Also, and I am sure you are more aware of this than I, even, sir, the cost of maintaing a modern division in terms of equipment and resources is much greater than it was prewar. Senator BREWSTER. Is this figure of 44 percent measured in terms of money or in terms of things? Mr. FOSTER. That is measured in terms of things, tons of steel. Senator BREWSTER. So that the question of cost does not enter into that. RESERVES AND MEN UNDER ARMS IN EUROPE, 1938 AND 1939 Mr. FOSTER. Not into that figure. You brought in the cost of maintaining the military establishment before the war and said that in France, for example, you had this great total of people. In terms of total European establishment, however, I think today they are back to just about that 1938 level, and it is different in accordance with the division as between countries, but the level of men under arms, as I recall the figures, is actually today 30 percent higher than it was in 1938, except for Italy. Senator BREWSTER. I noted that figure. Now will you tell me what the position of the reserves is, which is perhaps even more significant? Mr. FOSTER. That, sir, I am sorry I do not know. I am sure we can get you that figure. Senator BREWSTER. Doesn't it make a great difference whether you have 10 divisions under arms and 100 in reserve, or whether you have 10 divisions under arms and none in reserve? Mr. FOSTER. Not in terms of current expense. Senator BREWSTER. It does in terms of current defense. Mr. FOSTER. In current production of equipment, certainly you would have to have a good deal of equipment in order to supply the reserves. Senator BREWSTER. The point which I am making now, I felt when you made this statement that the number of men on active duty is 30 percent higher than it was in 1938 that it is an extremely misleading statement unless you associate with that also the statement as to reserves. That would tend to reassure the people. That sounds very optimistic and very glowing, but if you take up the question of reserves, the whole picture is utterly different, is it not? Mr. FOSTER. That I cannot tell you. I think your statement is correct, and that this means men in being, and therefore it does not associate with the smaller amount of reserves. Senator BREWSTER. Yes; I think your assistants have not adequately briefed you if they have not given you the complete picture, which is utterly different. This would tend to mislead the American people very materially. In fact, it might work against your objective, because they might conclude that they were much better off over there than they are. You are taking the other side of the argument, that we need still to give them aid. Mr. FOSTER. Yes, sir. We certainly did not intend to mislead the American public, and this figure was worked out in conjunction with the military, but perhaps did not go far enough. Senator BREWSTER. I think if you would secure that figure and supplement it for the record to the extent it does not come under classified material, it will be very useful to us in the whole thing. Mr. FOSTER. We will be very happy to supply it. (Additional information on NATO reserves supplied by ECA :) In 1938 the reported reserves of European NATO countries exclusive of Italy were between 61⁄2 million and 7 million persons. These represent reserves that are ultimately mobilizable without time limit. Currently, on this same basis, it is estimated that the ultimate reserves are probably equal. However, on a strict time limit-i.e., within 90 days after mobilization-the current reserves are approximately 21⁄2 million. Senator BREWSTER. It was true in 1918, if your memory goes back that far Mr. FOSTER. I was in the Army at the time. Senator BREWSTER. Then you perhaps are aware of this. I think it was true that every plane which we used in Europe was produced in in Europe, not in the States, and that most of the artillery, at least the light artillery, was supplied by France instead of the United States. Mr. FOSTER. That is correct. Senator BREWSTER. That, you see, will lead certainly all the old soldiers of the First World War to wonder why it is, with French production 40 percent above prewar this time, they are not turning out the matériel to equip their own divisions on a very much more accelerated scale than we can find is the case. Mr. FOSTER. That is what, of course, we are attempting to work toward, Senator Brewster, because their production in the past several years has been directed toward filling this gap, due to the devastation of war. Senator BREWSTER. There were two or three specific things I wanted to ask you about. I may get more later. ASSISTANCE TO SHIPBUILDING IN TRIESTE FOR ITALY On this question to which Senator Green addressed himself, about where the benefits of this program went, I heard a good deal of discussion about the Trieste