Dr. BENNETT. Coptic Christian. The Emperor is a very devout Christian. I found him one of the most intelligent and competent men I have run into anywhere.

Senator FULBRIGHT. What kind of city is the capital? Is it modern in any way?

Dr. BENNETT. It is a mixture of ancient and new. The hotel there is modern. The Bank of Ethiopia, which is the state bank and the bank of issue-he has just one bank, the State Bank of Etiopia, with branches over the country, is an excellent bank. He came to the United States to get a banker, and he got a Georgia banker, a man who had been with our Treasury Department, a man who has been with General Clay in the reestablishing of a firm currency in West Germany, and who was one of the Governors of the World Bank. He is one of the most competent men I have run into anywhere, and he runs the banking system of Ethiopia.

Senator FULBRIGHT. What is the population?

Dr. BENNETT. The population is 7 or 8 million people. The area of the country, I said a moment ago was small. I take that back. It is about the geographical area of Texas and Oklahoma combined, and that makes quite an empire all its own.

Senator MCMAHON. That is 40 times bigger than Rhode Island. Senator FULBRIGHT. That's bigger than Texas.

Their agricultural procedures are very primitive, I take it?

Dr. BENNETT. Quite primitive, but people want to learn.

Senator FULBRIGHT. They do? They cooperate with your people as well as the Indians?

Dr. BENNETT. Yes, sir.

Senator GREEN. If there are no more questions, Dr. Bennett, have you anything more you want to say to us?

Dr. BENNETT. I have only this to say, that I would like to express my deep appreciation for the courtesies extended to me and my associates. I am sorry we cannot answer all the questions. I would like to say to you that I have appeared before two committees of Congress, the Foreign Affairs Committee of the House last week, and this is the first time in my life I have appeared before a committee of the United States Senate, and you have been so kind and gracious and helpful I want you to know that I personally, on my behalf and that of my associates, want to express appreciation.

Senator GREEN. Let us thank you and your colleagues for all the information you have given us. You have answered all our questions, some of which were repetitious and some of which were far from the point.

Senator FULBRIGHT. Before he goes I want to make one suggestion or request, that he or Mr. Fryer supply us, in simplified form, with this matter of how much money you have projected in your program under this bill, so that we will have it definitely.

(Classified information was furnished the committee.)

Dr. BENNETT. We will be glad to do that.

Senator SMITH of New Jersey. I asked Horace Smith if he would take these figures and separate the military, the economic, and. point 4 so we could get a clear breakdown of the three things.

Senator FULBRIGHT. I want to be able to compare the point 4 money and the ECA. I would like to have what has been done this past year, so we can show the build-up.

(Classified information was supplied in this point.)

Dr. BENNETT. We will be glad to do that, and our program is small, but we feel like it is doing a full share in bringing about better understanding among our friends, our best customers.

Senator SMITH of New Jersey. Did you ever hear the expression, "a little leaven at the lump"?

Senator FULBRIGHT. I think you are on the right track. I think it fits in well with the exchange-of-persons program which can help your program.

Dr. BENNETT. It can help immeasurably.

Senator FULBRIGHT. I think the two are the most efficient use of the money.

Senator GREEN. (acting chairman). The committee will meet tomorrow morning at 10 o'clock, not at 10:30.

(Whereupon, at 2: 20 p. m. a recess was taken until the following day Tuesday, August 7, 1951, at 10 a. m.)

MUTUAL SECURITY ACT OF 1951

TUESDAY, AUGUST 7, 1951

UNITED STATES SENATE,

COMMITTEE ON FOREIGN RELATIONS,
COMMITTEE ON THE ARMED SERVICES,

EXECUTIVE SESSION

Washington, D. C.

The committees met, pursuant to adjournment on Monday, August 6, 1951, in the Foreign Relations Committee room, United States Capitol, Senator Tom Connally, chairman of the Foreign Relations Committee, presiding.

Present from the Foreign Relations Committee: Senators Connally, George, Green, McMahon, Fulbright, Sparkman, Gillette, Wiley, Smith of New Jersey, Hickenlooper, Lodge, and Brewster.

