a political and military judgment as to what is required in the interests of the United States. Then from that point on we try to carry it out on a cooperative basis, and a basis which we think will be most apt to succeed. You can assure your constituent that this is not a case where we pass out money on the basis of the eloquence of the pleas the country makes or their lack of a plea and so forth. That this is a policy based upon a decision made in Washington as to what will serve the best interests of the united States.

Mr. PROUTY. Thank you, Mr. Secretary.

Mr. JUDD. Mr. Chairman.

Chairman RICHARDS. We want to go into executive session.

Mr. JUDD. I want to say one thing in open session, namely, that there is nothing in our subcommittee report to which reference was made which suggests or implies that we should not have gone to Geneva. It merely records a serious sag of morale and confidence among our allies in Asia that took place after the first Geneva, before the demonstration at the second Geneva that while we did talk with the Communists, we did not give in to them, did not betray any allies, did not sacrifice any of our principles. We would have been untrue to the facts if we hadn't reported that sag, but there was no criticism of our going to Geneva in the report.

Chairman RICHARDS. Mr. Fulton came to the wrong conclusion from what he read, is that right?

Mr. JUDD. Yes.

Mr. FULTON. I am very glad you put that in the record. I am glad to know that the subcommittee did not really intend to criticize the bipartisan support and the decision of the present administration to participate in the Geneva conferences.

(Whereupon, at 12: 25 p. m., the committee proceeded in executive session.)

EXECUTIVE SESSION

Chairman RICHARDS. Mr. Secretary, we have that defense bill before the House today. There will be not more than three votes against it. It provides about $35 billion for defense. It is accepted without question because the military men, including the President, say it is necessary for defense. This mutual security bill is supposed to be an integral part of the program.

I think the $3 billion military aid should be in the military authorization. It would work exactly as it does now. The Defense Department handles the essentials now. I am afraid it is too late to talk about making a change this year.

Now, we have just a few minutes.

Mr. Secretary, I promised you I would get you away from here at 12:30 and it is 12:27, now.

Could you stretch it to about 10 minutes?

Secretary DULLES. Yes.

Chairman RICHARDS. Now, who wants to ask a question?

Mrs. Kelly.

Mr. VORYS. Something on Yugoslavia.

Mrs. KELLY. Not at this point, but I have plenty to ask on Yugoslavia.

Mr. Secretary, I will ask you about the attitude of the NATO members, as far as this program is concerned. Are they going to live up to their agreements at this point? Is this a two-way street?

Secretary DULLES. As I said in the public portion of this hearing, I think there is a tendency in some of these countries to assume that the change in Russia has already gone to the point where Russia need no longer be considered as a serious threat.

I did not find that feeling on the part of the United Kingdom which has just had a visit from Khrushchev and Bulganin and had some pretty straight talk from them, and who are right up against the threat to the Middle East which very vitally affects the future of the United Kingdom because from the standpoint not only of the oil, but from the standpoint of that foreign exchange position. Even if you could get the oil elsewhere, they could not afford to pay for it. They feel that the Russians are grabbing at the jugular vein.

I would say that the United Kingdom is perhaps stronger in its view that the peril still exists than it has been until recently.

The same is not true with some of the continental countries and of course the Soviet Union is making a particular effort to try to prevent the creation of a German military force.

I referred in public session to the fact that I anticipate that there may be an announcement from the Soviet Union which they will try to make spectacular, indicating that they have practically disarmed.

I would not be surprised at all if they took some of their people out of their land forces and put them into the factories and on the farms where they perhaps need them more.

(Discussion off the record.)

Mrs. KELLY. Well, then may we consider France and Italy. You have many conflicts with them.

Secretary DULLES. Of course, the French are having trouble in North Africa and that has drained off a considerable part of the forces in the area. Of course, they point to the fact that under the original NATO Treaty, Algeria was made a part of the North Atlantic Treaty area, so they say their troops are still in the area that was deemed vital for defense, including the area of the North Atlantic Treaty.

That is technically and indeed substantively correct. If that area should fall into Communist control, Europe could be attacked from the flanks in North Africa, or endangered from the flanks in North Africa, just as well as it could be by frontal attack from the East.

In Italy, I think that the Government as is now constituted is strong and vigorous and is desirous of carrying out its commitments.

I do not think there is any reason to think Italy would not carry out its commitments.

(Discussion off the record.)

Secretary DULLES. Those two forces are certainly at work, and while they do not impair as yet the military efficacy of NATO, I do think they suggest if you are going to maintain the unity of Western Europe, you have to do some relying upon something that is more solid, lasting, and dependable than merely fear.

Mr. JUDD. Will the gentlewoman yield?

Mrs. KELLY. I do not believe I have any more time.
Mr. JUDD. It follows right on that point.

You agree that this Soviet peace offensive, as far as some of the countries are concerned, is succeeding in softening their resolution, is that right?

Secretary DULLES. I would think so.

Of course, they think we are wrong in mistrusting what is going on. Only the future can tell, and I do not believe even the future can tell who would be right or wrong. The future can tell us if we are wrong. If the future works out all right, they will claim that they were right and we will claim we were right and nobody can decide.

Mr. JUDD. You said the effect of the Bulganin and Khrushchev visit to England had, if anything, the effect of strengthening the resolution of the British leaders.

Did it have the same effect on the people?

Secretary DULLES. I think it did.

Mr. JUDD. I am glad to hear that. That has been the soft spot.

