to bring them up, and now we have an average 38 percent higher. Is there any limitation, or is the program to be continued until everybody in the world has a standard of living equal to ours?

Mr. STASSEN. No; I would say that the program needs to be continued as long as there is a very grave Soviet threat, but that it should be very sharply reduced in amount and that we should shift over as rapidly as possible, in the direction of President Eisenhower's policies, to military production in western Europe supporting military forces in western Europe and air squadrons and everything that goes with it, on a basis of a sound economy in western Europe.

Senator ROBERTSON. You do not approve of the Senate amendment to put a limitation on your program?

Mr. STASSEN. I feel the Congress should pass on this every year in the light of the world conditions then prevailing, but the basic point of intention should be, How do you serve the security of the United States?

Senator ROBERTSON. Do you have any personal knowledge that would lead you to believe that any time in the immediate future any nation in addition to Germany of the six nations that are going to form the army over there is going to ratify that program?

Mr. STASSEN. It is before all the parliaments of those nations at the present time. Undoubtedly, the Secretary of State this afternoon will discuss that with you at greater length, but there is no question that the security forces of western Europe are building and are stronger every week and every month.

Senator ROBERTSON. Do you think France and Italy, after recent elections, are stronger than when they agreed to go into this program in February of last year?

NEW FRENCH FINANCIAL PROGRAM

Mr. STASSEN. The new government of France has just passed a new financial program in their Lower House yesterday which moves directly toward a sounder financial basis for France. It is a move that went through their House yesterday. They raised their taxes.

You asked about taxes. Here is the tax picture: I think it is important that we keep it in mind because there is so much misunderstanding about it. At the present time Germany has the highest taxes in the world on a gross national product. The United Kingdom has the second highest even after allowing for the reduction they have just made from their very high taxes. France is third, and has just increased their taxes in order to try to get on a sound financial basis.

(The following chart was submitted:)

36234-53

TAXES AS PERCENT OF GNP

TOTAL TAX RECEIPTS OF ALL LEVELS OF GOVERNMENT
AS A PERCENT OF GROSS NATIONAL PRODUCT

27.9

26.1%

23.9%

21.9%

NOTE: Years ending Dec. 31,1952 except Germany and Denmark F/Y ending 3/31/1953, Turkey F/Y ending Feb. 28, 1953 and Italy F/Y ending June 30, 1953.

Senator ROBERTSON. What was the amount of that increase? Mr. STASSEN. Eighty-four million dollars for France. Senator ROBERTSON. That is about as much as you recently appropriated to promote free labor unions in Europe, is it not?

Mr. STASSEN. I do not know to what the Senator is referring. Senator ROBERTSON. I am referring to your implementation of the Benton-Moody amendment that appropriated $100 million to equalize the distribution of profits and to strengthen labor unions in Europe. I understand your evaluation team came back and reported that you should drop that program but that between May 15 and June 30 before your appropriations here expired you allocated $70 million out of that $100 million to carry the program forward. Is that true or not?

Mr. STASSEN. Yes. This last Senate and Congress last year before I was in office passed an amendment sponsored by Senators Benton and Moody. It was my duty to implement the laws of Congress when I took office. I have implemented them with careful management and the emphasis has been on strengthening unions that are not Communist.

DANGER FROM COMMUNIST-DOMINATED UNIONS

You correctly said that there is very grave danger in Italy and France. The danger centers around the Communist-dominated unions of those countries. To serve the future security of the United States, it is in the United States interests to help strengthen the unions in Italy and France that are not Communist dominated.

Senator ROBERTSON. Is it true you sent a task team over there to investigate what results you could get and later they reported you could not get any worthwhile results and you overruled that decision? And last month before your appropriation expired you obligated $70 million for that purpose?

Mr. STASSEN. That is correct. The task forces said we should not stop the negotiations under way with governments but we should initiate no new ones. We have not initiated any new ones since they came back. We have waited for this Congress' action. Both Houses have taken out those amendments and have put in a modified amendment by Senator Thye proposed on the floor.

But, Senator, I submit that when Congress passes a law, those who administer must then administer the law under the basis that Congress passed it until Congress acts again. Congress is now acting again, and they are taking the Benton-Moody amendment out of the law and substituting a different approach to it.

Senator ROBERTSON. On that chart there on taxes, take France. Is it not true that France relies primarily upon the sales taxes and transactions taxes and has never been able to reach the rich people of France who are supposed to have from $2 to $3 billion of gold hidden over there waiting for a stabilized world in which they think they could use that?

Mr. STASSEN. It is true the taxes fall upon the people to a greater extent in France than in many other countries.

