provide an effective counterbalance to the Soviet Union, and many brilliant suggestions and many brilliant ideas and brilliant diplomacy has come out of that French objective.

French politics, however, are very complex, and French governments are always on a constant search for a new majority by which

they can govern.

The Communist power in France, which was tremendous at the end of the World War due to the very vigorous role it played, has been subject to a steady decline, and in the last elections which are now being held-one last Sunday, and the next one on the next Sunday-it is anticipated that the Communist position in the popular vote will reach the lowest point since the war-roughly 22 or 23 percent of the total vote.

The French have pushed their whole plan for mutual security and mutual economic assistance, and they have played, therefore, one of the great roles in the rebuilding of Western Europe.

ECONOMIC PROBLEMS IN FRANCE

In the economic field the chief task faced by the French in the early days after the war was the physical reconstruction and repair of the destruction caused by the war.

They did not stop their rearmament effort, and we have been very careful in dealings with the French not to push them to the extent than an inflationary trend will be created in the French economy, for the very simple reason that their whole problem of internal stability and internal order is based upon the retention of the social gains that have already been won and the retention of a standard of living which has not improved materially over that which existed before the war, and keeping their various groups quiet-and that consists not only of keeping the Communists quiet, and not giving them any opportunity for intensive propaganda and activity, but also every other group which is interested or which is represented in the French Parlia

ment.

The French rearmament effort since the end of the war has required deficit financing, and it has required assistance from the United States.

I am sure that, when you get to Paris, General Eisenhower will tell you in detail as to the extent that paid off and will pay off in terms of French cooperation.

SIZE OF FRENCH MILITARY FORCES

The French Army, as far as the published figures are concerned, is now approximately 600,000 men in the ground forces and 120,000 in the Navy and Air.

Mr. LANTAFF. Is that classified?

Mr. WILLIAMSON. No; that is as far as the published figures are concerned. I frankly do not know the classified figures. There is an organized trained reserve in France of 1,500,000.

Mr. CURTIS. Pardon me; does that include French oversea troops? Mr. WILLIAMSON. That is correct. Training and in the organized reserve, 1,500,000. A large section of the French forces are com

mitted in Indochina, and there the French have suffered very heavy causalties in their armed forces since the beginning of the Communist insurrection there. That is particularly important because the French have by necessity been forced to ship overseas to Indochina their highest-trained soldiers, and they suffered very heavy losses, particularly in the professional non-commissioned officers which have always proved to be the backbone of the French Army and the cadre for officers whenever the reserve was called into active service. Mr. LANTAFF. Part of our military aid is going to Indochina, is it not?

Mr. WILLIAMSON. A part of it?

Mr. LANTAFF. Yes. Part of our military aid to France is earmarked for Indochina; is it not?

Mr. WILLIAMSON. It is, but I do not know the figures.

Mr. LANTAFF. Do you know what disposition is made of scrap or surplus property resulting from that operation?

Mr. WILLIAMSON. Mr. Chairman, may I give you a suggestion on this question of scrap? I noticed in the hearing this morning and in the hearing this afternoon that that is an important question, and I would recommend that, if you concur and if Mr. Moreland concurs, you inform the missions about that, in the places that you are going to visit, about your interest on that question, because the information you would require, I assume, is readily available there and not available in Washington. The people in the missions in the areas you will visit are much better prepared to discuss that.

Mr. LANTAFF. I think that will be helpful to the committee if the State Department people, where we are going to visit, are alerted to our interest.

Mr. CURTIS. Well, let us be sure that we do not limit that to just scrap-also, salvage and surplus.

Mr. BROWNSON. Well, we will send them a copy of that paper, the purposes of the trip, that we have agreed to.

Mr. WILLIAMSON. If you let them know, they can have the material available when you arrive.

Mr. LANTAFF. Fine, that will be very helpful.

Now, what is the relation of the military in Paris and the departments below to the State Department?

AMERICAN ORGANIZATION ABROAD

Mr. WILLIAMSON. Well, let us take Paris first. We have in Paris the same as in other areas, military advisers who work directly with the French Government.

Mr. LANTAFF. Is that under the Ambassador?

Mr. WILLIAMSON. Our military comes under that.

Mr. LANTAFF. So, in each of these countries we visit in your area, in Greece and Turkey and so on, our military groups are going to be under the State Department, the Ambassador?

Mr. WILLIAMSON. That is right.

Mr. BROWNSON. Is that under a military attaché?
Mr. WILLIAMSON. That is his own advisers.

Then he has a staff

of economic and political people, and then he has MAAG.

Mr. LANTAFF. When we get through with our statement of inter

est, I presume we will send them out and they will be sent out to the various embassies that we will contact and they will-and I suppose that MAAG will be alerted.

Mr. WILLIAMSON. The MAAG people are the people that can provide this information for you. I am speaking particularly of Italy, because I know they have investigated that.

Mr. MEADER. Off the record.

(Discussion off the record.)

Mr. LANTAFF. Do you know whether or not counterpart funds are being used in the rehabilitation or expansion of any bases over in France?

Mr. WILLIAMSON. At this point, I do not think so. I think in terms of the-off the record.

(Discussion off the record.)

Mr. CURTIS. But if bases were to be expanded, it would be out of direct appropriations for the military?

Mr. WILLIAMSON. Yes.

Mr. CURTIS. What is the status of the counterpart funds in France? Mr. WILLIAMSON. You mean how they are used?

Mr. CURTIS. No; the status-how they can be utilized.

Mr. WILLIAMSON. The same as in the other countries, sir. They are held in public account by the French Government and released by the French Government on agreed-upon projects.

