Often, as a result, AID has found it virtually impossible to fill vacancies in principal health posts in key countries.

Public Health Service officers have sometimes felt that their acceptance of an oversea AID assignment might prove a detriment, not an aid to their own ultimate career development. And there have been other interagency shortcomings as well,

TRIBUTE TO HEALTH PROFESSIONALS

Notwithstanding these conditions, I want to say that this Nation can be proud of the humanitarian accomplishments overseas by federally employed doctors, nurses, malariologists, pharmacists, and other members of the health team, just as it can be proud of aid rendered by nongovernmental groups like CARE, Medico, Project Hope, medical missionaries of various religious faiths, and other private sources.

ABLE TOP TEAM AT AID

From the standpoint of the U.S. Government, the time for improved teamwork is nonetheless long overdue.

Fortunately, as AID's Assistant Administrator for Human Resources, serving with the able Administrator, David Bell, there is a very competent physician in charge, Leona Baumgartner. distinguished doctor has a long and outstanding interest in public health measures, at home and abroad.

This

I do not have the slightest doubt but that Dr. Baumgartner seeks to work out the closest collaboration with the U.S. Public Health Service and with private organizations. However, the sometimes rigid mechanisms of the Agency for International Development have tended to discourage greater initiative and responsibility on the part of other Federal agencies, such as the constituent units of the Department of Health, Education, and Welfare.

Here, I refer to both medical and nonmedical units of HEW; that is, to the U.S. Office for Education, for example.

What I seek is to encourage the domestic U.S. agencies with technical assistance competence-for example, in such fields as in housing, agriculture, and so forth to become genuine partners-in fact, not merely in name-with AID.

NEED FOR A CAREER POOL OF EMPLOYEES

Such cooperation and coordination is in the interest of both economy and efficiency. For example, in health, the U.S. Public Health Service has the best trained experts in the executive branch and the best access to still more of the

best experts in private life, in schools of

public health and elsewhere. Meanwhile, AID has the mandate and at least limited funds to assist in health.

A happy union of the two is indispensable. By "union," I refer to the establishment, in effect, of a unified pool of career medical experts who could serve not in one agency, but in all agencies with health activities-the Peace Corps, AID, NIH, other units of the Public Health Service, Defense Department programs overseas, and so forth. would rotate as the needs of the Nation and as their professional interests made advisable.

CIX-1383

They

Some small progress has been made toward this goal. But it has been "too little and too slow."

AID and the State Department need not surrender in the slightest their basic obligations for policymaking and policy supervision. But they should not try to do, in day-to-day technical management, what the so-called domestic U.S. agencies are far more competent to do.

Oversea health aid requires, in the final analysis, not only money, equipment, and other physical resources-it requires trained people. There is certainly not an unlimited number of American citizens with adequate training in public health type skills who are willing or able to take oversea assignments for 2 or 3 years at a time and who are effective in working with foreign nationals.

We need more such Americans and we need to make the best possible use of those we already have.

Similarly, we need to give every possible encouragement to the much larger number of American professionals, skilled in medical specialty services like surgery, ophthalmology, cardiology, neurology, and psychiatry, to accept temzations, to serve abroad. Survey after porary assignments with private organisurvey has shown that literally thousands of private M.D.'s are indeed willing to serve in developing countries for modus operandi for tapping this great at least short periods. The necessary

talent must be worked out.

OUR ASSETS FOR OVERSEA HEALTH

We can do so. We must do so. There is no reason why we should not do so. There is every reason why we should do so.

We have a great U.S. Public Health Service. We have a dedicated organization for foreign aid—AID. We have an outstanding multilateral organizationthe World Health Organization-whose regional collaborator is the famed Pan American Health Organization. We have enormous interest among private professionals and laymen.

We have an American Council of Voluntary Agencies for Foreign Service, untary Agencies for Foreign Service, uniting the major religious and nonsectarian aid groups. And we have other outstanding assets to do the job.

