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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 elations Committee room, U.S. Capitol, Senator Alexander Wiley chairman), presiding.

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

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

instances they were overstaffed, it wasn't the fault of the individua who went over on the job.

So many of these people who were notified in February that ther services would no longer be needed will not be off the payrolls until the end of June. So what you have on the worldwide picture is a progressive decline in the U.S. personnel overseas, and in the total payrolls of an administrative type for the conduct of this program. There are exceptions to it. I indicated packaging and handling." There are other exceptions, and you will find in the bill a prov sion that any ceilings should not apply to such things as the Ind China mission where we must increase and have increased, if we are to do the right job, or to any new missions that are established. such as for example, if we do decide to start arming some of the Pakistanis to guard those mountain passes, it will require some new personnel.

But the overall situation, Mr. Chairman, is that the existing missions in Europe are being, and will be further reduced in numbers and the administrations in Washington will be reduced as they are consolidated, and in some instances as we go into new programs, new countries or new necessities, there will be some expansion of personnel in those situations.

THE PRESIDENT'S REORGANIZATION PLAN

The CHAIRMAN. What do you think of the President's reorganization plan relating to State and MSA?

Mr. STASSEN. I believe that under it we can do an efficient job of conducting this program.

The CHAIRMAN. It contemplates, does it not, that the exchange program shall remain in State?

Mr. STASSEN. That is on the information side, yes. That is not ir my province, but you are correct that it leaves the educational exchange program in the State Department.

The CHAIRMAN. Well, now you have given us the information as to the increased personnel and the reason for it here in America. Will that number continue to grow, or do you expect to reduce tha number?

Mr. STASSEN. The packaging, handling and so forth will continue to be very extensive through this calendar year, and then may taper off a bit. We are making very heavy shipments of supplies at the present time to NATO.

FIGURES ON THE MIDDLE EAST

The CHAIRMAN. I think Senator Mansfield was also interested in ascertaining how much aid is contemplated for the Middle East. That would be the overall, and what, if any, as to the Arab countries, and as to Israel?

Mr. STASSEN. The overall in the Near East and in North Afric is $664 million in the proposed program. The overall of economi assistance in the Arab and Israeli area is $140 million.

Our illustrative contemplation would be something between, as I recall it, $60 million to $80 million, which would be involved in eac part of that program, the Israeli and the Arab situation.

The CHAIRMAN. When you speak of the Middle East, you are inning it all the way from the Mediterranean across to Pakistan nd India?

Mr. STASSEN. That's right.

The CHAIRMAN. And you are not in a position, other than what ou have just said now, that the $80 million that is involved in the rab and Israeli

Mr. STASSEN. $140 million in the combination of the area, which ncludes Israel and the Arab States.

The CHAIRMAN. That is all subject, however, I take it, to further tudy, depending upon how the facts develop in the Middle and Near Cast?

Mr. STASSEN. That's right.

The CHAIRMAN. Many things might develop that will change your erspective or your judgment, is that right?

Mr. STASSEN. That's right, and particularly in following through on the foreign policy leadership of the Secretary of State.

The CHAIRMAN. You approve, I take it, the contemplated thought of giving wheat to Pakistan?

Mr. STASSEN. Yes. I feel that Dr. Reed made a very thorough study in his analysis over there. He is the dean of agriculture of Purdue, and a very careful and sound individual, so that I feel his report has merit.

SESSION WITH MONNET

The CHAIRMAN. We had a very interesting session this morning, one of the finest, in fact, that I was privileged to listen to. We heard Mr. [Jean] Monnet tell us about what you might call a rebirth of he idea of the United Europe.

He told us about how things were working out under the Coal and Steel Treaty and told us further that the six nations there involved had directed, among other things, the assembly of that group to get to work on a constitution for a United Europe, and that on the 12th, as I recall it, there were at least in Italy, representatives of these six nations to discuss the suggested constitution, all of which, as I say, was a spiritual cocktail to me, because I remember several years ago, when we were in Salzburg, suggesting to the nations represented that they unite or die.

WHAT IS THE TIDE OF OPINION ON EUROPEAN UNIFICATION?

Now the question I am leading up to is, with that fine mind of yours, in going through France and these other countries, if you did get there on this trip or if you have been there recently, I want to get your judgment, what your thought is as to whether or not there is a tide there that is tending toward something of that kind, what the common people feel and think, what the leaders feel and think, recognizing as I think they should, the need of some unification, real political unification, and so forth. What is your opinion on that subject?

Mr. STASSEN. It is my view that the European Coal and Steel Authority, Coal and Steel Community, has been one of the most hopeful and concrete developments since the war. It is a definite integration. It is now underway.

