The CHAIRMAN. All those in favor of cutting it out, raise their ight hands.

(There was a showing of hands.) The CHAIRMAN. One.

Contrary the same.

(There was a showing of hands.)

The CHAIRMAN. The motion is not carried.

Now those in favor of the amendment raise your right hand. Senator HUMPHREY. What do you mean by the amendment? Senator GEORGE. There is no amendment.

The CHAIRMAN. "Amend Section 101." Raise your right hand. (There was a showing of hands.)

The CHAIRMAN. Five. Contrary.

(There was a showing of hands.)

The CHAIRMAN. Two. All right, it is carried.

Now what else, gentlemen? Does that finish the bill?

ATOMIC EQUIPMENT AND INFORMATION FULLY PROTECTED

Mr. WOOD. We do have the question of Senator Hickenlooper's concern about the loan of equipment, on which I would like to ask Mr. Eichholz to speak for just a moment on that.

Mr. EICHHOLZ. Senator Hickenlooper, as I understand it, you were concerned that it would be legally possible to loan atomic equipment or atomic information under this provision.

I can give you the categorical assurance that it would not be legally possible, because this is an amendment to the Mutual Defense Assistance Act, and nothing in this amendment aments section 407 (a) of the Mutual Defense Assistance Act, which provides that nothing in this act shall alter, amend, revoke, repeal, or otherwise affect the provisions of the Atomic Energy Act of 1946. Senator HICKENLOOPER. OK, that is all right then. The CHAIRMAN. All right, gentlemen.

TERMINATION DATE FOR THE MUTUAL SECURITY PROGRAM

Senator GEORGE. Mr. Chairman, so far as I know, I will offer no amendments, but I want to expressly reserve the right to support the amendment made this morning by Senator Mansfield to leave this 1954 undisturbed and cut this thing off at the end of 1954. I want to reserve that right on the floor.

The CHAIRMAN. You all have that right.

Senator HICKENLOOPER. Did you offer that this morning?

Senator MANSFIELD. Yes, I did.

Senator HICKENLOOPER. I would like to support that amendment,

too.

Senator HUMPHREY. I want to reserve the right to back it.

AID FOR CAPITAL PROJECTS OPPOSED

Senator HICKENLOOPER. I will say this. I have been trying to devise an amendment-I have been unable to approach it yet because of certain ramifications, but I have been trying to devise an amend

ment-that will prevent the spending of any MSA money on any capital operation.

Senator GEORGE. Well, we have got a whole lot of them in here, and I said as we went along that I did reserve the right on these purely economic appropriations.

Senator HICKENLOOPER. That is what I mean, as against the military.

Senator GEORGE. As against the military and as against legitimate Point Four.

Senator HICKENLOOPER. I am willing to go along on technical advice and the furnishing of a reasonable number of individuals to give advice and training, but I am against going out and building dams for these people and building powerplants, furnishing pipe and pumps and all those things for their capital operations.

Senator GEORGE. I am against purely economic appropriations. Senator HUMPHREY. You mean in Asia, too?

Senator GEORGE. Anywhere.

Senator HICKENLOOPER. Any place.

Senator GEORGE. I am not opposed to the offshore procurement, I want that understood.

Senator HICKENLOOPER. There are certain areas where I think we must spend a little money in capital investment, that is, investment in goods of a very limited degree, and that is the difficulty I have.

Senator GEORGE. That is the reason I am making the reservation on the economic authorization. If somebody offers amendments that seem to me to be reasonable and right, I am reserving the right on those. I don't think there are many of them.

FORM OF THE BILL

Senator SMITH. I would like to raise the question of the form of this. We have two bills before us. The alternative bill we discussed. but I understand the original bill divided in chapters rather than titles is the one the House is considering. Don't we want to report out the one with chapters instead of titles, the original bill?

Senator GEORGE. Our staff should be sure it is conformed.

