed that $100 million be spent in such a way as to assure that the matching counterpart funds would be used to establish revolving loan funds to carry out these purposes.

2 Shortly after taking office, MSA Director Stassen appointed teams of American businessmen to make overseas field studies of the operations of the mutual security program in 12 countries. Separate reports on each country and an overall evaluation report were issued.

Charles Sawyer, Secretary of Commerce during President Truman's second term.

by the mission headed by former Secretary of Commerce Sawyer that these amendments be repealed, and that pending congressional action further attempts to implement them would be abandoned.

Senator SMITH. What section would that be in the act, Bob? Senator GEORGE. We have amended several provisions in the act. Senator TAFT. It is the elimination of section 516.

Senator FERGUSON. 516 (a) and 115(k).

The CHAIRMAN. There is no authorization for it, either.

Senator TAFT. There is quite a bit of money hanging over. Now in the German thing. "No further Benton-Moody amendment funds should be authorized for Germany."

And on the following page, "The Benton-Moody amendments should be repealed." This is the German thing. Section 516, the Benton-Moody amendment to encourage free enterprise, and so forth. The Moody amendment sets forth $100 million of counterpart funds to further the object of 516. It stimulates the enterprise, and so forth, "the benefit of increased productivity to consumers."

My objection to it was it seemed to me a direct interference with the internal affairs of practically every country in Europe, but I think every one of these, if there was a joint report-I haven't seen a joint report-I am sure would recommend repeal of this amend

ment.

The CHAIRMAN. That is section 115 (k), is it?

Senator FERGUSON. Yes, 115 (k) in the Economic Cooperation Act, and section 516(a) of the Mutual Security Act.

Senator GEORGE. 516(a).

The CHAIRMAN. What action do you want to take on it, gentlemen?

Senator TAFT. If the committee thinks it is too late, I don't want to raise it here, but I do want to give notice I will raise it on the floor.

Senator FERGUSON. I move, Mr. Chairman, that we strike out those two sections. I think here is the difficulty if you allow them in. You will find people in the administration trying to enforce them and to carry them out in the use of money on a carryover.

The CHAIRMAN. Is there any second?

Senator TAFT. I second it.

The CHAIRMAN. Any comment?

Senator GEORGE. I never did think there was any virtue in it. I think I voted against it originally.

The CHAIRMAN. Did you want Mr. Wood1 to comment on it, gentlemen?

Senator MANSFIELD. Yes.

The CHAIRMAN. Mr. Wilcox calls my attention to the fact that if you strike it out, perhaps then there is involved something else. What is it?

CERTAIN TECHNICAL ASSISTANCE ACTIVITIES WOULD BE HARMED

Dr. WILCOX. It is my understanding you would harm certain technical assistance activities that are being carried on. They say that it is difficult to pinpoint these funds for the specific activities with

1 C. Tyler Wood.

out getting them joined into other certain technical assistance programs they are carrying on.

Senator FERGUSON. That is just why I want them repealed. I just think that if we leave them in here, even though we don't appropriate money, we are going to find exactly the same thing carried on by the administration as was carried on in the past.

And I feel the way to get rid of these things is to strike these provisions out, because they admit they don't want any money for it. Now how are they going to carry them out?

Senator GEORGE. They have got the counterpart.

Senator TAFT. They have got things they can do. They don't have to rely on this section.

The CHAIRMAN. Yes. All right, gentlemen.

Senator FULBRIGHT. Could I ask you what is an example of what Mr. Wood has in mind?

Dr. WILCOX. Senator, I don't know.

Senator GEORGE. Is he out there?

Senator SMITH. I think we might hear Mr. Wood, Mr. Chairman, because there may be something that would go wrong.

RELIEF ASSISTANCE FOR KOREA

Senator KNOWLAND. Mr. Chairman, before he comes in, we can also inquire on this one, because I thought when Mr. Dulles was before us that they had agreed that the language was acceptable, and that is on page 9, line 4, following the words "$71 million for making contributions to the United Nations Korean Reconstruction Agency," add "or such other agencies as the President may direct." Now this gives him a flexibility in the situation, because it might be possible in the event of certain contingencies that the United Nations rehabilitation agency would not be able to function there, and as I read this, this fund is exclusively directed to that end. We might have the need of having relief in Korea.

The United Nations could not function there, and the President should not be foreclosed from using an American agency if, in his judgment, the other one was not available.

Senator GEORGE. I thought we did that.

Senator KNOWLAND. I thought we did it, and I have raised this three times, and Mr. Dulles indicated that there was no objection to it when he was before us.

The CHAIRMAN. Without objection, the amendment is agreed to. Senator GEORGE. Mr. Wilcox, you had better get this amendment in now.