Present from the Armed Services Committee: Senators Hunt, Bridges, Saltonstall, Cain, and Knowland.

Present from the Foreign Relations Committee staff: Dr. Wilcox, Mr. O'Day, Dr. Kalijarvi, and Mr. Holt.

Present from the Armed Services Committee staff: Gen. Verne E. Mudge.

Present from the Appropriations Committee staff: Mr. Everard H. Smith.

Also present: Ben H. Brown, Jr., Deputy Assistant to Secretary of State for Congressional Relations; James Cooley, ECA; F. A. Allan, ECA; Ruth M. Briggs, Department of Defense; Samuel Efron, Office of the Secretary of Defense.

STATEMENT OF THOMAS D. CABOT, DIRECTOR, INTERNATIONAL SECURITY AFFAIRS, ACCOMPANIED BY CHARLES COOLIDGE

The CHAIRMAN. Mr. Cabot, you have called on us to be heard on the administration of the program; is that right?

Mr. CABOT. There were three points I would like to cover with you this morning. I thought if I had your permission I would file a statement on the changes in the legislation; why we have one bill for mutual security, and what changes were necessary in order to have one bill.

(The prepared statement by Mr. Cabot follows:)

STATEMENT OF THOMAS D. CABOT, DIRECTOR OF INTERNATIONAL SECURITY AFFAIRS

I am here this morning to testify on two major aspects of the proposed mutual security bill.

First, I have a prepared statement summarizing the legislative proposals which the administration has made. This statement sets forth the reasons why

one single bill was considered more desirable than several separate bills. It also explains the amendments to existing legislation which are proposed, and which experience has indicated are necessary if the United States objectives of the program are to be achieved most effectively. With the committee's consent, I'll not read this statement word for word, but will cover its main provisions briefly in my oral remarks.

Second, I should like to describe the present organization with which we propose to administer the program, and the factors which should control the decision on the type of organization need to administer the program.

Before I start, however, I have been asked by the Secretary of State to make a statement to you about the figure of $25,000,000,000 as the cost of our program for this and the two following fiscal years.

I. SUMMARY OF LEGISLATIVE PROPOSALS

We recommend that in authorizing the program, you make the maximum possible use of the authority which is contained in those existing foreign-aid laws that have already stood the practical tests of experience. Therefore, in lieu of drafting an entirely new statute, we suggest, that it would be wise to continue to employ the Mutual Defense Assistance Act, the Economic Cooperation Act, the Act for International Development, and other similar laws, amending them to the extent necessary in order to adapt them to changed circumstances and so as to weld them firmly together into a single legislative framework. We propose that Congress, by amending prior legislation and writing appropriate new provisions, deal with a series of substantive problems for which existing authority provides no adequate solution.

The entire program has the primary purpose of providing resources which other free nations do not have and which they require in order to resist Soviet imperialism. The kinds and amounts of resources required differ markedly from region to region, and from country to country. Such differences merely reflect variations in the form of the threat and in the capabilities of different peoples, with different resources and skills, to meet the threat which imperils them. In some nations the fundamental need is immediate military strength; in others, the kind of social, political, and economic stability that will make its society less open to Communist subversion; and in the majority, some combination of all of these. The situation in a particular country may therefore require one or more of the following: finished military equipment which can be immediately used by its forces: commodities which are necessary to sustain its underlying economy; raw materials or machinery which are essential to maximize local military production; technical assistance to increase industrial productivity, or, as in the underdeveloped areas, to open horizons for new and improved social, health, and economic conditions; relief supplies to meet immediate and crucial emergency conditions such as those which have existed among the Palestinian refugees and which are to be expected in Korea; training in modern military techniques and weapons; or food, clothing, and fuel to support military forces which are necessarily larger than those which the local economy can possibly maintain without outside help.

