Executive branch estimates as set forth in table 1 indicate that potentialities exist for the maximum obligation in fiscal year 1951 of about $2,480,000,000 in funds for the additional production of military equipment. The estimated composition of the obligations, which under these conditions might be incurred by the western European governments in fiscal year 1951 is also given in table 1, below. TABLE 1.-Estimated obligations by major categories of military equipment, including components thereof, which might be entered into by the western European countries in fiscal year 1951 Category of military equipment, including components thereof: Weapons Ammunition and explosives. General service vehicles___ Combat vehicles___ Electronics and communications equipment_ Ships and naval items_. Aircraft. Engineer items_ Miscellaneous_ Total__ Obligations entered into $250, 000, 000 415, 000, 000 169, 000, 000 577, 000, 000 134, 000, 000 182, 000, 000 607, 000, 000 74, 000, 000 72, 000, 000 2, 480, 000, 000 In order to support the increased call on the gross resources of the western European countries for increased defense efforts, it is necessary both to supplement their resources in certain critical items, such as machine tools, and to overcome the limitations on economic and financial resources in certain countries, such as Italy, so that a full contribution to the common defense effort can be made. The limitations on economic and financial resources become manifest in many forms. As an illustration, unemployed facilities and manpower might be readily utilized for increased productive efforts in military equipment. Such utilization, however, will result in increased payments for wages and materials which in time generate an increased demand for consumer goods and imports. Although it is recognized that controls may be required to direct the utilization of resources for military production, nevertheless, allowances should be made for increased demands for goods of a general economic character. Provision should be made to support a portion of these requirements. This kind of requirement can be met by using mutual defense assistance program funds to procure directly military equipment. The proceeds of such transactions might then be utilized by the producing country both to meet general economic requirements and to develop additional productive capacity for defense. Our estimates, based upon an illustrative program for maximum achievement, indicate that the amount of mutual defense assistance program assistance which should be available to support the placement of 2.480 million dollars of new procurement contracts for military equipment and the entering into production thereon in fiscal year 1951 is 475 million dollars, of which 75 million dollars has been included in the request for 1,222.5 million dollars of new funds for the fiscal year 1951 mutual defense assistance program authorized by the Congress. Accordingly, the net amount of new funds requested in the supplemental mutual defense assistance program to sustain the increase in a further effort in the production of military equipment on the part of the western European countries is $400,000,000. As indicated above, this estimate is based on the assumption that ECA economic assistance of about 2.5 billion dollars in new funds will be available in fiscal year 1951 to provide economic support to the western European countries. The economic assistance furnished by ECA, taken in conjunction with the assistance to be furnished under the mutual defense assistance program, should provide the resources needed to enable the western European countries to build up their forces and to launch an additional military equipment production program of several times the amount requested in fiscal year 1951. E. METHODS OF FURNISHING MUTUAL DEFENSE ASSISTANCE PROGRAM ASSISTANCE Our illustrative program of increased production of military equipment by the western European countries in fiscal year 1951 contemplates the employment of two broad methods of providing assistance to sustain both the increased defense efforts in troop support and in production of military equipment. 69887-50-pt. 2-24 The first method of providing MDAP assistance will follow the existing pattern of action by furnishing resources in the form of raw materials, components, machine tools and productive equipment, and technical assistance on a project basis. However, in furnishing such assistance on a project basis, the executive branch proposes to modify its present policies in order to finance procurement from sources other than the United States and Canada. The executive branch proposes to finance procurement of materials, when considered necessary to sustain military equipment production programs, from the Western Hemisphere, and other sources of supply within Europe. The growing need for extending the scope and area of procurement of needed materials arises from three basic considerations: (1) the necessity for minimizing the drain on critical supplies of materials from the United States; (2) the necessity for making most efficient use of the economic resources of the free world, thereby obtaining defense most quickly and cheaply; and (3) experience indicates that the potential volume of transfers of resources and equipment from one country to another cannot be realized without supplementary dollar assistance. A country such as Italy does not have the economic and financial resources available to provide materials on a grant basis to other European North Atlantic Treaty countries without obtaining a partial offset in the form of assistance requiring the expenditure of dollars. Again, the basic purpose of utilizing MDAP funds to provide assistance in the form of materials from sources other than the United States will be to harness the