orders cost a little more, and as you get future years, they will cost ess, as you project them.

Senator TOBEY. What is the title of the other plane?

Mr. STASSEN. The Hunter Hawker, a British plane.

Senator GILLETTE. What is the difference in the function of the wo, or their purposes?

Mr. STASSEN. I would not attempt to give you the technical way in which they fight them, and so forth. That would be an Air Force matter, but our own Air Force has evaluated them and told us in February that they were just the very best of design and performance, and they tested them over there thoroughly.

Senator GILLETTE. Why the two types of plane, if they perform the same function?

Mr. STASSEN. They do not perform exactly the same function, they have different application; I don't know the exact details, but perhaps one is for high-level purposes and one for medium level. Senator TOBEY. Both are fighter planes?

Mr. STASSEN. That is my understanding, yes.

Senator TOBEY. How do they compare with the Migs?

THESE ARE FIRST RATE AIRCRAFT

Mr. STASSEN. They are supposed to be-I think when we get into the technicalities, you really ought to ask the Air Force officers, but I understand from our Air Force, if an occasion arose, where they had to fly some of them, they would feel quite happy about it.

In other words, these are more or less the cream of what has been developed. There are other planes over there on the drawing boards, in the testing stages, and so forth, that have bugs in them, but that is a different thing.

Senator TOBEY. That was an amazing proposition of my classmate, was it not?

Mr. STASSEN. Yes.

Senator HICKENLOOPER. What?

Senator TOBEY. Very poor taste, offering $100,000 to anybody to bring a Mig in.

Senator GILLETTE. Where did he get the money?

Senator TOBEY. Yes.

Senator GEORGE. He doesn't expect to get the Mig, probably.

WHOSE PROPERTY WILL THESE AIRCRAFT BE?

Senator GILLETTE. Another question, Governor: When these are manufactured, whose property are they?

Mr. STASSEN. Those that the United States pays for are U.S. property; and the anticipation is that they are then turned over to NATO forces, in this instance, some of these planes it would be anticipated would go to the German squadrons who would be a part of the NATO Force, which is projecting ahead, say, 3 years.

Senator GILLETTE. You spoke of the fact that out of the total cost. we would contribute a certain amount.

Mr. STASSEN. About half.

Senator GILLETTE. Does that amount to the entire manufacture of these planes, or were there some planes we were paying for in there, in their entirety, that would become our property?

Mr. STASSEN. In other words, there is a specific portion of the production in definite planes that becomes U.S. property, and it is planned that, if all goes well in Europe, and you get the German squadrons built up, the German squadrons would be equipped with some of these planes.

However, if something took a different turn, they could be taken into the U.S. Air Force. In other words, the title is in the United States until such time as we turn the completed product over to a European country for NATO Forces.

Senator GILLETTE. At our discretion?

Mr. STASSEN. At our discretion. It is part of the overall program requirement of the NATO Force.

WHERE WILL THE PLANES BE BUILT ?

Senator TAFT. Where are these being built? I am sorry to have missed the first part of your statement.

Mr. STASSEN. In Britain predominantly, and in Belgium, the Netherlands, and France.

Senator TAFT. Do they have factories in all those four places able to build planes like that?

Mr. STASSEN. No, Belgium and the Netherlands are only building parts of the planes. In other words, Belgium will do an engine building job, the Netherlands will do certain of the subassemblies, and final assembly with some of the parts coming over from Britain, but Britain builds the whole job.

BALANCE OF PAYMENTS AID

Senator TAFT. That $260 million we put in, do we pay that in dollars?

Mr. STASSEN. Yes.

Senator TAFT. Known as offshore procurement?

Mr. STASSEN. Yes.

Senator TAFT. They don't need the dollars, do they? They put their dollars in the treasury, and pay for the work and materials in the local currency, say francs or pounds.

Mr. STASSEN. It results in balance-of-payments support.
Senator TAFT. It results in $260 million in economic aid.
Mr. STASSEN. Not economic aid.

Senator TAFT. Why not?

Mr. STASSEN. They must pay out of their treasury for the production of these planes which are turned over to us.

Senator TAFT. But they pay out in francs or pounds.

Mr. STASSEN. Yes.

Senator TAFT. And keep the dollars for themselves, and it is equivalent to a gift of $260 million to help balance the payments; it is economic aid.

Mr. STASSEN. It is balance-of-payments aid, but it is not budget

In other words, it has one effect but not the other.

Senator TAFT. The whole theory of offshore procurement seems › me to be economic aid. I don't see any other purpose. Ordinarily, e could pay for them ourselves, and if we were going to pay for hem, we could go and buy their pounds, and then give them their ounds.

Mr. STASSEN. It is equivalent, we buy pounds and give them dollars or pounds, and use the pounds to pay for the manufacture of planes. Senator TAFT. They don't need dollars to pay anybody in their wn country for these planes. They pay their men in pounds, and Day for their materials in pounds.

Mr. STASSEN. That is right.

Senator TAFT. There may be a certain amount of material that has to come from here or elsewhere that has to be paid for in dollars. That would not be, I take it, economic aid in addition to military aid, and we turn around and give the $260 million to one or two NATO forces and we are also giving in effect $260 million in economic aid to the British or whoever is making the planes.

Mr. STASSEN. It depends on what you mean by "economic aid." It is balance-of-payments aid, but not aid in the British budget. Senator TAFT. That is all they want their aid for, not their budget, but we are not supposed to be helping their budget, even with our economic aid. We are supposed to be giving economic aid for economic aid.