Secretary DULLES. Mr. Gaitskell will be here next Monday and I will have a chance to talk directly with him, but I think the impact upon the laboring people of England was that they were impressed. Mr. JUDD. We said in our study mission report:

But the fact remains however, that to many peoples of the Middle and Far East the Communist pose of friendly cooperation and assistance in the economic realm has many attractions.

(Discussion off the record.)

Chairman RICHARDS. You had another question, Mrs. Kelly?

Mrs. KELLY. That answer, Mr. Chairman and Mr. Secretary, seems to be contradictory to your statement on page 2, where the NATO ministers said:

We agree that these changes were on the whole encouraging.

If that is the fact, they are not encouraging.

Mr. FULTON. But overall, these current world changes are encouraging.

Mr. JUDD. They thought they were encouraging. That is what he just said. Their position softened a certain amount.

(Discussion off the record.)

Mr. JUDD. Mr. Chairman, I would like to ask the Secretary a question about Ceylon.

I have a letter from a friend in Ceylon who raises a question as to whether we should pursue, with the vigor that he said our representatives are displaying, efforts to develop our program there. He wrote it after the election.

He writes, for example:

These last few weeks have been spent in intensive surveys by specialists in the fields of agriculture, industry, transportation, housing, health

And so on.

Now, it seems to me this is a case where we ought to go slowly at first. We saw half a dozen programs around the world where we got into such things as housing. That is so complicated that it seems to me it is one of the things we could do the third or fourth year. Why start out a program of aid by telling them how to rebuild their houses? We did that in Egypt and alienated people.

This is the kind of zeal that bothers me. After criticism, again and again and again, about starting out in a country with too many projects

now, our people are over there pushing vigorously to get this big program in operation.

(Discussion off the record.)

Mr. JUDD. Why don't we put our toes into the water before we get clear up to our necks?

I wish you would have somebody in the Department look into that a little bit.

Chairman RICHARDS. Mr. Secretary, I know you have to go, but while we are considering this matter of making a big survey, has the Department firmed up what they want to do about appointing a new commission, and whether you want to include members of the legislative branch, or what?

Secretary DULLES. We have not firmed up our position there, as far as I know.

I have been pretty busy since I got back, but I do not think the position has been firmed up.

Chairman RICHARDS. I think we should have some idea about it before we carry this bill to the floor. It may be necessary for us to do something about it in this bill; I do not know.

Mr.VORYS. That is a controversial item within this committee.

Certainly, if we do not do something in this committee, there are already presented many amendments, some of which will be submitted, even in the committee, to authorize commissions.

Chairman RICHARDS. Now, I have to get the Secretary away. He has an engagement.

(Discussion off the record.)

Chairman RICHARDS. Thank you, Mr. Secretary.

The committee stands adjourned.

(Whereupon, at 12: 50 p. m., the committee adjourned to reconvene at the call of the chairman.)

APPENDIX

(The following statements have been submitted for inclusion in the record:)

NATIONAL ASSOCIATION OF MANUFACTURERS,

New York, N. Y., March 21, 1956.

Hon. JAMES P. RICHARDS,

Chairman, Foreign Affairs Committee,

United States House of Representatives, Washington, D. C.

DEAR MR. RICHARDS: We note with interest that the Foreign Affairs Committee is holding hearings on the President's foreign aid recommendations, and request the privilege of placing before the committee the views of this association as established by action of our board of directors February 10, 1956.

Our position with respect to foreign aid is as follows:

"1.The security and well-being of the people of the United States is the objective of our foreign-aid policy.

"2. That objective will be furthered by cooperation with other nations of the free world similarly committed to peace and security for their peoples.

"3. It is in our self-interest to assist cooperating nations to gain positions of strength, to protect themselves, and to join us in presenting a united front against subversion and aggression.

"4. In the furtherance of such objectives, the United States program of foreign aid, despite past mistakes and waste, has been sufficiently successful to warrant its continuance so long as it contributes to our direct interest. Under no circumstances should we be led into a competitive effort to buy the support of foreign countries by increasing our foreign-aid grants beyond that point. creasing effort should be made to improve the effectiveness of the administration of the entire foreign-aid program.

In

"5. Our foreign-aid policy should be completely integrated. Assistance directly related to defense should be dictated by military considerations and should lie within the province of the Department of Defense. Aid unrelated directly to defense should properly be placed under the International Cooperation Administration as a part of the State Department which is primarily responsible for our foreign policy.

"6. In view of the degree of worldwide recovery and prosperity since the initiation of the foreign-aid program, progressive reductions should be effected in foreign-aid expenditures unrelated directly to defense and should be wholly eliminated in the case of prosperous countries.

"7. Our continuing policy should be to foster free competitive enterprise by private investment and private activity. In view of the increasing availability of funds from private sources as well as from the World Bank-and its affiliated International Finance Corporation-and the Export-Import Bank, economie assistance funds appropriated to the administering agency, the International Cooperation Administration, should not be used to finance industrialization abroad.

"8. Opportunity should be afforded the free world for a full exchange of information and views in fields of economic and cultural experience. Technical assistance funds can be effectively utilized to this end if programs are established with a view of achieving practical and appraisable results. Foreign participants should, in every case, assume a share of the expenses of participation."

This position was developed by the association's international relations committee comprised of 210 members, many of them with extensive experience in the fields of international trade and investment. It was approved unanimously by the association board, with more than 100 in attendance, representing over 20,000 United States manufacturers broadly distributed as to geographical areas as well as to size and nature of industry.