Though our economic assistance and the industrious efforts of the peoples and the governments of our allies have resulted in great accessions to their economic strength, that strength is still insufficient to enable them to meet the entire cost of adequate military defenses wholly from their own resources. Nor can we ever forget that adequate military defenses mean more than military forces and their essential equipment and supplies. Adequate military defenses connote an equally strong economy as a base.

Here in this great, powerful country of ours, with its high standard of living, there have been strong murmurs about our high tax burden and the high cost of living despite the fact that we continue to be, by far, the best fed, the best housed, the best clothed, and the best convenienced and served people in the world. How important it is, then, that we be fully aware of the burden which the defense costs will place upon the shoulders of our friends who have only recently seen a slight improvement in their standards which were at bare subsistence levels until a few short years ago. They are well past the convalescent stage but they do not have any great surplus of energy or resources available for a full defense effort on their own.

The situation. I have just outlined underlines and emphasizes_the importance of the defense-support item in the Mutual Security Program. It is a form of economic assistance which strengthens the base for the military-defense structure. Its value is clear, for as the President's message states, it will create

more than twice as much military strength in Europe as would the same funds spent for the direct transfer of military equipment from the United States. In addition, it will strengthen the economy in all of the countries concerned. It would endanger the whole program to omit any part of this essential support.

What applies to the NATO phase of the program applies with equal force to the programs proposed for the Near East and Africa, for Asia and the Pacific, for the American Republics, and the multilateral technical assistance, immigration, and relief-package freight. The infectious disease of communism will thus be met by a sort of antibiotic force in these defense-support and economic- and technicalcooperation outlays. Weakness on that score can provide the most inviting entrance point for the Communist subversive activities. It is really frightening to realize that of the 13 critical materials needed in our production of key defense materials, 6 materials are not produced in this country at all, and of the remaining 7, 4 more such materials are produced to the extent of more than 90 percent in countries far removed from our own. For zinc and copper we depend for slightly more than 40 percent of our needs on foreign nations and our needs for lead are met to the extent of 55 percent from foreign sources. Most of these products come from lands in which our Technical Cooperation Administration and our multilateral technicalassistance programs are working steadily to increase productivity; in the latter case, through our cooperation with the United Nations. These programs are vital to our national security, and our national security is the basic reason for our support of this whole Mutual Security Program.

An expenditure of nearly $8 billion represents a huge degree of selfdenial, a great tax burden, but it is a small price to pay for the

objective toward which we as a Nation are striving. What you have already done has brought us far along the road and we are confident that your approval of this Mutual Security Program will bring us well along to the full achievement of our hopes.

I just want to add, when we face the price we are paying today in Korea for the loss of China, it just emphasizes that whole thought. Senator GREEN. Are there any questions?

If not, thank you very much.

Mr. James S. Martin.

STATEMENT OF JAMES S. MARTIN, GENERAL COUNSEL, ASSOCIATION FOR INTERNATIONAL DEVELOPMENT

Mr. MARTIN. Mr. Chairman, Senator Hickenlooper. My name is James S. Martin. I am general counsel to the Association for International Development, a trade association organized under the laws of the District of Columbia with offices at 1737 H Street NW.

Mr. Chairman, the Association for International Development is a recently formed organization of small- or middle-sized business and professional firms interested in promoting development. In forming this association we acted on the understanding that the Congress, through the Act for International Development and the Mutual Security Act of 1951, intended to encourage private initiative and the participation of private capital in developing the resources of countries which are just beginning their economic growth. Our intention is to round out a framework to be used in mobilizing efforts by private enterprise in this field, and to furnish a link between official agencies and qualified private groups interested in international development. The Mutual Security Act of 1951 declared that the act should be administered in such a way as to eliminate the barriers to, and provide the incentives for, a steadily increased participation of free private enterprise in developing the resources of foreign countries as provided in the act.

