Mr. CABOT. I think it depends on the type of cooperation we are. giving, in most cases. For example, in Cuba, if I recall correctly, they have only a small fiber project for point 4 work. Now, that, frankly, is as much to our advantage as it is to theirs if not more, because what we are trying to do is to provide ourselves with an alternate source of fiber in the event we cannot get such fiber from the Middle East. I do not recall the situation in Peru, but the oldest servicios are the ones, generally, to which the local country is contributing the greater part of the cost. We are always trying to turn the servicios over to the local government to give us the opportunity to turn to a new field which appears fruitful.

Mr. BENTLEY. In these other two examples, Mexico, for example, they have had a great deal of prosperity in the last few years by way of improvement. Paraguay and the Dominican Republic, why would they be unable to match our contributions?

Mr. PHILIPP. Generally, those 3 countries, our figures show, that taking all the costs together, they are actually contributing more than we. If I might cite an example: Paraguay, for fiscal year 1952—well, I do stand corrected, now that I see that.

Mr. CABOT. Paraguay is a very poor country. The Dominican Republic and Peru are cases where I think your point is well taken and I think they should contribute a greater part, once the service is established.

Mr. PHILIPP. Actually, in Peru, they do. The contribution Peru makes, for fiscal year 1952, is $1,956,000, matched by our $1,755,000. It is estimated that during this fiscal year, fiscal 1953, the Peruvian Government will contribute $2,347,000 to our $2,055,000.

Mr. BENTLEY. I am talking about fiscal year 1954, which is the program you have outlined here.

STATEMENT OF RICHARD F. COOK, PROGRAM DIRECTOR, INSTITUTE OF INTER-AMERICAN AFFAIRS

Mr. Cook. The figures I have for 1954, sir, show a United States contribution, total contribution, estimated at $2,054,800.

Mr. BENTLEY. Which one are you reading now?

Mr. Cook. For the Peruvian Government.

Mr. BENTLEY. In the other places, though, the contributions are less than 50 percent.

Mr. Cook. Less than 50 percent in total, which includes what Mr. Cabot mentioned in the program, but in addition to the contributions shown in there, there are many other contributions which do not show up much, such as the contribution to the training program. There is the international transportation in the training program. That reduces the cost of the training program, but with servicios, there is a set ratio which, in most cases, is better than 2 to 1. We show the overall, here, including such projects as the project in Mexico.

Mr. FULTON. Has Cuba asked for this money, or are we volunteering it?

FURTHER STATEMENT OF STANLEY ANDREWS, ADMINISTRATOR, TECHNICAL COOPERATION ADMINISTRATOR

Mr. ANDREWS. That program grows out of the program started immediately after the beginning of the war, where we found ourselves short of the fibers and jute. Under the old Coordinator of InterAmerican Affairs, and later the organizations which preceded the

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presented Institute of Inter-American Affairs, a positive program was put in there actually requesting Mexico to help us in the development of some alternate source. I would say in the early days Mr. FULTON. Mexico or Cuba?

Mr. ANDREWS. Both Mexico and Cuba.

In the early days, it was an actual case of mutual effort in the war, growing out of the war.

After the war, they found this substitute fiber for jute which can be produced and which is a good fiber, and the attempt being carried on in recent years is to mechanize that so that the higher labor costs in that area can, through mechanization, translate into a low-cost fiber.

Mr. FULTON. Now, we have India, who has a surplus of jute and cannot sell it, so we are helping them make up the deficit because of their poor economy.

On the other hand, down in Cuba we are now building up a cheaper fiber which will further undermine India on her exports to this country, and we are doing it without even being asked by one of the richest countries I know of. If I ever felt poor, it is in Habana, with all the Cuban millionaires, or in Miami, likewise.

Mr. ANDREWS. Because of the change in emphasis in national defense, because of stability which at least some of us think is returning to certain areas, the emphasis on that program is being cut down and we are in a period right at this time to determine whether it is cut out or whether to carry it on. That is subject to our overall national policy.

Mr. FULTON. What would happen if it were cut out in Cuba? Would there be a revolution?

Mr. ANDREWS. No, sir; but there would be some disappointment because the Cubans have invested a great deal of money in equipment and land and the development of this crop.

Mr. FULTON. You should represent my district and hear the disappointment in the United States for not cutting down on taxes. If you want to hear some disappointment, and effective disappointment, just go there.

Mr. ANDREWS. I might say, sir, the people who make carpets, the people who buy these fibers, have found it to be superior to jute and other fibers for carpeting and sugar sacks, and they are yelling for more of it all the time, so there you are.

Mr. FULTON. Why does not private industry develop the plantations?

Mr. ANDREWS. Private industry is doing it.

Mr. FULTON. Why are we doing it, then?

Mr. ANDREWS. It is a matter of research, sir. If I can take a minute, I can explain what it is about.

Mr. FULTON. I do not want to take the committee's time, but all these things begin to look like boondoggles. They are programed for some private interest, either for research and development of new supplies, when there is already a supply of similar materials from other countries which cannot be sold, and it is a useless burden on my taxpayers, and I am not going to vote for it.