The job must be done-not just in the teeming cities, with their crowded slums, but in the hinterland, in the countryside, in the jungles, in the mountains, in the tiny villages which have never seen a doctor or drunk clean water or been free from disease, infected flies or snails or mosquitoes or other carriers. HELP NOT JUST TO "COMBAT COMMUNISM” BUT

TO FULFILL OUR IDEALS

Finally, it is my hope that we will render technical assistance in health to a greater degree-not because we are concerned that the desperate native masses will turn to communism, but because it is morally and ethically sound that we do so.

No people has acted from greater humanitarian zeal that the American people. No nation in all of history has done more or wanted to do more to relieve human suffering than has our Nation.

We do so because it is in our nature, our character, our tradition; it is part of all of the religions by which we worship.

I serve notice, therefore, of my continued intention to help make certain that these objectives which I have expressed, time and time again, will receive appropriate attention by the Agency for International Development, by the Department of State and the U.S. Public Health Service.

FOREIGN AID NOW CONDITIONED ON
PERFORMANCE

Mr. President, what kinds of conditions are now being agreed upon by the United States and the recipient governments, and how do these conditions work?

There are two categories of conditions. First, there are conditions based on the performance of an entire country, and applied to all aid programs and projects in that country. Second, there are conditions for specific programs or projects in a country, even where the country as a whole does not have to take certain agreed upon self-help steps.

Under the Charter of Punta del Este, which established the Alliance for Progress, every country in Latin America is committed to undertake certain self-help measures. It is explicitly recognized in the charter that U.S. assistance to Latin American development will be conditioned upon the necessary structural reforms and measures for the mobilization of internal resources on the part of recipient countries.

The recent United States-Brazilian agreement, which conditions further U.S. aid to Brazil upon the taking of certain steps by the Brazilian Government, was made in accordance with the charter. Under this agreement, which is the first of its kind, Brazil was toFirst. Increase revenue by reforming the tax system, as well as improve tax collection and administration.

Second. Reduce Government budgetary deficits by eliminating subsidies on wheat and petroleum, eliminating deficits on publicly owned enterprises including transportation and power systems, and curbing public pay increases.

Third. Control inflation by limiting the expansion of credit by the banks, by establishing better central banking machinery, and by appealing to unions and businesses to hold the line on wages and prices.

Fourth. Reduce the balance-of-payments deficit by establishing a realistic exchange rate and by adopting specific measures to increase exports.

Fifth. Stimulate economic growth by adopting measures to encourage outside private investment.

Sixth. Increase agricultural growth and productivity by seeking a broad program of agrarian reform.

In addition, it was understood that Brazil should arrange with the International Monetary Fund to defer payment on an IMF obligation, as well as secure a standby arrangement under which the IMF would make temporary credits available to offset Brazilian export losses. It was also understood that

In several other cases development loans for Latin American countries have been made contingent upon acceptable arrangements with the International International Monetary Fund for exchange rate reform and an economic stabilization pro

gram.

One example is the recent $35 million development loan to Chile which is conditional upon a satisfactory stabilization program. The loan will be disbursed at a rate corresponding to the rate of Chile's budgetary performance. Better budgetary performance will speed up the rate of loan disbursement, and vice versa. In some cases there is a condition that the borrowing nation secure aid from

other donor nations before the United States will promise_assistance. A stabilization loan for Egypt, and the consortia arrangements for Pakistan and India, and more recently for Turkey, are examples of this type of condition.

of

There are numerous examples specific types of conditions required by the United States on development grant and development loan projects.

In one Middle East country the government undertook to reorganize the port administration, to establish separate organizations for the goods handling and customs functions, and to finance the timely completion of complementary requirements such as connecting roads. Management, organizational, financial, and budgetary arrangements for the port satisfactory to the United States were made conditions of an AID loan.

In another Middle East country, specific conditions were set forth in a U.S. loan made for the purchase of construction equipment. Because several government departments were involved, one condition of the loan was that a new central agency be established to handle the equipment. Employment of qualified

junior level technicians, and the cooperating government guarantees the provision of cash wages for 60,000 workers. Establishing conditions for aid is one thing; enforcing those conditions, especially when political considerations are involved, is another. Flexibility in enforcing foreign aid conditions is just as essential as flexibility in enforcing the conditions of a commercial contract. Up to a certain point, exigencies must be taken into account. The problem, of course, is knowing where to draw the line.