It is obvious that in any country where two or more different forms of resources are required, it would be folly to make judgments with respect to one form of aid without reference to the others and without seeking that combination of all forms of aid which will best support our objectives in that country. For another thing, it must also be clear, given a country's requirements and its maximum capabilities in terms of materials, facilities, and manpower, that failure to provide resources in one form frequently merely increases, sometimes very disproportionately, the amount of resources that must be provided in another form. For example, a reduction in the economic aid proposed for Europe would necessitate over the long term a substantial increase in the military equipment program, an increase which might greatly exceed the amount of the reduction. Conversely, a significant cut-back in the military equipment program would require a step-up in the economic program. The real task, therefore, is to strike a proper balance between the two so that, for a specific amount of total assisance, we achieve the largest increment in total European strength. This cannot be done if we separate each form of aid into separate isolated compartments. Our objective everywhere should be to capitalize, by a careful selection of types of aid and techniques, on the particular capabilities of a country with the minimum net demand on our own wealth.

It is essential, in selecting the forms of aid to be provided, and in the allocation of different types of resources between United States requirements and com

peting foreign claimants, that we undertake these tasks against the background of world-wide plans and through machinery which assures that the available quantities of each type of resource will be employed so as to produce the largest possible increment in the security of the free world. These things will be difficult to do under any circumstances, and they will patently be impossible of accomplishment if we treat this program as a series of unrelated and separately administered undertakings, each devoted to providing one particular type of resource for only one segment of our total objective. Our efforts to create military strength in critical foreign areas, and particularly in the North Atlantic Treaty area, are part and parcel of our own national security program. This relationship is also close in the case of other forms of aid because we are dealing with personnel, materials, and equipment for which combined foreign and domestic demands exceed availabilities. Consequently, sound judgments as to those domestic and foreign programs which should be emphasized presuppose a broad examination of our total security requirements rather than the kind of disjointed and parochial approach which is inevitable if each foreign-aid project is considered in isolation.

A final advantage of the single program is the opportunity which it affords to the executive branch, to the Congress, and to the American public to gain a clear appreciation of the full scope of our foreign-aid activities.

A major question concerns the extent to which we should rely upon existing legislative authority. The preparation of wholly new legislation is a long and complicated affair in which it is difficult, in spite of the most able and meticulous draftsmanship, to deal with all the problems which require treatment, or to do so in a way that will obviate the subsequent development of major issues of interpretation. Consequently, if we can, by simple amendments, use existing laws for the Mutual Security Program, such a course would have many advantages. Their scope and meaning are clear and understood by all concerned; they have, in general, met the test of experience; and a large number of people in this country and abroad are familiar with the procedures which have been developed for their administration. Moreover, perhaps 50 rather elaborate international agreements have been negotiated under the authority of these laws and have proven to be satisfactory instruments for our dealings with other countries.

I believe that a partial inventory at this point of the legislative amendments which we propose will provide a useful background during the remainder of these hearings. They fall into three principal classes: (1) Those which give concrete recognition to the fact that the Mutual Security Program is a single program with several interdependent and mutually supporting elements; (2) those which increase the geographic coverage of the Mutual Defense Assistance Act, the Economic Cooperation Act, or the Act for International Development; and (3) those which amend provisions in the foregoing laws which are not entirely adequate to meet a number of current problems.

We have prepared a new statement of purposes which embraces the total objectives of the Mutual Security Program and which modifies, to the extent that they are inconsistent therewith, the purposes originally set forth in the Mutual Defense Assistance Act, the Economic Cooperation Act, and the Act for International Development. The new statement emphasizes the primary need for strengthening the collective defenses of the free world and the importance of developing the resources of the free countries, both as a foundation for military strength and in order to increase their ability to resist internal aggression. It recognizes that, in Europe, economic recovery need no longer be given a priority over efforts to increase military strength.

The new legislation should also recognize that no one can foretell the exact course of events during the next 12 months and that the pattern of assistance which we are presently proposing may therefore need to be somewhat modified if it is to be responsive to changing requirements. Consequently, there should be authority to utilize a small portion of the funds which may be authorized for a particular type of assistance in one geographic area for the purpose of increasing the amount of the same form of assistance in some other part of the world. In the fluid state of current affairs, new emergencies may develop, and we must be in a position to respond to them quickly and forcefully. Experience with the Mutual Defense Assistance Act has already demonstrated the importance of this type of flexibility. Specifically, we suggest that not to exceed 10 percent of the amount made available by Congress for a specific form of assistance in any one region should be available to provide the same form of assistance in other regions.