effective productive capacity of the entire western European economy and of other friendly areas in order to increase the defensive strength of the west. The second broad method of providing MDAP assistance will include direct purchases of military equipment. Such military equipment may be used in the country producing it, or may be transferred to a third country. In some cases, it would be practical to procure in a country urgently needed items for its military forces, since production could not be financed without some external assistance. In some cases efficient production of a military item requires concentration of production in a country and transfer of end products to other participating countries. For example, mine sweepers are needed by several European NAT countries and can be produced efficiently in European shipyards. Arrangements might be made for the production of several score of such vessels with the costs of production being shared by the producing country, the other countries receiving some of the mine sweepers, and by the United States. Components for end items of military equipment might be purchased within Europe for transfer to other European NAT countries. It is contemplated that such arrangements for direct purchases will be on a government to government basis, be held to a simple and practical working basis, and where possible carried out in such a manner as to insure that both the producing and recipient countries have an interest in the project so that quality, quantity, delivery, and other agreed specifications are met. On the basis of the illustrative program of $2,480,000,000 of additional orders which might be placed in fiscal year 1951 for military-equipment production, it is estimated that the $475,000,000 (of which $75,000,000 is budgeted in the fiscal year 1951 MDAP appropriation request) would be employed as follows: First general method: AMP financing of materials, components, production equipment and technical assistance, including patents and royalties payable in dollars, and packing, handling and transportation payable in dollars__ Second general method: Direct purchases of military equipment and components in Western European countries_ Total_ Less amount of funds requested in the fiscal year 1951 appropriations__. $321, 000, 000+ 153, 000, 000+ 475, 000, 000 75, 000, 000 Funds requested in the supplemental fiscal year 1951 appro- F. ESTIMATED COMPOSITION OF ASSISTANCE The estimated composition of assistance to be furnished under the illustrative program of expanded military equipment production in western European countries will vary according to the general method employed to furnish such assistance, as indicated below: (a) Illustrative composition of assistance to be furnished directly to support the additional production projects of military equipment undertaken in fiscal year 1951: Carbon steel_ Alloy steel.. Aluminum Copper- Chromite. Nickel Tungsten. Zinc-- $27, 200, 000 6, 000, 000 3, 000, 000 23, 200, 000 300,000 1, 000, 000 400, 000 6, 100, 000 50, 000, 000 Miscellaneous raw and processed materials. Machine tools and production equipment_ Technical assistance, patents and royalties payable in dollars.. Total__ (b) Illustrative composition of direct purchases of military equipment and components from the western European countries in fiscal year 1951: G. APPRAISAL OF POSSIBILITIES OF ACHIEVING THE TARGET ESTIMATES While it is believed that the maximum program of increased production of military equipment in the western European countries which could be initiated in fiscal year 1951 is of the order of magnitude of $2,480,000,000, it should be recognized that the illustrative program outlined above represents a vast undertaking on the part of the European countries. The necessity for evaluating the financial and economic risks involved, inevitable delays in determining specifications and placing procurement contracts, and the difficulty of converting vital sectors of industry to defensive production, will hamper and impede the initiation of a program of the size contemplated. It should be recognized that these and other factors may retard the full development of such a program. Many of these factors are beyond the control of the western European countries, particularly the possible rise in raw material prices and the growing scarcity of essential materials and components. The support of this and future production programs in years beyond fiscal year 1951 will, of course, be related to developments, particularly as to the amount and kind of resources which the western European countries can make available for increased defense efforts. If, for any reason, it should be found impractical for the western European countries to initiate production programs in the approximate size contemplated, or estimates of assistance requirements are too high, the funds could be made available for the procurement of military equipment in the United States. Conversely, if the estimated requirements for assistance to support military-equipment production in western Europe are found to be greater than those herein estimated, efforts will be made to devote the needed amounts of funds to this use, since the investments of funds for production abroad yield several-fold the value of military equipment available for the common defense. TRAINING PROGRAMS Mr. SHEPPARD. I see you have a summary of the training program on page 30 of the justifications, which will be placed in the record at. this point. Summary of training programs by title and by service, Department of Defense The increase of end-item equipment plus new type production items envisioned for inclusion under the supplemental fiscal year 1951 program will generate requirements for increased numbers of personnel to be trained and possible additional specialized