For example, let's take the military. We heard various estimates that this country could furnish so many divisions, that country so many divisions, and so on, yet there did not seem to be any accurate estimates of what they would contribute. Part of the financial figures seemed to be based on the expectation that we were to equip so many divisions here and so many divisions there. That seemed to me to be a variable factor so far as the number of divisions to be equipped in a certain time was concerned.

The CHAIRMAN. May I intervene there? I want to suggest that after General Marshall has testified, it is our plan to hold executive hearings. It seems to me that some of these matters, like the Senator is referring to, ought to be handled in executive session, because we do not want to publish to the world just how many divisions and just how much money we are going to spend on each country and all that. It seems to me those things ought to be properly dealt with in executive session. I am not trying to cut you off, Senator Smith. I am making that observation.

Senator SMITH of New Jersey. I am not asking that question at all-how many divisions there are. I am just asking whether the procedure to get at the figures was based on the estimates of the needs of whatever divisions might be developed in the course of negotiations with General Eisenhower and the various countries.

Secretary ACHESON. That is correct, Senator. There is a program which has been worked out and worked out in detail by the military authorities, and which has been reviewed by General Eisenhower, in view of his knowledge on the spot. That calls for the raising of certain divisions and certain forces other than ground forces by particular countries by certain target dates.

Now, the needs of those units can be ascertained with great accuracy. You know exactly what each particular unit needs and you know what can under present facilities be provided in Europe and can ascertain what has to be provided somewhere else. When you come to doing all of that you find that there is still a gap in forces. There is something more which is needed. That is now being worked on by the standing group and General Eisenhower.

What this program is concerned with is in equipping those forces which can be raised by the time the program is capable of delivering them, and I am sure that General Kibler, General Marshall, General Bradley, and others can lay this out for you in very precise detail.

Senator SMITH of New Jersey. I assumed that must be the procedure, in view of our conversation, although nobody there of course can give us those figures. They all said they came here. I am sure we can get those from those gentlemen.

DURATION AND SIZE OF THE PROGRAM

Now, when you talk about 1953 and 1954 and suggest that the figure will be a similar amount, it contemplates, then, an over-all bill of possibly 24 or 25 billion dollars for this set-up of our European strength-the Atlantic Pact strength. Is that a fair statement? Secretary ACHESON. That is about it.

Senator SMITH of New Jersey. Many people are asking me, "Well, is this the end, or are we going to have some more?" We ought to

face the reality that we will have to go ahead until we get to a point where, as I understood in talking with General Eisenhower and from your statement here this morning, we will have put in enough funds to develop the productive capacity for these people to take care of themselves and produce their own equipment for further development of their armed forces. Is that a fair statement?

Secretary ACHESON. That is the expectation and the hope. I should rather have the people who know more about the actual capacity in Europe tell you to the best of their judgment when that will come and to what extent it will come.

Senator SMITH of New Jersey. I am just trying to get in my own mind a picture of the approach. So, 1953 and 1954 seem to be the key years, added to fiscal 1952, to bring about this result.

Secretary ACHESON. I think your approach is quite correct.

UNEXPENDED BALANCES FROM PREVIOUS YEARS

Senator SMITH of New Jersey. Mr. Secretary, this bill here, as I read it, provides for the use of certain unexpened balances under several items. Doesn't that mean it is in addition to the $8,500,000,000 we are contemplating, adding to that amount and unexpended balances so that the over-all figure would be $8,500,000,000 plus the expenditure of these unexpended balances?

Secretary ACHESON. Mr. Coolidge has just informed me that the unspent balances have to a very large extent-over 90 percent—been obligated. Therefore the funds should remain available in order to make payments under contracts which have already been made. All of the funds have been programed so that the program here represents new requirements of $8,500,000,000, but the funds already appropriated

Senator SMITH of New Jersey. They have been definitely appropriated and not merely authorized?

Secretary ACHESON. I believe that is correct.

OCCUPATION COSTS IN GERMANY AND JAPAN

Senator SMITH of New Jersey. My next question is this: We have occupation and Japan and Germany, and of course these figures do not take care of those budgets for those two areas where we are in military occupation. Is that correct?