In agreements on conditions, especially those involving an entire country program, it would be a mistake to expect the line always to be drawn where it was marked out originally. But allowing for reasonable adjustments, it is reasonable to expect conditions to be carried out, as nearly as possible, as agreed upon. Otherwise agreements on conditions will not be taken seriously.

The difficulty in carrying out conditions while at the same time serving broader foreign policy interests can be seen in the case of Brazil. U.S. aid to U.S. aid to Brazil is being held up at the moment because the Government of Brazil has not met the conditions agreed upon earlier this year. Since the BrazilBrazilian Government has done little, United States agreement was signed, the in fact, to live up to its pledge. Inflation increased by more than 25 percent in the first half of 1963, and probably will tion increased by more than 25 percent in increase by more than 50 percent before the end of the year. The Government of Brazil has loosened rather than tightened credit. The Brazilian budget deficit has gone up rather than down. Government pay raises, rather than be

ing held to the announced 40 percent, have been increasing by 70 percent.

What happens next? From the stand

of an acceptable spare parts and maintenance system were other conditions of the loan.

A home savings program in a Latin American country requires that the U.S. contribution of $7.5 million to the savings bank be matched, and that there be established a National Housing Institute to administer the program.

Conditions to insure repayment of U.S. loans, including government guarantees of loans to private or semipublic institutions, are common practice. In one such case, the United States insisted upon the financial reorganization of a truck company to open up prior mortgage bonds so that AID would be ratably insured, the sale of common stock rather than of senior convertible debentures as proposed by the company, establishment of a ratio of debt to net worth not to exceed 2 to 1, and a limitation on dividend payments.

A normal condition of cost sharing between the United States and a recipient country in a grant project is exemplified by a recent work relief project emphasizing rural reconstruction. Under this agreement, the United States provides surplus agricultural commodities for food, hand tools and equipment,

ations, Brazil must not be allowed to

flounder. If the enforcement of conditions on our aid program were predicted to have that effect, it would be very difficult to make the conditions stick. On the other hand, if the conditions are modified to the point of being substantially softened or virtually removed, it would be very difficult in the future to persuade any government to live up to its commitments. The answer may lie somewhere in between. But even if

there should have to be some adjustments in the original agreements-and they certainly should be kept to a minimum-we will at least have made a start on establishing, together with the host government, performance standards for a country receiving U.S. assistance. This is one of the most encouraging improvements made in foreign aid since the new program was established in 1961.

EFFECTIVE FOREIGN AID-PEOPLE-TO-PEOPLE
TECHNICAL ASSISTANCE

Mr. President, a key element of the U.S. foreign aid program is the technical assistance effort going forward in many emerging countries around the world. In some 21 countries technical assistance constitutes almost our entire foreign assistance effort. In other countries it is

carefully coordinated with other forms of assistance to insure that our help gets to the people.

In many countries a small number of devoted Americans are working among the people to transfer American knowhow and skills. They are not living in luxury as is often charged. Rather, they are working side by side with the people of the developing countries getting a job done. It is a challenging, often frustrating profession.

These are people from the backbone of America-from Vermont, Indiana, California, from all over the United States. These are people with the kind of pioneering spirit which built America.

Because of them, and the rest of our aid effort, U.S. foreign assistance is reaching the people of the underdeveloped world. It is making a constructive impact.

The evidence of this impact is not often dramatic. Nevertheless, change is occurring at an increasingly rapid pace. For every constructive change in the traditional way of life that is visible, there are many others that are spreading more slowly but which will ultimately transform the society of the underdeveloped nations in the decades to come.

It is clear that if there is to be substantial development in these nations it will have to come from changes generof their own societies. This is what selfated and accepted within the framework would like to have developing nations help really means-not simply that we pay a fair share of the cost of development, but rather that we and they realize that lasting development must be built from within.

It is within this framework that U.S. technical assistance plays such a basic and vital role. Technical assistance

helps the individual in an underdeveloped country to help himself and to help build his society. It enables the campa

sino, the peasant, the tribal farmer to adapt the technical know-how and expertise of the modern world to the realities and confines of his own primitive

conditions.