It is the first step of any kind of a constructive note to them in the flow of coal and steel across those borders, so that I think it is a hopeful sign of a very concrete nature.

We all recognize, too, that steel and coal are at the very base of any sound economy, and with that, of course, the authority that was set up and the committees that are underway and the foreign min isters' meetings on the European political community are hopeful signs.

I would hesitate to say that it was anything like a tide that had set in, because there are still, of course, many countering influences. and we know that the next step of the EDC is very crucial in our joint objectives for the security of Western Europe.

I would certainly agree with you that the Coal and Steel Community is a very hopeful development.

Senator FULBRIGHT. May I ask a question, Mr. Chairman?
The CHAIRMAN. Yes, carry on.

A LOAN TO THE COAL AND STEEL COMMUNITY

Senator FULBRIGHT. Pursuing that thought there, we developed this morning a good many very specific facts about that Coal and Steel Community. I was wondering if you would have any objec tion to a provision in this bill which would give you authority to make a loan to that Coal and Steel Authority, assuming they feel that it is necessary for the modernization of those plants.

When I say loan, I mean a real loan, because, as I understand Mr. Monnet's attitude, he is not asking nor does he intend to ask for any grants or even what we used to call fuzzy loans, but a real loan based upon the productivity of coal and steel members, that is, the actual producers. I wonder what would be your attitude towards a provision in this bill on that.

Mr. STASSEN. Well, Senator, I feel that any financial requirements of the Coal and Steel Community should be met on a loan basis. In other words, if coal and steel cannot sustain sound credit arrangements for loans, then clearly nothing could do so, and I feel that this can sustain a sound loan basis for credit.

Now as to the method by which it is done, that is, of course, at the discretion of the Congress, and as to the administration-wide approach to it, I do not believe the administration-wide position has been firmed up as yet, although one may develop out of these conferences that have now been held these last 2 days, so that I am in this situation in which I thoroughly agree with your basic analysis. I do not wish to be in the position of stating an administration position prior to it having been taken.

Senator FULBRIGHT. He made a very persuasive case based upon the importation of coke and coal from this country during the last 6 or 8 years, in that it amounted in the overall to about $2 billion. which, of course, was a large part, 20 percent of the dollar deficit of Europe in this country which, of course, we have actually paid.

It looked to me as if it is a very good investment, that if we could help them increase the productivity of coal by a loan which would be repaid, that we would thereby cut off this great drain of our funds to the extent of 20 percent of the total. At least it has been

at in the past, so it seemed to me to be a very good business roposition.

Mr. STASSEN. You are absolutely correct in that respect.

Senator FULBRIGHT. We have a precedent in a sense. In the last 11, if you will recall, we had a provision in here as to the Euroean Payments Union.

Recognizing the importance of that, we authorized the transfer funds to this agency, and in that case it wasn't a loan as such, it it was an authority to allocate certain of the funds provided for the act to the promotion of the European Payments Union. We also authorized in that act and recognized the European Coal id Steel Community in section 2-B, so that this committee and the ongress has recognized this Coal and Steel Community, but it seems me-and these were tentative figures-that if they can modernize at Community and we could help them, that it would be well worth hile purely from the economic point of view.

In addition it would have a great psychological effect toward omoting unification of Europe and even a psychological effect on e EDC, I would think, because here is the first concrete step that s been taken, and we make a gesture of approval and support rough the authority of the loan. It would strike me as being both od business and good politics and good psychology in this overall fort to bring about a stronger Europe.

Mr. STASSEN. I think the Senator's analysis is entirely correct, and the Senator would wish as to the specification of the adminisation's position, I could consult the Secretary of the Treasury and e Secretary of State and advise with you further on it.

Senator FULBRIGHT. I wonder if it is proper, I would like to quest that the Administrator consider this matter, and if he can, bmit a tentative amendment to this bill which would carry out is idea, if that is agreeable to the administration.

Senator SMITH. I think that is a very important suggestion. Mr. STASSEN. In a broad sense the authority is in the bill now, it I think we would hesitate to use it unless the Congress had dicated some very specific view.

And I would feel that I would want to consult the Secretary of e Treasury and the Secretary of State before I gave the comittee a position.

WHAT WOULD BE THE AMOUNT INVOLVED?

Senator GEORGE. I would think so, but then did they indicate what e amount would be?

Senator FULBRIGHT. Well, a tentative amount.

Senator GEORGE. How much did he say he wanted?

Senator FULBRIGHT. He didn't ask for anything. I want to make plain he didn't come in here and ask for anything. I asked him out the progress that they are making, and he first gave us the ures about that amount of coke and coal imported from this untry amounting in round numbers to $2 billion.

He said they have the coke and coal, but they do not have the odern machinery and mining equipment to produce it in adequate

ounts.

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