Secretary ACHESON. That is right. The civil part of the expenses of our operations in Germany is included in the State Department appropriations; that is, the direct governmental expenses, and the economic assistance is included in this bill.

Insofar as Japan is concerned, that has been carried in the military budget.

Senator SMITH of New Jersey. Would the Austrian occupation be the same? Are there any other such areas?

Secretary ACHESON. The economic help to Austria, as in the case of Germany, is in this bill. The actual expenses of the troops are in the military budget, and the expenses of the civil side of the administration are in the State Department budget.

Senator SMITH of New Jersey. I am just trying to get the answer to a question that is put to me frequently. Does this $8,500,000,000 cover our entire foreign aid for fiscal 1952?

Secretary ACHESON. I think in a broad sense, and with the exception of Japan, which I have pointed out in my statement, the answer is, it does.

Senator SMITH of New Jersey. I think that will help clarify that.

ADMINISTRATION OF THE PROGRAM

Now, on this question of administration, which Senator Lodge raised, I will just briefly refer to that. It has been suggested that there could be an administrator set up to sort of coordinate the whole business and, as Senator Lodge said, to heckle the military department and heckle the economic department to see that the contracts came through and the operations were effective. I will explore that with. this committee of which President Conant of Harvard is chairmanyou are probably familiar with that-the so-called Committee on the Present Danger. They have had some recommendations to make to give more effective action. I do not know whether you are familiar with that or not.

Secretary ACHESON. I am familiar with that.

Senator SMITH of New Jersey. Do you approve? Or are you opposed to that recommendation?

Secretary ACHESON. I should not join in it.

Senator SMITH of New Jersey. Would you oppose it if it were proposed by others?

Secretary ACHESON. I think I should.

Senator SMITH of New Jersey. You would be willing to discuss it. in a friendly way if it came up before the committee? Secretary ACHESON. Most certainly.

Senator SMITH of New Jersey. That is all.
The CHAIRMAN. Senator Hickenlooper?

PRESENT ADMINISTRATIVE DIFFICULTIES

Senator HICKENLOOPER. Mr. Secretary, I want to join in the expression that Senator Lodge made a moment ago about the confusion that exists in Europe. I don't want to emphasize that condition as a destructive thing, necessarily, but I ran across the same criticism on the part of the people at the working levels in Europe, and I received several illustrations. For instance, one illustration where eight reference steps were made in a very important matter to, I think, four different agencies, with an interminable loss of time and duplication of investigations and so on which was very criticizable, at least on the part of the working level people.

I also want to verify what he suggested: That we have a substantial number of very able people in Europe and other places, so far as their individual ability is concerned. But there is, according to these reports I got in certain areas, a sense of frustration at loss of time, which comes perhaps from a division of authority and the lack of concentration in someone-you can call him an expediter or agitator or whatever you want to call him, someone with authority-so that you don't have authority split into several different heads with all the resultant delay.

I do not know just what the solution of that matter is, but I did come away with the idea that it could be materially corrected and helped for efficiency and general satisfaction at the working level.

Then, another observation that I would like to make.

The CHAIRMAN. What do you mean by "the working level" over there? What is this working level that you are talking about?

Senator HICKENLOOPER. The people who develop these things and attempt to put them into operation on the ground. The top people will not or did not necessarily criticize; the chief officials of these departments didn't mention it, but the folks down a little below the top do have on occasion the feeling of frustration and delay. And they are devoting their time sincerely and with ability to these jobs. I am not criticizing them in any way.

MUTUAL AID ASPECTS OF PROGRAM

But the next observation I would like to make, just for your information as to what effect it had on me, is this: On the question of this mutual-aid philosophy, I don't mean this as destructive criticism, but I do feel that the American people are entitled to the facts. I did not come away with the idea that this is mutual aid at all up to the present time, and I will tell you why. Every dollar of American preparation is being paid for by the United States in this country, every nickel of it. In Europe, and I won't mention the exact percentages but I will say that from a third to 50 percent, varying with the country, of all their own preparation for their own defense is also paid for by the United States.