situation, where we gave very large grants to building ships for Italy. Are you familiar with that general situation? Mr. FOSTER. In general terms, yes, sir. Senator BREWSTER. I think we supplied approximately a third of the cost of those ships-did we not-that were built in those shipyards? Mr. FOSTER. I think that is about right. Senator BREWSTER. Who actually operates those ships now? Is it a public or a private concern? Mr. FOSTER. That I don't know. I will have to find that out. It may be a public concern. Senator BREWSTER. I would hope so, but I think you will find that there are large private interests associated, and the criticism has been that we not only gave this money to build these ships, which directly or indirectly affect our own merchant marine, but that the profits therefrom accrue in many instances to private individuals rather than to the public. I would appreciate it if you would look into that whole picture and carry it through to a conclusion and furnish us with a report on it. Mr. FOSTER. I will be happy to supply it for the record, Senator. (The matter referred to is as follows:) TRIESTE SHIPBUILDING PROGRAM No ECA dollars have been spent for the support of the shipbuilding program in Trieste. The only disbursements have been from lire counterpart funds, which the property of the Allied Military Government. All such funds have been made available in the form of loans with the necessary approval of ECA. Shipbuilding has always been the major industry of the zone of Trieste, and the one upon which employment primarily depends. Of approximately 30,000 industrial workers now registered as employed in Trieste, 30 percent are directly engaged in shipbuilding and marine engineering, and a further 13 percent are employed in woodworking, paint and varnish manufacture, instrument making, decorating, upholstering, etc.-industries which depend for their existence upon subcontracts from the shipbuilding industry. Therefore, nearly half of Trieste's industrial workers rely directly upon shipbuilding for their jobs. In addition, that part of the population engaged in trade and servicing activities would clearly suffer from a sharp decrease in employment in shipbuilding. It is against this background, and in full consideration of the political importance of Trieste to the United States, that ECA has approved the utilization of a substantial portion of counterpart funds in support of shipbuilding. In 1949, agreement was reached between the Allied Military Government and the Italian Government for Trieste to undertake a substantial building program for the Italian merchant marine. Under this program, approximately one-third of the cost of new ships is financed by grant by the Italian Government through the Allied Military Government budget; another third is lent from counterpart funds (repayable in 15 years at an interest rate of 4 percent and secured by a mortgage running against the shipowner); and the remainder is financed by the various private ship purchasers. Under this program, ECA has approved loans covering the construction of 96,000 tons of ship construction distributed among the four of the six shipbuilding yards in Trieste and, of course, giving employment through subcontracts to the engine works and other auxiliary industries of the zone. To date, approximately 15 billion lire ($25 million) of counterpart funds have been lent; these loans are made available in the form of progress payments as ship construction takes place. The responsible Trieste authorities have no doubt that the shipbuilding program has been the main factor which has kept zonal unemployment in bounds. (Even now, between one-fifth and one-sixth of the registered jobseekers in the area continue unemployed) and it is felt that any substantial increase in unemployment would constitute a danger to United States objectives of political stability in this sensitive area. Despite continued attempts on the part of Allied Military Government, supported by the ECA mission, to diminish the reliance of this traditionally one-industry town on shipbuilding, it must be recognized that this switch depends not only upon the development of other existing industries but also of an introduction of new industries. Of necessity this must be a long-term plan and one very sensitive to impact of political influences. The latter have understandably, since the late war, tended to discourage the investment of capital in an area so highly liable to political fluctuations. AID TO YUGOSLAVIA Senator BREWSTER. It did involve rather a large item. Now, how much has been put into Yugoslavia during and since the war, approximately? Mr. FOSTER. We will have to supply that, Senator Brewster. I think you asked that question of one of the other witnesses. Senator BREWSTER. I asked Mr. Acheson. Mr. FOSTER. Mr. Acheson said he would supply