Modern communications, independence, the education of a few native leaders are causing an awakening in the developing countries. In some places it is an emotional demand for modern social legislation or educational facilities; in other places it is a less articulate but health practices or for the right to own no less pressing demand for improved the land that the people work; in still other places-perhaps the majority-it is a slowly growing realization that things need not necessarily be as they have always been. This, for many, is the one dynamic new idea: That change is possible; that the pattern of life of the last 2,000 years need not be the pattern of life for the next 2,000 years.

American technical assistance is helping to insure that the changes which will inevitably occur in the developing countries are changes for the better; that all people share in the opportunity for a better life.

How effectively are we achieving this goal? Let me give you a few examples from one area of our foreign assistance

ALLIANCE FUNDS?

In Nigeria, 170,000 farmers will be reached by AID assisted and trained extension workers in 1963. More than 100 Young Farmers Clubs with a total membership of more than 7,000 Nigerian youth have been organized under the guidance of a single AID technician.

In the Sudan, 325,000 people are being reached this year by agricultural extension programs sponsored by AID.

In South Korea, counterpart funded loans from members of the National Agricultural Cooperatives Federation provided more than 724,000 individual agricultural credit loans for crop production during 1962. Fifteen thousand loans were made to village cooperatives to assist in procurement of materials and marketing.

In Ghana last year, 180,000 farm families were reached directly by AID-sponsored agricultural extension farm programs. These programs included demonstrations and training in livestock development, vegetable production, construction and use of minor irrigation works, and the uses of fertilizer and

pesticides.

In Turkey, 31,000 of the total of 40,000

rural communities will be reached this

year by AID trained and assisted agri

culture extension workers. In the last

2 years, 246,000 new acres of farm land have been prepared for irrigation. Almost 17,000 potential farm leaders from 3,500 villages have received water and soil conservation training under a program financed by Public Law 480 commodities.

In Chile, 215,000 farmers were reached last year by AID-sponsored extension activities. Twenty rural training centers are reaching 2,000 students each year in basic agricultural techniques.

In Taiwan, 80,000 agricultural credit loans were made last year under the sponsorship of AID-supported National Agricultural Cooperatives Federation; 637,000 farmers are benefiting directly from AID-generated farm and home economic extension work. More than 80 percent of farm families in Taiwan are now being reached by extension workers.

In Vietnam, in the midst of a shooting war, rapid strides are being made in increased agricultural production-300,000 people are being reached by extension work in basic agricultural techniques. A million and a half people have been reached by a plant production program designed to provide training and demonstration in the protection of plants and harvests from rodents and insects.

These specifics are impressive and I am afraid not very well known; but they are not unusual. They are typical of the way in which the U.S. foreign assistance effort is getting directly to the grassroots of the developing nations.

Our foreign aid program is effective; it is doing a job.

This is no time for us to slacken our efforts.

I urge that the Senate approve the Foreign Assistance Act as reported by the Foreign Relations Committee.

Mr. President, development loans make up the major AID contribution to the Alliance for Progress. Over $340 million in development loans was used in fiscal year 1963. Total commitments for development loans and grants were $465 million.

It was and is impossible to state precisely the need for loan funds. The level of the Alliance lending program is contingent upon many factors. Most are beyond the control of the United States. The uncertainty stems from the fact that no lender, no bank, can predict the amount it will lend in the future and still remain a sound insti

tution.

Based on the most careful analysis of the probabilities, AID has stated that it will need a minimum of $550 million for new development loans and $100 million for development grants this year. This amount is designed to meet the Latin American countries' increasing need for marginal external assistance as the Alli

ance progresses.

loan funds for the Alliance in fiscal year AID's commitment of development 1963 gives us a clear idea of how the pro1963 gives us a clear idea of how the program operates. Two years of Alliance

experience back up the method, which

These involve the assurance that the has to meet two key U.S. objectives. self-help and reform requirements of the Alliance must be met and, at the same time, the need to capture the confidence and imagination of the Latin American people.

AID, therefore, has acted on these principles: First, it has refused to commit or spend unless convinced that the outlay is clearly in the U.S. national interest, promoting development and freedom in Latin America; and, second, it has been prepared to offer assistance whenever a Latin American nation initiates the social and economic changes the Alliance calls for. On a per capita basis, countries like Chile, El Salvador, Colombia, and Panama received much more aid than did Paraguay or Haiti, for example.

