It is a very small amount of cash. I think only 20 percent in cash and the rest is in the form of a guarantee.

Mr. JAVITS. I think our guarantee is as good as money. I think the Secretary will agree with that.

Mr. ACHESON. Well, it is very different from money, Mr. Javits, because the bank has to get its money first by sales to the public.

Mr. JAVITS. I am sorry, sir, but that is where I think perhaps I would argue with you. But I think if the Secretary will read the basic documents he will find that the bank can loan out of its capital without raising the money from the public.

Mr. ACHESON. I am sure of that, too.

Mr. JAVITS. Now, as to the final question that I would like to ask. 1 assume this question of the overextension of Britain's position has been discussed with the British, and I wonder whether in the course of that discussion anything was made of the fact that Britain has 10 times as many troops in Palestine as she has in Greece, and I assume that it costs 10 timse as much to maintain them, and at the same time, she has no intention of retrenching in her position there.

Mr. ACHESON. I cannot recall. I was not present at all the conversations about the British loan which was the time that we went thoroughly into the British financial position. Mr. Clayton was present throughout those discussions and perhaps he can throw more light on that point.

Mr. JAVITS. Thank you very much.
Chairman EATON. Mr. Colmer.

Mr. COLMER. Mr. Secretary, there are a couple of questions that I want to ask. If they prove to be embarrassing you may treat them in the nature of observations.

There is considerable feeling in this country that this is a job for the United Nations. I got the impression from the statement you made a moment ago that there was some technical prohibition against the United Nations going into this at this time. Is that correct?

Mr. ACHESON. I do not think I meant to give that impression. Mr. COLMER. Then what is the objection to the United Nations taking over?

Mr. ACHESON. Well, what I have been pointing out about that is that in the problem of Greece the United Nations is at the present moment dealing with the threat charged by Greece along its northern borders. So far as the financial difficulties are concerned, except for the International Bank, the United Nations does not have the funds to respond to the Greek request. The Greek request is a very urgent one. It is one that has to be acted upon in the very immediate future. Therefore, in accordance with its own clear understanding of the practicalities of the matter, and also in accordance with the recommendations of the FAO mission, the Greek Government has asked directly the United States Government to furnish the funds. The United States Government would undoubtedly have to furnish them in any event, whether the request was made in the first instance to the United Nations, or in the first instance to the United States, if they were going to be furnished at all.

Mr. COLMER. Well, is that tantamount to saying that the United Nations Organization has not progressed to the point that it can take care of this situation?

Mr. ACHESON. I do not think it is contemplated under the charter that the question of emergency financing would go to the United

Nations. The International Monetary Fund, and the International Bank, it was hoped, would deal with those situations. Unhappily, in this particular case, they are not able to do so.

Mr. COLMER. An observation in that connection. In the fall of 1945 a group of Members of Congress, of which I was one, made a visit to some 13 countries over there and interviewed the leaders of all of those countries, including the entire British Cabinet and Generalissimo Stalin himself. The most discouraging thing we found over there was the fact that none of these leaders mentioned the United Nations. It was never mentioned except when we brought it up. About all we got was a shrug of the shoulders.

What I am trying to say in my observation is that we got the impression that we in this country are about the only ones who took the United Nations seriously, and therefore, we could not look to the United Nations now to meet this problem.

The other observation is, the European people are not familiar with the system that prevails in this country, and now that the President of the United States has asked the Congress for this assistance to Turkey and Greece, we would not be in a very enviable position with Europe, and particularly calling names, with the Soviet Republic, if the Congress were to refuse. Would we not be in worse shape than if we never started it at all?

Mr. ACHESON. I think we would be in worse shape. Of course, the situation to which you refer is one which is inherent in the division of powers in the Constitution of the United States. That is a principle to which we are all firmly attached, and the difficulties that go with it we have to face, as well as the great benefits that come from it. Therefore, all that you say is quite true. That does not mean at all that the Congress should not perform the functions it was created to perform by the Constitution.

Mr. COLMER. And with that, of course, Mr. Secretary, we all agree. I was merely observing that, having taken this step and with the implications that it will have abroad, if it were not followed, I think we would be in a very embarrassing position. That is all.

Chairman EATON. Mr. Lodge.

Mr. LODGE. Mr. Secretary, to clarify this matter and carry Mr. Colmer's observation one step further, I should like to ask you whether in your opinion declarations made by the President of the United States, such as those made at Tehran, Yalta, and Potsdam, or through his emissaries, are binding upon the Government of the United States.

Mr. ACHESON. That covers a wide field. Under the Constitution the President has clearly defined powers. In two of those conferences there were, of course, discussions of military affairs. The President is the Commander in Chief of the Army and the Navy of the United States, and under his war powers can make commitments as to what part the United States will play in the war, and those, I suppose, are binding commitments.

I imagine that certain other statements which were made, or commitments which were made-let us say statements-made in the course of those protocols were leading toward the very type of discussion which is going on now, and which must ultimately be framed in a treaty which would have to be brought back and approved by the Senate. There were a great variety of subjects covered in the con

ferences to which you refer. Some of them, I think, were wholly within the constitutional powers of the President; some are within his negotiating powers and will have to be confirmed either by the Congress or the Senate.

Mr. LODGE. I think that is a very intelligent reply, Mr. Secretary. Insofar as the so-called agreements or declarations were intended to operate in the postwar period, they do not have the force of treaties duly ratified by the other body.

Mr. ACHESON. Well, I do not have the exact meaning of the question in mind, but that sounds to me to be about right.

