this equipment, because otherwise we will not be able to carry out the recovery program.

Mr. LODGE. In other words, you do not believe that we should use economic sanctions. Russia through her representatives and satellites has made violent attacks upon us; has made attacks upon everything that we stand for, but you do not believe that the time has come for us to retaliate?

Secretary HARRIMAN. One only deals with economic sanctions in extreme situations. I believe that we should conserve our resources and our available equipment to go into those countries which we believe need the equipment, and when our cooperation will result in recovery. I do not believe that we should develop it on the basis of sanctions because I am still hopeful that we can develop healthy trade between these countries that you speak of which will be useful to the world recovery and useful to the peoples of these countries. It is quite difficult. It is quite different to trade than it is to make loans or grants. I am speaking only about trade. If they have a surplus of food and want to use that to buy something from western Europe, or if they. have some raw materials that we need, I do not think it is proper to attempt to shut off trade.

Mr. LODGE. In other words, Mr. Secretary, you are satisfied that the use which Russia and her satellites will make of machinery, equipment, and other items purchased from the United States will be in the best interests of the United States?

Secretary HARRIMAN. I believe that we should not ship our materials which are a direct contribution to military strength.

Mr. LODGE. But surely, in the totalitarian state almost anything contributes to the power of that state. It does not necessarily have to be guns and bullets, does it?

Secretary HARRIMAN. Well, when you get into a war everything contributes, it is true. The stronger economically a country is the stronger they are to wage war. I do not believe there is any intention to make war at the present time. I am still hopeful that if we can get recovery on the free countries of the world; if we can get the grass to grow a little greener in those countries, where they have free gov ernments and where the dignity of the individual is the basic concept. that success will roll back behind the iron curtain and will be invisible to us. Therefore, I am hopeful that if we embark on this program of recovery we will succeed and there will be pressures which will force a change in policy. Therefore, trade is an important thing in connection with that. I would not shut it off entirely. I would simply say that we need to help in the recovery of the free countries of the world and I would shut off, of course, those things that are directly connected with military establishments.

Mr. LODGE. In other words, Mr. Secretary, that would not seem to you to be in any way inconsistent or constituting help to the countries which have declared war on the Marshall plan?

Secretary HARRIMAN. There is mutual help in trade, Congressman Lodge, of which we have been talking about, and it would be very desirable to get the maximum shipments of food from these areas of eastern Europe which have always been the breadbasket of Europe. Mr. LODGE. Are we getting some food from them now?

Secretary HARRIMAN. There are some shipments of food being made. I understand that the Soviet Union has something in the neighbor

hood of 2,000,000 tons of surplus grain, the sale of which they have been, at one time or another, attempting to negotiate with the French and the British. So far there have been very limited shipments. But it would be of value in the recovery program to have those shipments from Russian being made, and the effect would be to get in return the goods that they need in their economy. And I believe that is helpful for the recovery of the world and will add to the pressures I have indicated, even though they will be getting some of these food shipments.

Mr. LODGE. In other words, you would believe, Mr. Secretary, that we might get a satisfactory quid pro quo from Russia and her satellites in connection with the materials which we are sending?

Secretary HARRIMAN. No, I am not sure of that; and I think, as I said, in connection with the recovery program of Europe, we should direct any further expansion and control to see that it goes direct to the countries which we want to help in the emergency that is now being faced.

But I would not go so far as to shut off trade; we would not want to build an iron curtain and have the effects of an iron curtain, as the result of the natural pressures from these countries, in order to penalize as between the success of the program and the life that comes out of a free country.

Mr. LODGE. You say that the pressure would be just only to the extent that we receive something in return.

Secretary HARRIMAN. That is correct, in that, of course, we are receiving something in return.

The Soviet mission that buys in this country was paying for the supplies and machinery they are buying in this country; they are being paid for, and there are no loans being made to the Soviet Union to buy credits

Mr. LODGE. There are no loans being made now?

Secretary HARRIMAN. No; except in connection with the tail end of the lend-lease pipe line, I think that they are all complete they are just about completed.

Mr. LODGE. May I ask, Mr. Secretary, a question in connection with the list which you said you were going to furnish, covering articles which we are shipping to Russia, if you can also provide us with a list of those articles which are going via other satellite countries?

Secretary HARRIMAN. We have no information as to what is going through other countries. We do have information as to the shipments to what you term "satellite countries," countries of eastern Europe, and we will give you that information as well as the other. Mr. LODGE. It just occurred to me that Russia might be getting a great deal more indirectly than directly.

Secretary HARRIMAN. I would be surprised, although I cannot be sure, but I would be surprised if much went directly through these other countries, because of the limitation on what they can buy here and pay for; it would be much simpler for them to direct it to the Soviet Union rather than via some other country.

Mr. LODGE. I happen to know of one particular proposed shipment of some 400 jeeps to Bulgaria, and I thought that you might have that information.

Source: Special Programs Division, Areas Branch, Office of International Trade, Department of Commerce, November 1947.