AID's development lending operations, like those of a bank, depend a great deal

mutual confidence. The United States has not assumed the posture of a hardhearted lender. Congress has placed tight restrictions on AID loan procedures, however. The loans must reflect careful feasibility studies and a clear capacity for repayment. AID, therefore, has acquired many aspects of a full-fledged banking operation. It has, moreover, insisted that the Latin Americans live up to their own commitments on reforms. If we did not do so the money we lend would neither benefit the borrower nor further our Alliance objectives. On the other hand, to raise hopes and aspirations, to achieve worthwhile bootstrap efforts and then not be able to back them up with marginal external lending causes a loss of confidence among our Latin American neighbors and a sense of alienation from the Alliance.

Right now, today, finance minister and development experts from the Alliance countries are meeting in São Paulo, Brazil. This meeting of the InterAmerican Economic and Social Council is devoted to an analysis of reform efforts, to methods for improving the administration of the Alliance, and to strengthen that spirit of mutual confidence which is the true revolution in this hemisphere over the past 3 years.

The democratic leaders in Latin America today count on us. At the very moment when they have gained confidence in us and are exposing themselves to grave political hazards in the firm expectation of timely and effective support from the United States, we must come through.

THE FOREIGN AID BILL HAS BEEN GREATLY IMPROVED BY THE SENATE

Mr. GRUENING. Mr. President, I wish to pay tribute to the majority leader [Mr. MANSFIELD] for the wise and skill

but to rework the bill right here on the floor of the Senate.

ful manner in which he handled the debate on the foreign aid authorization bill. The action of the Senate on this bill was tantamount to the Senate acting as a Committee of the Whole in working its will upon the bill. It was an operaIn fiscal year 1963, aid was concen- tion which I hoped to avoid by supporttrated in the countries which performed. ing the motion to recommit. When that It was reduced or held up where self-motion failed, there was no alternative help and reform efforts were shunned or lagging. You will recall that the United States spent almost nothing in Peru. Funding for Brazil and Argentina was much lower than expected. Brazil had not met her self-help commitments, nor had it reached the stage of political and, particularly, particularly, financial stability which would make worth while all of the lending which was previously estimated. Argentina's political problems prevented any clear focus on development.

This year, Peru's new constitutionally elected Government has put that hitherto politically stagnant country on the Alliance road to reform. Argentina has a constitutionally elected government and the prospects are good for stability after a year of turbulence. Further development opportunities are evident in Central America and Chile, among oth

ers.

That we have now done.

The guidance of the majority leader in that action was eminently successful and has now produced a bill which, in my opinion, is a much stronger bill than the one reported by the Senate Committee on Foreign Relations. In reporting, even that committee in its report expressed its dissatisfaction with the bill and the conduct of the program.

I would also express my appreciation and admiration for the work of the senior Senator from Oregon [Mr. MORSE] in leading the debate on the floor of the Senate during these past weeks to strengthen the bill and thereby, we hope, the foreign aid program. His skillful, learned presentation of each point in the debate is greatly to be admired. If, as a result of the action here on the floor in

strengthening the bill, the foreign aid program itself is strengthened, then the credit in no small measure must go to the senior Senator from Oregon. He astutely guided the perfecting and strengthening amendments to the bill through the shoals of opposition-opposition which, I must say, at times was blind opposition to any change whatsoever, however meritorious and justified that change might be.

Mr. President, it is my intention to vote in favor of final passage of H.R. 7885 as amended.

The cuts in the amounts authorized were relatively unimportant. It is my firm belief, Mr. President, that if action by the Congress a few years back had kept the lid on the ever-increasing authorization for our foreign aid program that program today would be in a much stronger position and would not have aroused the criticism of the people of the United States from coast to coast. If the AID administrators had been forced to count their pennies rather than their millions, they would have put the U.S. dollars where they would do the most good. The program needs greatly to supplant largess with frugality and omniscient presence with selective leadership where it counts the most.