Mr. Wood. There are two bills which are consistent with each other as far as the amounts and provisions of the legislation is concerned. You can adopt either one.

You could very easily take the actions of the committees in these markup sessions and apply them to the other bill.

Senator HUMPHREY. How are you going to relate that to the basic law? When Senator George is reading on this item of excess goods. for example, you had all the amendments down the line year after year. How will this new version be attached so that when we have a running account of the amendments to the Mutual Security Act, that we will know exactly what we did this year in terms of that act! Do you know what I am driving at? When you read from the document, Mutual Security Act as amended, you keep a continuity in each one of these sections according to each action of the Congress Mr. Woon. In either form, Senator Humphrey, it will refer back to the applicable sections and provisions of previous legislation. The CHAIRMAN. Do you want to take the House form!

AID FOR THE ARAB WORLD AND ISRAEL

Senator HICKENLOOPER. There is one other element in this bill I ould like to ask about. What did you do yesterday afternoon-I isn't able to be here about the Arab world and Israel?

Senator GEORGE. We never did settle that, did we?

Mr. Wood. That was settled, as I recall it.

Senator HUMPHREY. We had an analysis. Senator Langer raised a int on it.

Senator GEORGE. We didn't change those figures.

Mr. WOOD. We did not, sir.

Senator HUMPHREY. Senator Langer told me he was going to er an amendment to increase the amount to the Arab area. The CHAIRMAN. As a matter of fact, the Arab world got more oney than Israel did, though not percentagewise according to pulation. I thought there was no further action to be taken. Senator GEORGE. I expect you will have to meet some amendments

that.

Senator HICKENLOOPER. Let me ask you this. You are giving Israel out half as much as you do the rest of the Arab world. The rest the Arab world in that particular area has about 65 million peoe, Israel about a million and a quarter people.

Mr. WOOD. Nearer 2 million now, Senator.

Senator HICKENLOOPER. In this whole bill how much money goes to the budgetary balancing business of Israel?

Mr. Wood. The total, Senator Hickenlooper, in title II with spel economic assistance for the Arab States and Israel is a regional ure of $140 million, of which it is presently thought that about If would go to aid Israel and half to aid the Arab States; that, I explained yesterday when this was being discussed, this may ry somewhat. The attempt is to treat this as a regional fund in der to bring them together.

PURPOSE OF THE ASSISTANCE TO ISRAEL

Senator HICKENLOOPER. What I am talking about is how much these dollars is going in to help balance the Israeli budget and w much is going in to apply on the Israeli debt? That is the int.

Mr. Wood. None of these dollars are proposed for application to e Israeli debt, Senator Hickenlooper. The total that would be given Israel out of this fund which is presently thought to be somehere in the neighborhood of half, or $70 million, the total of that given to Israel would assist in helping the Israeli to balance both eir foreign exchange budget and their internal budget. Senator HICKENLOOPER. Well, that is the same thing, isn't it? Mr. Wood. But not to apply to their debt or pay off their debt or ything of that sort.

Senator HICKENLOOPER. Do we do that with any other countries, we them money to balance their budget?

Mr. WOOD. Well, as a matter of fact, in a number of the cases that have testified to here, the effect of the aid we give them will be

both to assist them in their foreign exchange problem and to assis them in their internal budgetary problem.

Counterpart when it is applied to military expenditures in France or the United Kingdom does help them when it is spent on their military budget in handling their internal budget. That is inherent in a great many of these operations.

Senator HICKENLOOPER. I understand every time you spend a dollar or ever spend any money, somebody gets benefit from it in taxes and other things that go back, but I have the impression that a part of this $70-some million is going directly to apply in their fiscal operations as dollars.

Mr. WOOD. What will happen is that counterpart will be put up for this 70 million, or whatever it ultimately turns out to be, and that counterpart under the law can be spent in agreement with us for purposes within the country. Any amount of that that is spent for projects within Israel will help them with their internal budget. Senator HICKENLOOPER. I understand that, and that is the theory of the MSA expenditures.