We are not sending any dollars to France. We are sending to France arms, planes, tanks, and munitions and are providing certain exports from the United States to France in this program to bring France through this postwar situation.

I realize that the Senator is very critical of France. I think you must at the same time consider that here is a country that has been overrun in this last war, and thank God, we were not touched. We must be very thoughtful when we sit in our position of great wealth and great riches untouched by war and are too critical of another country that has gone through the tragedies and the burdens France has had.

Senator ROBERTSON. I do not mean to be critical of France.

FRENCH TAX INCREASE

Mr. STASSEN. With all of this France is building her defense effort. France is moving. Can you think of the parliament of France with a 31 percent tax burden yesterday voting to slightly increase those taxes in order to try to get on a sound financial basis? France is carrying through its defense effort, building up its divisions.

General Gruenther will be before you next Wednesday to talk to you firsthand of these NATO forces, including the French divisions, and his judgment will be the military judgment which you should have on that situation.

Senator ROBERTSON. But the President has recommended we cut our own Air Force $5 billion. You come before us and ask us to give $750 million to the Air Force of France. Would I be critical of France if I would say that I would rather put the $750 million on our own Air Force?

Mr. STASSEN. Senator, we are not recommending $750 million for the Air Force of France. The amount is a much smaller amount. I can give it to you in executive session, but it is a much smaller amount than that. Those figures in detail are classified. But may I say to you that every dollar that we propose to help finance air planes in Europe, including France, has been approved by the Defense Department and the United States Air Force.

IMPORTANCE OF FOREIGN AIR FORCES

In other words, when you think of the whole air position of the United States, the strategic bases which are the deterrent to the Soviet Union beginning a third world war, and the defense of those bases, it is tremendously important that there be a strong RAF, that there be a strong French Air Force, that there be Norwegian, Belgian, and Turkish air squadrons, because the presence of those fighter squadrons and those jet interceptors and those fighter-bombers is the kind of thing that will mean more security to the United States than a similar number here, and at the same time they cost less than do United States squadrons. They do not involve United States men endangered in the operation.

We know that some of those air forces have proved, particularly the RAF, that they are some of the best air fighters in the world.

So from a standpoint of United States interests and the security of the free world, we feel, as President Eisenhower has said, that you

can gain more security for a dollar spent to back up these air forces in these modest amounts than for the same dollar spent added to the United States Air Force.

Senator ROBERTSON. Does our Air Force recommend money be taken from their fighter planes and given to the French?

Mr. STASSEN. It was not a question of one program versus the other, of taking from one and adding to the other. We decreased the amount for Europe more than we decreased the amount in the domestic budget. We came down from $7.6 billion in President Truman's budget to $5.2 billion in this program. We decreased Europe to an even greater degree because we increased in the Far East and Near East, as I indicated.

Senator ROBERTSON. I will not ask any more question, Governor, until you reach the technical assistance program. Senator DIRKSEN. Mr. Chairman.

HEARING PROCEDURE

Chairman BRIDGES. So that we may maintain order, will members of the committee please address the chairman? Then we will see that everybody has an opportunity to be heard.

Senator Dirksen?

Senator DIRKSEN. I have a few questions. First of all, I think the committee ought to know how this presentation is going to be made and at what point certain specific questions can be asked.

Now, Governor, I assume you are going to be content with general observations, and then as we get to specific countries, will you have some member of your staff available to respond to any questions with respect to Europe, the Far East, Africa, and so forth?

Mr. STASSEN. We will respond to the committee's wishes as to our presentation. Many of the matters when you get into specific armed forces of countries, will of necessity be in executive session if we are to be really informative, because of the classified nature of the material.

The matter whether a session is open or executive is entirely up to the committee. We will have available the military officers of the three services, the representatives of the Department of Defense and of State. We will have General Gruenther coming over from Paris, who has the responsibility as of tomorrow for the NATO forces, and we will also summon any other witnesses that the committee wishes to hear on any part of this program.

Chairman BRIDGES. Governor, is it planned to have Admiral Radford appear as a witness on the bill?

Mr. STASSEN. If the committee wishes to hear from him, I would endeavor to see whether he is back.

Chairman BRIDGES. Will he be back next week?

Mr. STASSEN. My last information was that he will arrive in town from the Pacific on Sunday or Monday. If the committee wishes to hear from him, we would send him a cable and try to work out the arrangements.

Chairman BRIDGES. If General Gruenther is to appear on next Wednesday, perhaps on Thursday or Friday, if it is possible, we would like to hear from Admiral Radford. Then another witness we would be very interested to hear from, if you can have him over here, is