CRITICISM OF TCA

Experience during the past year of operation of the point 4 program, however, indicates that point 4 has been limited almost entirely to direct Government aid and welfare activities in the fields of health, education, and agricultural research and demonstration.

We have no objection to welfare activities as such, but we think there is a very definite distinction to be drawn between dispensing technical advice and services in the welfare field, and the actual development of profitable new resources which could put welfare activities on a self-sustaining basis in the countries now receiving aid. We think it is important to find out which interpretation the Congress intended.

The point-4 program as administered by the Technical Cooperation Administration in the Department of State has broken down completely, or has failed to get off the ground at all, in the field of industrial development and the actual creation of new sources of wealth in the aided countries. The Act for International Development declares it to be the policy of the United States to aid in the development of the resources of underdeveloped areas by encouraging the exchange of technical knowledge and skills and the flow of invest

ment capital, wherever such technical assistance and capital can effectively contribute to raising standards of living, creating new sources of wealth, increasing productivity, and expanding purchasing power. The same act also provides that in carrying out the authorized program the participation of private agencies and persons shall be sought to the greatest extent practicable.

In the field of development of basic resources, instead of providing encouragement to private firms to undertake the development of specific resources, as a practical demonstration of how new developments can be touched off, Government missions have been sent out to make economic surveys, reports, and recommendations for national and regional economic development. Such general surveys and reports are of such high order that they can be of use only to a very large corporation that can afford to maintain a staff to interpret the reports, and then send their own men or hire a private engineering firm to go down and check on the basic facts.

This planning, surveying, and reporting is being done largely in a vacuum. So far as we have been able to ascertain, point 4 officials are unable to point to a single instance in which such general plans and surveys have resulted specifically in the creation of any new basic industrial enterprise. Surveys and studies which are not geared to some concrete plan of action are a waste of time and money, except perhaps for the few technicians and experts who get a free ride and a chance to broaden their education by travel. For the most part such surveys and studies are being undertaken by Government missions. In some cases, however, private engineering and consulting firms have been hired to do similar work. This is not a fair example of what we believe is meant by the participation of private enterprise in the development of resources.

GREATER ECONOMIC DEVELOPMENT PROPOSED

We believe that the intent the Congress expressed in the point 4 legislation and the Mutual Security Act would be served by the encouragement of mutually profitable enterprises, in which American capital joins with local capital to create new production units. Such projects would pay their own way in the end, and would actually create new wealth.

As we understand the attitude of the point-4 agencies at the present time, they do not believe that the Congress intended assistance to be provided directly to help establish particular enterprises. They believe that technical services should be confinded to giving general advice to other governments, and making general plans to show how industries might be developed, provided capital is available. have seen no evidence that capital is actually ready to flow on such terms.

We

We think the point-4 program must bring its focus down so that small and middle-sized American business can participate in world development-providing specific, on-the-spot information and planning for concrete projects, rather than generalities which must be checked and investigated at considerable expense before anyone can tell whether profitable development is really possible.

We

This is an issue of policy which only the Congress can resolve. think the point 4 provisions of the Mutual Security Act should be

clarified. At present, the so-called industrial program of point 4 has run off into a lot of boondoggling instead of carrying out the declared purpose: to encourage increased participation of free private enterprise in the development of resources abroad.

If funds are simply going to be used to carry out more and more general plans and surveys, it may be that an entirely different kind of legislation would serve the purpose better than the present act. For example, many people believe that the tax concessions granted by Congress to firms undertaking private development work in Puerto Rico have accounted for much of the phenomenal development of that area in recent years. It is quite possible that similar tax concessions could be extended to companies engaging in deveopment projects in countries which have signed point 4 agreements. Such concessions would probably do far more to spark-plug actual development of resources in those countries than the present steady build-up of Government missions, and the craetion of bigger hierarchies of Government employees engaged in general planning and surveying and demonstrating.

Or, to take another example, a system of loans to small private firms, to enable them to undertake specific projects which will set up new enterprises, might entail much less expense and have more effect than the continuance of the present program.