Mr. CURTIS. Do you know whether or not, in connection with military and economic aid to France, a good portion of the military supplies and equipment are sent over from this country or are they secured in France?

Mr. WILLIAMSON. If you are going to have a witness from the ECA, I suggest that you ask him that question because that is a very complicated problem on which a very complicated answer will have to be given, and I am not in a position to do it.

Mr. CURTIS. Is the French economy improving now, generally? Mr. WILLIAMSON. Steadily. There again, I say that from a very broad and general point of view. However, there has been a steady and noticeable improvement since the end of the war.

Mr. CURTIS. How about American private-capital investments in France?

Mr. WILLIAMSON. They are very much facing the same problems, when you compare American capital investment in France as in Italy, but we do not have an investment agreement with France as we have with Italy.

Mr. CURTIS. Is there any thought along that line, of getting one?

ENCOURAGEMENT TO AMERICAN INVESTORS

Mr. WILLIAMSON. Not to my knowledge, although the ECA has gone into the whole question of giving guaranties of one sort or another to private American investors.

Mr. CURTIS. To encourage them?

Mr. WILLIAMSON. Yes; to encourage them.

Mr. MEADER. You do not have a treaty like you have with Italy negotiated?

Mr. WILLIAMSON. Not that I am aware of.

Mr. LANTAFF. Why is that? Why should a treaty be negotiated in Italy and not one with France?

Mr. WILLIAMSON. Because the Italians were very much in favor of that and wanted it, first; secondly, because of the-well, the desire on our own part to bring about investment in the economic possibilities in Italy and to encourage investment in the economic possibilities of Italy.

Mr. CURTIS. Actually, the more private money that goes in there, the less you will need from our Government.

Mrs. HARDEN. Mr. Chairman, may I ask a question?

Mr. LANTAFF. Yes, Mrs. Harden.

Mrs. HARDEN. How many changes have there been in the French Government since 1935?

Mr. WILLIAMSON. Offhand, I do not know. I mean I would have to go back to the record and count them. I really would not want to guess, unless I guessed off the record.

Mr. LANTAFF. Well, go off the record. (Discussion off the record.)

Mr. LANTAFF. Any other questions?

Mrs. HARDEN. No.

Mr. MEADER. I would like to ask one.
Mr. LANTAFF. All right.

Mr. MEADER. Are you familiar with what happened to our surplus property in France and Italy?

Mr. WILLIAMSON. No sir; I am not. Maybe Mr. Murphy is.

Mr. MEADER. I had one other question that I had forgotten to ask in connection with Italy. The Parke-Davis Co. in Detroit has complained that the Italians have not been respecting the treaty or living up to it. Are you familiar with that?

Mr. WILLIAMSON. Personally I am not. There are people in my office who have discussed that question with various representatives of the drug firms in the United States.

Mr. MEADER. Off the record.

(Discussion off the record.)

Mr. LANTAFF. Mr. Williamson, I think we are about through here. Is there anything further that you wish to add with reference to anything within your sphere?

Mr. WILLIAMSON. Nothing, sir, except to say we would be delighted to inform all of our people of your interest so that they can, ahead of time, get the desired materials collected.

Mr. LANTAFF. We will have it prepared within the next day or two. Mr. WILLIAMSON. And so you can get the exact answers to your exact questions.

Mr. LANTAFF. Well, our time has expired. I am willing to adjourn for this afternoon.

(Whereupon, at 4:45 p. m., the subcommittee adjourned.)

FEDERAL SUPPLY MANAGEMENT

(Overseas Survey)

THURSDAY, OCTOBER 11, 1951

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON INTERGOVERNMENTAL RELATIONS,

OF THE COMMITTEE ON EXPENDITURES,

IN THE EXECUTIVE DEPARTMENTS,
Washington, D. C.

The subcommittee met, pursuant to adjournment, at 2:45 p. m., in room F-14, United States Capitol, Hon. Herbert C. Bonner, chairman of the subcommittee, presiding.

Members of Congress present: Herbert C. Bonner, chairman, W. J. Bryan Dorn, Sidney A. Fine, Bill Lantaff, Cecil M. Harden, Charles B. Brownson,, and George Meader.

Staff representatives present: Christine Ray Davis, chief clerk; Thomas A. Kennedy, general counsel; Herbert Roback, staff member; Ray Ward, Bureau of the Budget.

Mr. MORELAND. When we closed yesterday we had on deck Mr. Beale, who can give you some background information on Great Britain. I would suggest, if you wish to hear him, that he be first, and then we can move into our lend-lease and surplus property staff. Mr. BONNER. All right, sir.

Mr. MORELAND. This is Mr. Beale, who is in the British Commonwealth and Northern European Affairs Office.

Mr. BONNER. Mr. Beale, will you give your full name?

STATEMENT OF THOMAS BEALE, OFFICER IN CHARGE, ECONOMIC AFFAIRS, OFFICE OF BRITISH COMMONWEALTH AND NORTHERN EUROPEAN AFFAIRS, DEPARTMENT OF STATE; ACCOMPANIED BY ALLEN MORELAND, CONGRESSIONAL LIAISON OFFICER, DEPARTMENT OF STATE

Mr. BEALE. My name is Thomas Beale and I am Acting Officer in Charge of Economic Affairs in the Office of British Commonwealth and Northern European Affairs.

I think that of the main points in connection with the United Kingdom, the most important is the size of their defensive program. They have programed for the 3 fiscal years of 1952, 1953, and 1954, 4.7 billion pounds sterling, or about $13 billion.

NOTE.-Asterisks denote classified material deleted for security reasons.