that to you; and, therefore, I assumed he had. Senator BREWSTER. He said he would have the proper person supply it, and I assumed you were the one. (The matter referred to is as follows:) ASSISTANCE TO YUGOSLAVIA I. UNITED STATES ASSISTANCE A. Assistance 1944-June 30, 1951 Since 1944 the United States has furnished direct assistance in grants and loans of approximately $216 million. In addition, we contributed approximately $300 million assistance through UNRRA. The direct assistance consisted of $160.6 million in grant aid (of which $133.5 million was from United States Government sources and $27 million from non-Government sources) and of $55 million in Export-Import Bank loans. The following table gives a breakdown of this assistance. Grant assistance: United States assistance 1944-June 30, 1951 Lend-lease (for military supplies and services, 1944–45_. Yugoslav Emergency Relief Assistance Act of 1950 (food- MDAP food assistance (1950). Voluntary relief agencies-food and consumer goods, as follows: CARE Lutheran World Relief_ Church World Services. MDAP raw materials assistance (1951). Total grant assistance___ Loan assistance: Export-Import Bank-for raw materials, industrial machinery, and (August 1950) food, as follows: September 1949_ March 1950_. August 1950__ Total loan assistance. B. Proposed assistance It is proposed to extend economic and military assistance to Yugoslavia on a grant basis under the Mutual Security Program. A tentative estimate of $60 million has been set for economic assistance required during the current fiscal year from the United States. As yet, no figure has been estimated for military assistance, owing primarily to incomplete information regarding Yugoslav requirements. 1,000,000-pound advance against shipment of timber (1950) 2, 800, 000 B. Proposed assistance In accordance with a program worked out among the United States, British, and French Governments, the United Kingdom, France, and other countries will also provide grant economic assistance to Yugoslavia during the current fiscal year. While the precise amounts of their contributions to this program have not yet been determined, the United Kingdom has announced that its contribution may amount to as much as $28 million. III. ASSISTANCE FROM INTERNATIONAL ORGANIZATIONS UNRRA (portion representing United States share, $299,082,000, 1945-47) International Monetary Fund drawing, secured by $8,000,000 Yugoslav gold (1949) IBRD timber loan (1949) – $480, 000, 000 9, 000, 000 3, 700, 000 In addition, UNICEF, WHO, and FAO have operated or are operating limited programs in Yugoslavia. IBRD loan negotiations The Yugoslav Government has been negotiating with the International Bank for a loan since 1949. It is our understanding that the International Bank and the Yugoslav Government have now agreed upon an investment program of approximately $200 million to be advanced in a series of installments over an extended period. This program includes projects for the development of Yugoslav mineral, forestry, and agricultural resources, and for the development of related industries, over a long-range period. Mr. FOSTER. We have supplied only $50,000,000 out of ECA funds, and that was during the past year. Senator BREWSTER. That is all the grants that you have made? Senator BREWSTER. Do you, as a part of your conduct of the affair, go into the entire question of past, present, and prospective economic aid by ourselves and our allies? Mr. FOSTER. In the historical sense we would have it. We would proceed from here, if we have the additional responsibilities which are contemplated in this bill. Last year the aid was given in terms of food and commodities. It is contemplated here that we will have an ECA mission in Yugoslavia and have a broader program. Senator BREWSTER. Do you intend to disclose the amount which you have tentatively allocated to Yugoslavia? Mr. FOSTER. Yes, sir. Senator BREWSTER. What is that figure. Mr. FOSTER. Sixty million dollars. Senator BREWSTER. Under the new program? Mr. FOSTER. Under the new program. Senator BREWSTER. And what is the character of the aid? Mr. FOSTER. Well, that will be broad economic aid of the type that we have normally supplied to ECA countries. It will be directed toward providing commodities; it will be directed toward providing technical assistance; it will be directed toward providing equipment in order to increase production, and in general will follow the same sort of investigations that we have in the other ECA countries. UNITED KINGDOM AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AID TO YUGOSLAVIA Senator BREWSTER. Is it correct that England or the United Kingdom at this time is allocating $150,000,000 to Yugoslavia? Mr. FOSTER. I do not know that figure, sir. They, I believe, will contribute along with us to this general development program. |