Mr. LODGE. Mr. Secretary, I want to ask you whether you feel that there is any objection to dividing this bill in two in view of the points which were raised here this morning differentiating the Turkish crisis from the Greek crisis. Would you have any objection to separating this bill in that fashion, one for Greece and one for Turkey? Mr. ACHESON. I should think that would be most unfortunate, Mr. Lodge. I would hope the Congress would not do that.

Mr. LODGE. You recall, perhaps that yesterday I asked you a question with respect to the Italian treaty. You said at the time, as I recall, that you were not familiar with the provisions of the Italian treaty to which I referred and that you could not answer my questions. I wonder if you are now sufficiently familiar with the subject to answer some questions.

Mr. ACHESON. I asked some of my colleagues to make a study of it. As I understood the import of your question yesterday, it was whether there were provisions, military provisions in the Italian treaty which might perhaps weaken the Italian state so that it could not (a) protect itself against internal difficulties, or (b) protect itself against foreign aggression. Is that what you had in mind?

Mr. LODGE. The point that I was trying to bring out was this. As I understand it, the Greek crisis has been precipitated largely by guerilla bands aided and abetted in one way or another by Yugoslavia. It occurs to me that Yugoslavia also has a common frontier with Italy, that the Italian peace treaty proposed for ratification by the Senate contains provisions for the defortification of the Italian frontier, for the dispersing of the Italian navy, for the reduction of the Italian army, and for the withdrawal of the Allied forces.

I was requesting your opinion on this. I was suggesting that we were moving in one direction in Greece according to the President's policy, and that the Italian peace treaty, with respect to those military provisions, was at variance with that policy. Would you care to comment on that?

Mr. ACHESON. I think that what I would have to do to really make an intelligent response to that would be to get the advice of the War and Navy Departments as to whether they thought that the provisions of the treaty would weaken Italy to the point where it would be open to the same sort of problem that is arising in Greece. I think both Secretary Byrnes and Secretary Marshall have said many times that these treaties that are now before the Senate were very far from the heart's desire of the American negotiators, but they were the best treaties they were able to get, and they thought they were compensated by the great advantage of the withdrawal of foreign troops from the countries which were involved in the treaties.

Mr. LODGE. May I suggest there, Mr. Secretary, for your consideration that they probably were the best treaties obtainable at that time under the circumstances then obtaining.

Mr. ACHESON. Yes.

Mr. LODGE. Circumstances which obtained prior to the declaration of policy by the President and the Congress, and which due to the providential flexibility of our system we now have an opportunity to reexamine in the light of the President's policy and in the light of the vastly changed circumstances.

I would like to suggest that you reconsider the matter in that light, because I think that we run the danger of going in one direction in Greece and in another direction in Italy. I would like to suggest also this, and ask your opinion on it-that with our reluctance to involve ourselves militarily in Greece we run the risk of strengthening Greece economically, building roads for her, and doing a lot of other valuable things, and then having her taken over at some subsequent date vastly improved. I would like to have your comment on the danger of that.

Mr. ACHESON. Well, this is a dangerous life and a dangerous world. Mr. LODGE. I agree with that.

Mr. ACHESON. One always has to choose between alternatives, and I think I would choose a vigorous attempt to maintain the independence of Greece rather than a default.

Mr. LODGE. I would agree with that. My point was let us make it so vigorous that the millions of dollars that the American taxpayers spend there do not in the end accrue to the benefit of the very forces with which we appear to be in continual disagreement.

Mr. ACHESON. Yes; I agree with that.

Mr. LODGE. Thank you very much.

Chairman EATON. I wish on behalf of the committee to thank the distinguished Secretary for his very illuminating discussion and for the patience that he has shown. We will stand adjourned until Monday morning at 10 o'clock.

ASSISTANCE TO GREECE AND TURKEY

MONDAY, MARCH 24, 1947

HOUSE OF REPRESENTATIVES,
COMMITTEE ON FOREIGN AFFAIRS,

Washington, D. C.

The committee met at 10 a. m., Hon. Charles A. Eaton (chairman) presiding.

Chairman EATON. The committee will come to order, please.

Our first witness this morning is the distinguished Under Secretary of State, Mr. Will Clayton.

Mr. Clayton, will you take the stand?

I would like to suggest that everyone speak out so that everybody can hear.

STATEMENT OF HON. WILLIAM L. CLAYTON, UNDER SECRETARY OF STATE FOR ECONOMIC AFFAIRS

Secretary CLAYTON. Mr. Chairman, I have a brief statement which I would like to read. After that, I shall try to answer any questions that members of the committee may wish to ask me.

The general political situation in Greece has already been outlined by Mr. Acheson. I should like to explore with you the economic position of the country and the events which have brought the Greek. economy to a state of near collapse.

Even before the war, Greece was a poor country. Her per capita income was one of the lowest in Europe; labor productivity was low in both agriculture and industry; population pressed on limited resources; and there was a constant deficit in the balance of trade.

Greece entered the war on the side of the United Nations relatively early in the conflict. By April 1941, Greece was completely occupied by enemy forces and remained under occupation until late in 1944. During this period, the Greek economy was operated almost entirely by and for the enemy war machine. Through such devices as issue of occupation currency, drafts on the Greek Government, clearing arrangements which gave exports to the enemy without recompense, requisitions, confiscations and the like, the Greek economy was systematically and progressively stripped and at the same time billions of drachma were pumped into circulation.

One of the first acts of the German occupation authorities was to requisition existing stocks of Greek food, already seriously depleted. Agricultural products were regularly requisitioned in various areas and sometimes the Germans themselves harvested crops to keep them from the local population. Clothing was requisitioned in Crete and other Greek areas. The Germans seized transport, machinery, and raw

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