Two amendments which I offered have been adopted and are included in the bill.

One amendment deals with withholding all aid-except the Peace Corps and Fulbright educational grants-from nations found by the President to be aggressors or preparing for aggression. This amendment should not have been necessary. For years now either the Senate has adopted "sense of the Congress" resolutions or Members have Members have taken the floor to denounce this or that aggressor nation squandering our money to prepare to engage in aggression. But these warning signs of a rising tide of opinion on the part of the people of the United States have gone unheeded by this and past administrations. And now the Congress has acted with clarity in setting forth the guidelines of how it expects the foreign aid program to operate.

The second amendment relates to military aid to Latin American countries. This too is an amendment which should not have been necessary. There have been plenty of hints in the Congress during the past years which should have given the military program administrators clear indication that the policies they were pursuing in giving military assistance to each and every Latin American country did not follow the wishes of the Congress. However, those hintsand even some of the restrictions written into foreign assistance program authorizations-went unheeded. So, finally, there was no recourse but to write the restriction into the bill this year. Many other amendments offered by other Senators have been adopted and should result in a much stronger bill.

Will it result in a much stronger foreign aid program? That remains to be

seen.

Congress can but set down broad general guidelines describing the type of

program it is willing to support. It is now up to the administrators of that program to adhere to those guidelines and steer the foreign aid program in that direction. And to those administrators I will give this one bit of advice: I for one-and I am certain there will be others will be watching the administration of the foreign aid program closely tion of the foreign aid program closely in the months ahead to see to it that the congressional administrations are heeded. And I for one-and here, too, I heeded. And I for one-and here, too, I know that I will be joined by many of my colleagues will not hesitate to fight for stronger action if these warnings go unheeded.

In that connection I would point out one fact dealing with interest rates on development loans.

On November 8 I called up my amendment to increase rates of interest on development loans to the amount paid by the United States to borrow money. That amendment was defeated by the vote of 30 to 44.

On November 13 the Senate rejected a second amendment raising the interest rate to 2 percent. That amendment was rejected by a vote of 41 to 47.

The point I make in this admonition to the administrators of the AID program is just this: There are at least 41 Senators who are dissatisfied with the custom of granting development loans at three-fourths of 1 percent interest. They want it raised to at least 2 percent. So when the foreign aid authorization bill for fiscal year 1965 comes before the Senate not many months from now there will be many of us who will be watching to see whether the minimum written into the fiscal year 1964 authorization has become the maximum. If so I am certain they will be willing to join with me in an attempt once again to make these real attempt once again to make these real loans rather than combined loans and grants.

Mr. President, much has been written and spoken in the past weeks about the role of the U.S. Senate in the realm of foreign policy. Much of what has been written has been hastily conceived and not thought through.

Now every foreign aid authorization bill has contained restrictions on and directives to the Executive in administering the foreign aid program. If this ing the foreign aid program. If this were not so, the foreign aid authorization bill could be expressed in a single paragraph such as the following:

There is hereby authorized to be appropriated the sum of $ for the fiscal year to be used for carrying out a foreign aid program.

Some who have spoken and written on the role of the Senate seem to set such a wide open authorization as their goal.

With the advent of the AID program as an instrumentality of U.S. foreign policy, the Congress-which alone can appropriate funds-has become whether it wants to or not-truly enmeshed in foreign policy determinations. These can be of a positive or negative type. Negatively by continuing to appropriate funds for ongoing programs the Congress acquiesces in the policies being pursued; postively by writing into the authorization bill certain directives and limitations.

Actually-upon analysis-those who have been critical of some of the directives written into the bill worked on in the Senate are critical because of the content of the directives rather than because they believed that Congress should hand the administration a blank check in the field of foreign assistance. They have sought to cloak their criticisms under learned phrases about the Executive having a free hand in foreign policy determinations. They overlooked their own silence over the restrictions approved and recommended by the Senate Foreign Relations Committee.

There is nothing sacrosanct about the recommendations of that committee. They are still only recommendations of that committee. They are still only recommendations to be accepted, rejected or amended by the Senate and the other body.