training courses. The tempo of training will of necessity have to be increased with emphasis upon utilization of the most expeditious means which is normally more costly than the present training operation. The cost of ocean travel may have to be assumed by MDAP for title I and III countries as is already required for title II countries. The delivery of large quantities of highly technical equipment will require the services of a large number of additional technical experts. To insure the proper utilization and maintenance of new-type equipment, it is envisioned that the services of increasing numbers of civilian technical representatives will have to be procured by contract. These technical representatives will be required in the general fields of aircraft, radar, electronics, and ordnance. The large increase in the number of aircraft programed under this supplemental estimate and the addition of improved but more complex types of equipment indicates a much larger requirement for pilot training to be conducted in the United States. Mr. MAHON. Gentlemen, are there any further questions? Mr. MAHON. Yes. Mr. OHLY. Fine. Thank you. Mr. MAHON. We will have to give further consideration to the whole matter before the bill is reported to the House for consideration. I want to thank you and assure you that the whole matter will have our early attention. General LEMNITZER. Thank you, sir. Mr. OHLY. Thank you, Mr. Chairman. STATEMENT OF GEN. OMAR BRADLEY Mr. MAHON. The committee has been conferring informally from time to time with General Bradley, chairman of the Joint Chiefs of Staff, concerning our military programs. At this point in the record we will insert his statement, which he has furnished the committee, concerning the need for additional funds for the mutual defense assistance program. Mr. Chairman and members of the committee, at the very moment that our forces are fighting in South Korea, we must turn our attention to other areas of the world. While your committee is considering appropriation requests for greater defense measures in our own country, we must consider a simultaneous build-up of the defenses of nations friendly to us. The additional appropriations requested under the Mutual Defense Assistance Act are a vital part of that build-up. Title I is for North Atlantic Treaty nations, and I will confine my remarks to a consideration of that area. The other areas are undoubtedly important. But the North Atlantic Treaty plans are now at the point where further forces must be provided rapidly if the threats in Europe are to be met. There is an evident change in attitude of those nations which have been disturbing the peace for 5 years, and which now add outright attack by arms to their previous means of aggression. To meet this new attitude, friendly nations must speed up their efforts to rebuild the armed strength of non-Communist countries. The principles upon which this program is based have not changed. Our assistance will only be effective if the recipient nations increase their own efforts to implement the plans that we have drawn up together. Through the military assistance program, we intend to speed up the rebuilding of the forces of Europe which once formed an important part of our own security, and which must, once more, be an important part of the collective security of our combined nations. I mention the words "speed up," and that is a key to what we are trying to do. In the North Atlantic Treaty Organization we have firmed up our plan. We have agreed on the approximate forces that this plan calls for. With the change in attitude evidenced by the Communists when they resorted to force of arms in Korea, it became evident that the orderly progress toward the establishment of the forces called for by the plan would have to be accelerated. In the first year of military aid, our basic principle was to furnish equipment for the forces in being that these nations had mobilized. The second year we want a little further. We planned to furnish them equipment for forces in being, and forces that they could readily mobilize, including some of their reserve units. With this supplemental request, we intend to help them to manufacture some of the things which our collective forces need. This manufactured material will, of course, be in addition to that which we can manufacture ourselves, or can continue to supply out of our reserve stocks. The principle still applies that part of our own new production will replace in our stocks that which we supply these nations from our war reserves. As I have pointed out before, I feel sure that in time, having reestablished a sound economy, the European nations themselves would build a better defense. The combined efforts under the North Atlantic Treaty make these total efforts a stronger collective defense than the 12 nations could have achieved separately. But that process, even with the North Atlantic Treaty, would have taken several years without the military-assistance program. The Mutual Defense Assistance Act of 1949 and 1950 served to speed up the process of building these forces. Now even that rate of build-up is not sufficient. I want to assure you that the Joint Chiefs of Staff endorsed this program. They have gone along with it willingly, and will undoubtedly work on it with great care and attention as it progresses. As to the other nations of the North Atlantic Treaty and their pledges of what they will do, I feel sure that their cooperation will be enthusiastic and prompt. My belief is not based on information which I have that is not available to you. It is based on the attitude toward the Mutual Defense Assistance Act, which was evident at the Hague Conference, and which has been clearly evident to me in subsequent meetings. The French chiefs of staff, the British military repre |