Then I asked him about modernization. He said they contem plated or they have already agreed in their own minds they would require over a 4 to 5 year period between 114 billion and 112 billio

He said we believe we can finance, I think he said we know where we can finance two-thirds of that from European governments and European funds, private funds, issuance of bonds, together with the collections of money that they are now proceeding to extract, levying a tax now which pays for their administrative expenses, with a little more. It finally boiled down in round numbers to in the neighborhood of $400 million over a period of 4 to 5 years.

Senator GEORGE. Four hundred million dollars a year?
Senator FULBRIGHT. No, no.

Senator SMITH. All told.

Senator FULBRIGHT. Four hundred million dollars all told. He didn't say, "We expect it from you." He said, "We don't see yet how we can manage."

These are very rough figures, but I pressed him to indicate as near as he could on their present knowledge of what they contemplate would put their coke and coal industry in a position to take care of this deficit which they have been getting from us, and of course which we really have been giving to them. It would amount, if these figures are in the neighborhood of what they believe to be correct, to be $100 million a year.

Furthermore, I may say I think part of that, if not all of it or a large part, might well be supplied by our counterpart. It doesn't necessarily need to be all dollars, although that is a matter he couldn't go into.

He wasn't informed about, I understood, nor am I, as to whether or not the right counterpart in the right place necessarily would be available. But much of it does not have to be, in other words, an import from this country.

HANDLE THIS AS A BANKING PROPOSITION

Senator GEORGE. I don't see why it couldn't be handled as a banking proposition and not mix it in this program. Your Export-Import Bank, for example, or I don't see why the iron and steel industries now there couldn't capitalize and issue bonds with permission to sell some in this country.

Senator FULBRIGHT. As I understood it. Senator, they certainly do intend to issue bonds. The question in his judgment was whether or not the European countries could absorb the total amount. They expect to furnish two-thirds of it, as he said this morning. Well, one of the reasons isn't only the

Senator GEORGE. They could handle that. That is a financial prop osition that ought to stand on a financial basis.

I hate to see it come in here because I don't think we can give this country the impression that this is an expanding program. It has got to go the other way. We all realize that, Governor. I do.

Senator FULBRIGHT. It would strike me, if his facts are correct. that that would be one of the most potent ways to decrease this program in the next 4 years of anything you could do.

Senator SMITH. I thought the Senator was suggesting that the administration study it and see whether they can take a position on it as against further dollar aid.

Mr. STASSEN. You see there are such things, as Senator George id, as a possibility of this working through the export-import. Senator GEORGE. Yes, I think so.

Mr. STASSEN. Although it does not involve really the expansion of ports. And there might be other methods of handling it.

That is why, as I say, I agree with your basic analysis, Senator ulbright. I would like to consult the Secretary of the Treasury and e Secretary of State as to the administration's view on it.

A CONCRETE EXPRESSION OF APPROVAL

Senator FULBRIGHT. I think one aspect of it which could be hieved which I think would meet Senator George's view and what think should be done, if we can, is find a way to express our apoval of what they are doing, because I think they are at a point here they need encouragement and some approval as the first conete thing that has actually been done. Everything else up to now is been talk.

But his description of the power which they have actually received id which they are actually using is something that not many ople in this country are aware of, that there is substance to this ganization, real substance.

Senator GEORGE. I thought we were right active in promoting the hole program.

Senator FULBRIGHT. We were?

Senator GEORGE. Yes.

Senator FULBRIGHT. There has been talk. I don't know of any d we have given to them at all.

Senator GEORGE. There is more than talk. I don't mean financial d.

Senator FULBRIGHT. We have all very recently approved this idea unification of Europe, but this, of course, is the outgrowth of the human plan.

Senator GEORGE. And we were certainly most instrumental there far as we could, through good offices at least, in promoting it. Senator FULBRIGHT. Well, I think that is true.

Senator GEORGE. I don't disagree with you, Bill, on it except don't want to mix it in this program, at all. I would be very uch against that. This is a banking proposition, and you just leave ose people alone. They will capitalize any necessary loans and handle em. Maybe the Export-Import Bank as matters now stand, would ve to have an amendment.

Senator FULBRIGHT. I doubt if it would qualify for that. I don't ink that they need imports particularly from this country and aterials.

It is a very large undertaking on which they need financing, and ought to be, from what he told us, a genuine loan. I mean these dustries are not on their back by any means, but they have not en able to bring up their coke and coal, their coke ovens. Senator GEORGE. Undoubtedly they do need to keep on modernizg their plant and their facilities. That is unquestionably so, but I ink that can carry itself.

It might be easier to have governments advancing loans rather an do it the other way, but we have certainly got machinery

enough here that with some proper amendments it would enab 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 the:. 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 w 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 te 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 refn gees to get on some new land and it includes the matter of the de gree 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 e Indian situation. The reason I ask you is this.

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

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

Mr. STASSEN. What we anticipate in the 1954 program is someing in the order of 80 million of economic support of the 5-year lan and something in the order of 30 million for technical assistance, 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 re justified in going that far.

We do feel that it is desirable to back the 5-year plan in a modrate degree, and that we can well spend for U.S. objectives about 10 million, in the next fiscal year.

Senator SMITH. What about supporting those so-called pilot plans, he plans that Mr. Ghosh1 and others have. Have you considered that s 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 ver 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 he 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

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 un if you 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.]