So that so far as mutual aid is concerned, outside of one item of $6 million which can be calculated as aid or otherwise-it wasn't anything out of pocket, but it was calculated as having a value of $6,000,000 that is the only contribution of any European country to the mutual aid of Europe outside of what they were doing for the protection of their own domicile or homestead or land. So that I feel that it is a little deceptive to say that this is mutual aid when the mutuality seems to be all on our side, and the contributions of the European countries up to this point are only to the extent of a partial contribution to their own partícular security.

Now, that does not mean that I am against this program. I don't mean that at all. But I simply can't go out and tell the people that we are in a mutual-aid program in which we are getting any mutual aid from these people at all, unless it be the privilege of pouring money in, and troops to defend them. If they are permitting us to do that, that may be mutual aid. Nevertheless I think the program has merit and I think progress is being made, but there is a long way to go yet before we begin to receive mutual material aid from any of these countries over and beyond the absolute necessity for their own defense.

POSSIBLE IMPORT FEES ON AID

I would like to ask this question: It was reported that the French either are now or have been charging us import duties or exactions or fees on equipment which we are sending into France to contribute to the mutual aid program. Do you know anything about that?

Secretary ACHESON. No, sir; I have not heard of that. I will look into it.

(The following information was supplied for the record :)

Hon. Senator TOM CONNALLY,

United States Senate.

AUGUST 8, 1951.

MY DEAR SENATOR CONNALLY: During the. July 26 session of your committee's hearings on the proposed Mutual Security Program, Senator Hickenlooper asked Secretary Acheson about certain reports to the effect that the French are charging us import duties, exactions or fees on equipment which the United States Government is sending to France in connection with the Mutual Security Program. Secretary Acheson has asked me to look into this matter and report to the committee.

The Department of State knows of no instance in which customs duties or other taxes or fees have been levied either on NDAP shipments to France or on equipment imported into metropolitan France for the construction of bases. Attention is directed to the first paragraph of Annex C of the Mutual Defense Assistance Agreement between the United States and France as signed and released on January 27, 1950. This paragraph reads as follows:

"The representatives of the Government of the Republic of France have advised the representatives of the Government of the United States of America that the Government of France has decided to authorize in the application of Article 189 of the Customs Code of the Republic of France the importation free of duty and taxes of equipment and materials which may in the future be imported into France under the Mutual Defense Assistance Agreement. This exemption from customs duties and internal taxation upon the importation of such equipment and materials shall relate only to deliveries effected to the Government of France by the Government of the United States of America, of grant aid furnished under the above-mentioned Agreement."

With regard to the information that appeared in the press on June 9, 1951, to the effect that, when General Bradley was in Paris, he was alleged to have complained that France is exacting duties on equipment being imported to France to construct American bases, the Department of State and the Department of Defense at that time pointed out that the reports of General Bradley's remarks were without foundation. The Departments added that in no case did the United States Government envisage paying duty on base equipment and that these views are known to the French.

It is possible that the reports to which Senator Hickenlooper alluded had reference to Morocco. On the hypothesis that this may be the case, I am enclosing a separate secret statement on this subject, which may be made available to all members of the committee but which I will ask you not to make public for security reasons.

I trust the information submitted herewith will prove satisfactory to Senator Hickenlooper and the committee.

Sincerely yours,

CHARLES A. COOLIDGE,

Deputy Director, International Security Affairs. Senator HICKENLOOPER. I don't say that is true. The report was made to me. It may have been stapped within the last few weeks, but it was reported that they had been charging us import fees or exactions of some sort on the equipment which we were sending in for their defense.

AID TO CHINA

Now, I noticed in your statement, in your general reference to the allocation of moneys over the world that various countries are mentioned, including the island of Formosa, but no mention is made of China; that is, the mainland of China. Does that indicate an abandonment of the mainland of China so far as the free nations and Mutual Assistance Program are concerned?

Secretary ACHESON. No, Senator. I think this is to indicate that the bill does not carry any funds to be expended on the mainland of China; because that cannot be done.