Mr. WOOD. Exactly.

ECONOMIC REHABILITATION OR FISCAL MANIPULATION

Senator HICKENLOOPER. But theoretically that helps develop the economy of the country, that is, that helps build industrial plants. creates wages and jobs, and there is a difference between that and pouring cash into the books of the treasury, just cash credits for the purpose of budget balancing or for the purpose of helping them with their deficiencies in taxes, and so on.

One might argue that by doing that you put them in a little better financial position and maybe they can do a little bit more and be in a little better economic position, but I don't like the theory of it. Mr. WOOD. One of the things we are told by the law to do is to attempt to assist these countries in overcoming inflation.

To the extent that counterpart is applied to expenditures within the country and thus relieves them from having to increase their borrowings or print currency, to that extent it assists in the maintenance of stability or the development of recovery.

Senator HICKENLOOPER. We have had this question come up from time to time in the past. I remember we had it up with the British. There was a time when the British were worse off.

They have been able apparently to balance their budget and reduce their taxes a little bit over there, but there was a time when we suspected that part of this money we were giving was going into the British fiscal operation purely, and there was a lot of resentment and objection to that.

Also the question with the French, whether or not they were using some of the dollar credits which we gave them not for economic rehabilitation but for fiscal manipulation in their budgetary operations.

Senator GEORGE. We had those questions up, Bourke, and my reeollection is that we didn't do what some wanted to do, write an express prohibition against it into the act, and we did it on this theory: That is you go back to the original Economic Recovery Act.

ou find one of the purposes there set out was to stabilize the curency of the country and expand their trade, and so forth, and we eclined to put in the express prohibition at that time because we elt that maybe by the use of some of this money they could stabize their currency.

Mr. WOOD. And it wasn't only a suspicion. Actually it was set ight out before the committees that we did use in the early days ome of the counterpart of aid to Britain, for example, to assist the British in holding down inflation by reducing the size of their debt, which was threatening an explosive inflation.

The CHAIRMAN. In Italy, we did the same thing.

Mr. Wood. It was one of the things that saved the British ecoomic situation, so that she could proceed with this defense program. Senator GEORGE. We had quite a debate here, but we didn't put in A prohibition because we reached the conclusion that it was sensible o aid them in stabilizing their currency.

FORM OF THE BILL

The CHAIRMAN. Can I get your decision, gentlemen, as to having the form printed, the new bill as we have passed it but using the form that the House is using, so we will not run into conflict? Senator HUMPHREY. I So move.

The CHAIRMAN. All right, it is so ordered. I want to say that that will be printed and we can meet Friday morning and have the complete bill in the new print and everything to go over it, and then send it to the calendar.

Senator HUMPHREY. May I ask this question. Why doesn't the House change, since we have acted on this one? It just dawned on me. We have done ours. Why don't they change?

The CHAIRMAN. That is fine. My point is we don't want to get into any disagreement.

Senator GEORGE. It is better to have the same bill in conference. Senator HUMPHREY. We have completed our bill. I am just wondering unless there is something that the Agency feels awfully strong about

Dr. WILCOX. Mr. Chairman, if the committee wishes I would be glad to take the matter up with the House to see if the committee does report out this bill, the House would be willing to make that change.

The CHAIRMAN. That is all right.

Senator SMITH. Does the House have this revised draft?
Dr. WILCOX. Copies have been sent to the House.

Dr. KALIJARVI. The committee does know about it and they have deliberately voted to proceed on the original bill.

The CHAIRMAN. The original bill then will be corrected according to our corrections here in committee and be ready for final action on Friday.

I want to state that next Wednesday at 10 a.m. we will meet to go ahead and make arrangements for hearings in relation to German. debt settlement. The full committee will meet on the St. Lawrence on Tuesday.

We have a note here that the Subcommittee on Economic and Social Policy, of which Langer is chairman, is supposed to have a

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