Mr. Chairman, whatever answer the Congress gives to these questions of policy, we think the small and middle-sized private business and professional firms interested in world development are entitled to a clear statement of the Government's intentions.

NEW ORIENTATION OF TECHNICAL ASSISTANCE URGED

Senator GREEN. Your statement is a very clear criticism of the existing law. Are we to understand that you are opposing the bill that is now pending before us, the Mutual Security bill?

Mr. MARTIN. In the first place, I should say that we are not opposing the bill as presented. In fact, we are not certain that an actual change of the wording of the statute is required. The wording which I quoted in my statement seems to us to be a fairly clear indication that it was the intention of Congress that this specific kind of encouragement should be given. I am merely pointing out that in practice, when we who represent firms in private business like to try to cooperate with the Technical Cooperation Administration, we find we are discouraged rather than encouraged by the replies.

Senator GREEN. It is our duty at present to consider the proposed Mutual Security bill.

Mr. MARTIN. Therefore it seems to me, Mr. Chairman, that if in the opinion of this committee the present Mutual Security bill as drafted clearly contains language that indicates an intent to encourage private enterprise to actually engage in development activities, then perhaps simply a statement by this committee to that effect will be just as well as any change in the wording of the act itself. But we do think that in its report the committee should make clear what was the intention of the Congress in the Mutual Security Act of 1951 and what is to be the intention of this committee in its recommendation of the Mutual Security Act of 1952.

Senator GREEN. Senator Hickenlooper, have you any questions?

Senator HICKENLOOPER. Mr. Martin, I take it that you believe that private enterprise is a successful defense of progress; that is, the integrity of private enterprise.

Mr. MARTIN. I do, sir; subject to certain qualifications.

Senator HICKENLOOPER. And you believe that private enterprisers can probably do more to lift standards of countries and develop their situations than endless Government missions?

Mr. MARTIN. That is correct.

100 percent.

I think I could subscribe to that

Senator HICKENLOOPER. And I take it that you believe that if our policy is as it has been declared in the law to be, to encourage the flow of private capital for development, that we should encourage the integrity of contracts and discourage expropriation and other things that private enterprisers are so often fearful of.

Mr. MARTIN. That is correct.

Senator HICKENLOOPER. I do not think I found myself in disagreement with you.

Mr. MARTIN. Thank you, sir.

Senator HICKENLOOPER. I think it is a very important thing that you have pointed out here, but I am not too encouraged to think it will be followed vigorously.

Mr. MARTIN. If I may say so, I found out at considerable cost to my own personal experience last year that I personally spent $16,000 trying to find out how to cooperate with the Technical Cooperation Administration on specific projects that might further the point 4

idea.

Senator GREEN. Thank you.

Dr. Dobriansky.

Will you give your full name and identify yourself, Dr. Dobriansky? STATEMENT OF DR. LEV E. DOBRIANSKY PRESIDENT OF THE UKRAINIAN CONGRESS COMMITTEE OF AMERICA

Dr. DOBRIANSKY. My name is Dr. Lev E. Dobriansky. I am a member of the faculty at Georgetown University. I am president of the Ukrainian Congress Committee of America.

In assuming this privileged opportunity to testify on the Mutual Security Program I should like to address myself almost exclusively to that vital and delicate part of the program covered by what has popularly come to be known and accepted as the Kersten amendment to the Mutual Security Act. It is with a live sense of reasonable confidence, based on my wide association with American groups actively engaged in achieving a vigorous and genuine unity of anti-Communist forces here and abroad, that I feel the following general observations and concrete proposals accurately express the dominant sentiments and sober judgment of a broad section of our population. Particularly is this true of those possessing an intimate knowledge of the political realities behind the iron curtain, especially the imposing reality of Stalin's greatest weaknesses.

VALUE OF THE KERSTEN AMENDMENT

For an effective and rapid implementation of the Kersten amendment, which our farseeing Congress passed last year, I earnestly urge