Senator KNOWLAND. Do you have the language, Mr. Wilcox?
Dr. WILCOX. Yes, we have it, Senator.

The CHAIRMAN. All right, get Mr. Wood in for just a minute.
Senator LANGER. What line does that cut out?

Senator KNOWLAND. It doesn't cut out anything. It just adds. The CHAIRMAN. Mr. Wood, there is a motion pending to strike out section 561 (a) of the Mutual Security Act.

Senator TAFT. The Benton-Moody Act.

The CHAIRMAN. And section 115 (k), known as the Benton-Moody amendment. Now what is your reaction to it?

THE PROBLEM LIES WITH ADMINISTRATION

Mr. WOOD. Senator, I would like to point out that the teams in their overall reports said the objectives of these amendments were good. They had been badly carried out, with which we heartily agree. Senator TAFT. They recommend specifically they be repealed. Mr. Wood. That is true, sir, but to say

Senator TAFT. They did not approve the objectives at all. They disapprove the objectives in the French report, disapprove the objectives in the German report.

Mr. Wood. The overall report makes a statement as follows:

While we approve the aims of these amendments, we do not feel that they are serving or can accomplish the purposes for which they were intended. We believe it will require a long period of education to change business practices and national policies in many countries, and that such a program should be divorced from defense assistance.

Senator TAFT. It comes to the same thing. I mean they say, of course, we would like to see them restore competition, but it is wholly impractical and they never can do it.

Mr. WOOD. Of course, the committee will decide this, Senator. Our feeling is that the wrong administration of this can be corrected by administrative methods, and that to repeal the amendments exactly as they stand would be in a sense a declaration that the United States is no longer interested in free enterprise, the ending of cartels and restrictive business practices.

Senator TAFT. You have got the biggest cartel there. We have just approved the Schuman plan, which is the biggest cartel the world has ever seen, complete control of steel, iron, and coal in Europe. What fools we make of ourselves to go in and say they shouldn't run cartels.

DEAL WITH THE ISSUE IN THE REPORT

Mr. WOOD. For what it is worth, our suggestion was that the committee in its report take account of the statements by the evaluation teams, with which we agree, and say-as a matter of fact, I have drafted something here which I could pass along to the staff, say-in effect that the committee thinks this has not been properly done in the past. They are not making any new dollars available for it, but it does not think it is necessary to repeal the amendment. That would be our suggestion.

We, of course, are in the hands of the committee, but it does seem to us that it would be a mistake to take action which might be implied as meaning that we were no longer interested in free enterprise and the other things that everyone in this country is interested in. That is the main reason why we are not suggesting the repeal.

REPEAL WOULD HAVE LITTLE PRACTICAL EFFECT

The CHAIRMAN. Supposing it is repealed, what is the effect on anything that is pending?

Senator FULBRIGHT. Other than psychological, what effect is there? Mr. WOOD. There is really practically none. Let me put it this way. The Benton amendment merely states these objectives. It has no force and effect except as stating these objectives.

The Moody amendment was the one which was put in in the Congress last year which states that the counterpart of $100 million shall be used for the promotion of the objectives of the Benton amendment.

Now already the counterpart has been agreed by international agreements with various governments for use for these general purposes, and we have made some very serious mistakes in trying to interefere in too much detail, which is now being corrected.

Already the counterpart has been committed somewhere in the neighborhood of $80 million, and other negotiations are going on, but that can be used, we are sure, in such a way as not to engage in this detailed interference in these attempts to negotiate percentages of profits from increased productivity, that would be paid to labor and all that sort of thing. That is ridiculous.

REPEAL WOULD BE UNWISE

Senator TAFT. Mr. Wood, it is suggested the overall report is somewhat different from the others. Let me read what the evaluation report says, of March 24:

We believe that the so-called Benton-Moody amendments encourage unnecessary spending on the part of U.S. agencies charged with carrying out provisions of those amendments, and that they should be repealed.

Mr. WOOD. I think the first statement is correct.

Senator TAFT. You gave us a statement which implied they didn't do that. They recommend the repeal just as strongly as can be. Mr. Wood. Is that the French report, Senator?

Senator TAFT. That is the March 24 evaluation report, the overall

summary.

Senator GEORGE. They said substantially the same thing in what you have read, Mr. Wood.

The CHAIRMAN. The objectives are all right.

Mr. WOOD. That is an exact quotation from that report. It is not the same one as that. They did recommend the repeal. We think that that is not a wise recommendation because there isn't anything more particularly that is going to be done about this.

These evils which we admit can be corrected by administrative action. Under those circumstances what is the use of taking the psychological chance of having it said by the Communists that we are not interested in free enterprise, and that sort of thing.

WOULD REPEAL SAVE MONEY?

Senator FULBRIGHT. $80 million has already been obligated under this program?