That is precisely what the Senate has been doing these past weeks-accepting, rejecting, or amending the recommendations of its Foreign Relations Committee. That is its duty. For the Constitution states not only that the appropriating power lies with the Congress, but it contains the further limitation that:

No money shall be drawn from the Treasury, but in consequence of appropriations made by law; and a regular statement of account of the receipts and expenditures of all public money shall be published from time to time.

During the course of the debate on the foreign aid bill-H.R. 7885-two proposals for changing the program have been advanced which should put all Members of Congress on the alert.

The repeated statements portending proposals to be put before the Congress bode ill for the retention of even the small amount of congressional control over the foreign aid program.

If this is the future "new look" of the program it is only more of the

same.

The first proposal I expect to be advanced is that we should delegate to international organizations more and more of the conduct of our foreign aid program-with our money, of course. This trend I will also resist. The Congress should seek in more and more ways to regain control of the foreign aid program-control which it has in the past years weakly permitted to be taken from

it. It is essential that this control be regained by the Congress. You will recall the action a few years back when the World Bank approved a large loan to Egypt for improving the Suez Canal at the very time when Egypt was refusing to adhere to its international commitments and permit free passage through the canal.

This lack of firm control over who, where, and how U.S. dollars are to be spent should not be transferred to international organizations. The siren's call of anonymity in foreign aid decisions should not be heeded. It is true that such anonymity dissipates blame for foreign aid fumbles. But more important, if we are building up the U.S. image in the countries aided, we should be there to take the credit when our foreign aid program proves to be a success.

Although I shall vote in favor of the final passage of the foreign aid authorization bill, because of the improving amendments which the Senate adopted, it should not be taken to mean that I am completely satisfied with the bill or will, without attempting further to improve the foreign aid program, docilely vote to approve whatever appropriations may be recommended by the Senate Appropriations Committee. On that point, I shall wait and see.

NEW EMPHASIS ON DEVELOPING PRIVATE ENTER

PRISE THROUGH FOREIGN AID

Mr. HARTKE. Mr. President, in his foreign aid message to Congress last spring, President Kennedy declared:

The primary new initiative in this year's program relates to our increased efforts to encourage the investment of private capital in the underdeveloped countries.

Private investment is now being heavily stressed in our foreign aid program for four basic reasons.

First. The United States has a vital interest in encouraging private enterprise and initiative in countries receiving our assistance.

Second. Achievement of industrial and agricultural growth in the less-developed nations requires the development of technological and managerial skills in the private sector of their economies.

Third. Economic development of the less-developed countries cannot be achieved through Government assistance alone. There is not enough money in all the public treasuries to supply the needed capital. Foreign aid can provide some of the capital required for the first stages of development, but only through private enterprise can a country achieve eventual economic independ

ence.

Public funds are, of course, still necessary for large public utility type projects, such as dams, transportation networks, and irrigation systems. These facilities, while essential to support the private sector, are often not attractive to private investors, especially in the less-developed countries. Moreover, Government funds are necessary to provide the social progress projects-the schools, for example, from which private companies must draw their educated managers and skilled laborers, as well as the public health facilities essential to a vigorous work force.

Finally, as foreign aid succeeds in helping countries to reach self-sustaining economic growth, private capital will take the place of Government aid. Private investment is therefore increasingly important not only to assist in the phaseout of Government aid but also to provide a continuing mutually beneficial economic relationship when aid has terminated.

Foreign aid draws on the resources of a broad segment of the private sector both at home and abroad. This is done in part through universities, cooperatives, savings and loan associations, credit unions, trade unions and similar organizations. Relationships with private business, United States and foreign are also very extensive. These relationships can be divided into three general

categories: First, procurement with foreign aid dollars; second, assistance to private U.S. business in locating and financing profitable investment opportunities in less-developed countries, and, third, strengthening the local foreign business community.

As part of a deliberate policy to tighten procurement procedures in order to protect U.S. balance of payments and to stimulate the U.S. economy, our foreign aid program is increasingly based on procurement of American goods and services. Of the $2.4 billion committed during fiscal year 1963, $1.9 billion or 80 percent will be spent in the United

States.

This has had a dramatic impact on several major U.S. industries, particularly the chemical industry and the iron and steel industry. In 1960, 17 percent of the fertilizer financed by foreign aid came from the United States; in 1963 that percentage will be 97 percent.