It seems to me, I just think the nature of this is that it ought to be analyzed. I don't say that it is necesarily objectionable, but I do think that it means that military aid to the extent that it is provided by offshore procurement, is also economic aid to the extent of itMr. STASSEN. Of the balance of payments? Senator TAFT. Of the balance of payments.

DOLLAR PURCHASES

Mr. STASSEN. I thoroughly agree with you on that respect, and they use these dollars then to buy the wheat, cotton, lard, nonferrous metals, and various other imports from the dollar areas, and that is where the British then use the dollars.

Senator TAFT. They buy most of them sterling.

Mr. STASSEN. No; the dollars they use to buy things in the dollar area with.

Senator TAFT. I mean, in a general way, but not necessarily thinking of this plane alone, the materials going into planes may well come from sterling areas, and probably do, in the most part.

Mr. STASSEN. They may use the dollars to buy the cotton, and none of it goes into the planes, but they use the cotton in their textile industry, or something of that kind, in their balance of payments, of course; that is true. So it is an aid to their economic balance of payments, but it does not go into their budget.

FIRST MAJOR COMBINATION OF AIRCRAFT PROCUREMENT

Senator MANSFIELD. Hasn't this program been going on for a number of years!

Mr. STASSEN. Yes, it has. This is the first time you have put together the major combinations of the aircraft industry. The concept of offshore procurement of supplies in Europe has been going on 2 years, but this is the first major combination of aircraft procurement to establish an aircraft production base over in Europe.

Senator MANSFIELD. I made the observation, it seems to me it was during 1948 when I was there at that time, the Belgians were getting certain parts from England, and the Dutch were finishing them off. and that way they were getting the entire plane made through three: different sources and distributing them among the French, Belgians, Dutch, and English.

Mr. STASSEN. This plan has not been in effect any such length of time.

Senator MANSFIELD. Have they other planes, fighter planes, of various kinds?

Mr. STASSEN. I would not know as to that, but this is the first major combination aircraft package which, of course, had its_genesis & year ago, and was consummated during this NATO Conference whereby all countries came to a conclusion, and each took their proportion of it.

A MATTER OF IMPORTANCE TO THE GERMAN AIR FORCE

Senator GILLETTE. Governor, did I understand that of the contributions we are making toward the building of the planes, we are making no financial contribution to the construction of the planes that become their property?

Mr. STASSEN. That is right.

Senator GILLETTE. None whatever?

Mr. STASSEN. No. In other words, we take title to a given number of these planes, and then we turn them over to any country that fits into our overall approach to the military requirements of the NATO conditions.

Senator GILLETTE. Again, as I asked a while ago, at our discretion? Mr. STASSEN. At our discretion, yes. And in this instance, confidentially, it is a matter of some importance to the German Air Force when it comes into being.

during 1948, when I was there at that time, the Belgians were getting The CHAIRMAN. When is the hope of its coming into being?

A REEMPHASIS ON EDC

Mr. STASSEN. One of the points that I thought was a good result was the reemphasis in the NATO Council, as a whole, of the importance of the European Defense Community [EDC] to the defense of every member of the North Atlantic Treaty.

Now, you have seen the newspaper accounts of the continuing prohlem in ratification in Germany, and undoubtedly tomorrow when the Secretary of State is here, he will give you an appraisal of just what that situation is.

But in the whole NATO Council, the emphasis of the importance of EDC was stressed to the whole Council. I feel that it was fully stressed.

AN AGREEMENT ON INFRASTRUCTURE

Now, a second constructive result was the agreement upon a 3-year rogram, subject to the approval of Congress and other Parliaments, or the construction of essential airfields, communications and warng networks, and related facilities, which has been called infrastrucire, with participation in the payment by every 1 of the 14 members. he total 3-year program will cost $770 million, of which the United tates will pay 4212 percent.

You will recall that that is the activity over which there was conderable difficulty last December, and we have now reached a formula or the participation of the 14 countries with a 3-year program for his purpose, and it is subject to the approval of Congress, and to he approval of other Parliaments, and as we come up with our letailed program, we will have some specific items that are involved n this.

Senator GREEN. Would the ownership be in NATO?

Mr. STASSEN. The ownership of facilities will be, of course they vill not take ownership of land, but they will have the right of the omplete use of the airfields and communications for NATO pur

poses.

Senator GREEN. Indefinitely?

Mr. STASSEN. The life of NATO, as I recall it, is 15 years, with indefinite extension unless canceled.

Senator GREEN. That means, the right to use it will be
Mr. STASSEN. That is right, for the life of NATO.

THERE MAY BE SOME SURPLUS CAPACITY

Senator HICKENLOOPER. The communications system, and the transportation, can also be used, for instance, for her internal civilian use, subject to the paramount use of NATO.

Mr. STASSEN. Subject to the command; that is right. Subject to NATO command.

Senator HICKENLOOPER. So that the French are getting a very substantial amount of communications and transportation improvements which would otherwise be impossible by their domestic internal economy, subject to a preemptive right, let us say, of maintenance as they need it or want it, they can override that, as I understand it. Mr. STASSEN. If they are no longer necessary for military purposes. Senator HICKENLOOPER. No, I mean when they set up, for instance, telephone networks, as I understand it, for rapidity of internal communication over France; now, the French can go ahead and use those for those facilities for their own peacetime economic communications system, but NATO will have priority on its use, and if an emergency arises, why, NATO will be able to take over, take them over. That is my understanding.

Mr. STASSEN. My understanding is that these facilities as a whole are those that are needed, either in peace or war, so long as you have NATO forces. In other words, these airfields will be the fields on which these combat squadrons will be housed, and the communications network is the network that will control those combat squadrons for their patrols or when they are to be alerted, and so forth.