In the first 9 months of 1963, for example, Chemical Week magazine reports that foreign aid funds financed $34 million in exports of chemical products such as fertilizer, pesticides, and basic industrial chemicals.

At

Similarly, in iron and steel products in 1960, 11 percent came from U.S. mills while in 1963, 87 percent of such prodwhile in 1963, 87 percent of such products came from the United States. the present time more than one-half of the present time more than one-half of all U.S. iron and steel exports are financed out of the foreign aid program.

Just in recent weeks, for example, there have been foreign aid orders for there have been foreign aid orders for $630,000 for steel billets to Pakistan from Bethlehem Steel, $1.5 million for hotrolled aluminum steel sheet to India from McLouth Steel, $563,000 for coke tin plate McLouth Steel, $563,000 for coke tin plate to Taiwan from Wheeling Steel, and $255,000 for steel wire rods to India from Colorado Fuel & Iron.

In addition to using 8 out of 10 foreign aid dollars for buying American goods, special efforts are now being made to increase the role of U.S. private investment in the development of lessdeveloped countries.

First. There is a special program for finding and drawing the attention of private businessmen to investment opportunities in less developing countries. The first comprehensive listing and summarizing is now being made of investment opportunities identified in feasibility opportunities identified in feasibility studies conducted since 1960.

Four countries have been selected as showcase nations for private investment-that is, specific target countries in which to demonstrate the contribution that private participation can make to economic development. The four countries selected are Colombia in Latin America, Pakistan in the Near East, Nigeria in Africa and Thailand in the Far East. These are all nations which are regarded as friendly toward private investment from the United States, and countries in which substantial economic progress can be anticipated in the near future.

In each country the U.S. Embassy and our foreign aid mission, together with the host governments, have selected a small number of industries of a priority nature that would be especially appro

priate for private investment. After these opportunities have been identified, efforts are made to match them with potential U.S. investors. Full use is made of industrial and publications resources of the Department of Commerce, consultations with trade associations, banks, and management consulting firms, and ultimately direct contact with individual companies.

Second. Through the investment guarantee program approved by Congress, the U.S. Government pays up to 50 percent of the cost of over 50 surveys being undertaken by U.S. private businessmen to survey such investment opportunities as castor bean processing in Thailand, and manufacturing prestressed concrete in Argentina. Use of this special program has been increasing as more businessmen have learned of the availability of this form of assistance. Forty-five surveys were approved during the past year, and 28 more are now being processed.

Third. Between January 1, 1962, and June 30, 1963, 70 dollar and local currency loans to private business amounting to over $70 million were approved. In September 1963, the largest Cooley loan was approved-$17.5 million in Indian rupees to a private fertilizer company in India in which the California Chemical Co. and the International Minerals & Chemical Co. are major participants.

Fourth. Processing of specific risk investment guarantee contracts has been accelerated. There are now over $1 billion of such insurance contracts outstanding.

The number of guarantees issued annually has jumped six times in the last 2 fiscal years-from $53 million in fiscal 1960 to over $300 million in 1962. It is estimated that the dollar volume in fiscal 1964 will exceed one-half billion dollars.

The geographic coverage of the program has also been enlarged-this year 8 additional less-developed countries have agreed to implement the programbringing the total of participating nations to 57.

What does this protection mean to the U.S. investor? Let me cite one example. In 1960, the Pluswood Industries, of what was then the Belgian Congo. Oshkosh, Wis., made an investment in Political upheaval, along with foreign exchange difficulties, resulted in the firm's inability to transfer into dollars the Congolese francs received as interest on a $200,000 loan. But since this investment was covered by a guarantee against inconvertibility of currency, the U.S. Government paid Pluswood over $17,000 in American dollars for the Congolese francs. Thus, the investor received his money at once and in dollars. The U.S. Government then became the holder of the francs and subsequently was able to recover $8,000 through selling the foreign currency after the restrictions on convertibility were relaxed.

Likewise, if a foreign government should expropriate the assets of a guaranteed investment without paying prompt, adequate, and fair compensation to the American owner, he would be paid