Mr. ANDREWs. That situation just arrived in the last 2 months, sir. There was a desperate situation here, and our Munitions Board

was doing everything they could to speed ahead these programs down there. Now the situation has changed.

Mr. FULTON. So has the administration changed.

Mr. ANDREWS. It is under review right at this time, sir.

Mr. MERROW. Does the situation Mr. Fulton has been speaking about in Cuba obtain in these other countries where we give assistance? Mr. ANDREWS. No.

Mr. CABOT. I was in the Department during the war handling the Caribbean area, and I well remember the headaches we had in trying to get these programs under way under war considerations and conditions, to try desperately to provide in Central America the things we lost in the Far East.

For example, hemp, manila hemp, quinine, and some of the soft fibers, like the one referred to in Mexico. We were practically down on our knees to get these things from these countries and without their full cooperation we would have had an even rougher time than we did have.

Mr. FULTON. You are talking about World War II. I am talking about the fiscal year 1954.

In the Pittsburgh area, or Pennsylvania, or Illinois, or Indiana, for that matter, we had many things set up for development in World. War II that were later cut back and cut drastically. So if this is a continuation of the programs from World War II, of supplying strategic materials, my only comment on that is that World War II, while not over, is pretty nearly over.

Mr. CABOT. If I may comment on that, Mr. Fulton-I am not thinking of World War II. I am thinking of our national security. I am thinking of the fact that we may again find supplies of these vital materials cut off from most distant parts of the world, and in that case we would certainly need the supplies we can produce fairly rapidly.

Mr. FULTON. There is no immediate strategic need for these supplies, right now; is that the case?

Mr. CABOT. I do not think there is immediate strategic need, no. Mr. FULTON. Then, where there is an item where there is no strategic need now, and where we are already cutting back the airplane program of this country where there is a vital strategic need, do you not think we ought to give some of these others up?

Mr. CABOT. Well, Mr. Fulton, there is no immediate strategic need for fire insurance on your house, probably, but on the other hand, you would be very sad if your house burned down and you had not proper fire insurance for it.

Mr. FULTON. Do you think planes are more important or more of this fiber research from Cuba?

Mr. ANDREWS. Well, this stuff is chicken feed in comparison with airplanes. I will not argue how important planes are; I just do not know. I do know that this is important to our national security and to our foreign relations.

Mr. MERROW (presiding). Are there any other questions?

Mr. BENTLEY. I have one more question, Mr. Chairman: Mr. Cabot, are any of these funds to be used for promotion of the Inter-American Highway?

Mr. CABOT. No.

Mr. BENTLEY. Is that in this bill at all?

Mr. CABOT. No, that is in a separate bill entirely, if I remember correctly. I believe it is already through the House and through the Senate committee. It will be about $1 million for the Inter-American Highway in the coming fiscal year.

Mr. FULTON. I have one further question: Just by way of information, was this program in the Dominican Republic one of the factors in the negotiations with them on our defense area, there? For example, was this part of the negotiations for the agreement on the guided-missile program, or the target area?

Mr. ANDREWS. Not that I know of, certainly.

Mr. FULTON. So, there is no implied commitment that we might have made on this type of thing in return for much more essential things for our security?

Mr. CABOT. Certainly not that I know of. That happened before I came into the Department, so I really have not reviewed it, but I do not think there is any connection.

Mr. FULTON. I would like to know that definitely, because I have lived up to the commitment in cases where I would not be able to vote for programs that I think are not essential, after World War II. Mr. CABOT. The gentleman who was on the Dominican desk at that time says there definitely was not.

Mr. MERROW (presiding). The next item on the agenda is dependent overseas territories, Mr. Wood.

Mr. WOOD. Mr. Chairman, we have finished now, except for one item which will be coming up shortly, the programs for technical progress and development.

The thought strikes me that it might be useful to take just a few minutes by way of summary from Mr. Andrews. We have been discussing these programs all over the world in some detail. It seems to be it might be useful to the committee to have a very brief discussion of the fundamental purposes, needs, and requirements, in relation to our national security, of these programs all over the world. I think Mr. Andrews, in just 2 or 3 minutes, can summarize, and so complete the record on this phase of our request.

Mr. MERROW (presiding). Mr. Andrews

Mr. CABOT. May I be excused, Mr. Chairman, unless you want me further?

Mr. MERROW (presiding). Certainly.

Mr. ANDREWS. Mr. Cabot has covered the overall picture relating to the programs in Latin America. I think in order to complete the record and round it out and save committee time, I would like to introduce for the record the first four pages from the blue book, which gives more detailed descriptions of these programs, points out the history of the program, how it has been running for 10 years, how the character of the program is changing with the meeting of certain conditions in those countries, and I will be willing to answer, or the staff behind me, any of the details you may ask about.

(The information referred to is as follows:)

REGIONAL TABLE I.-Economic assistance and technical cooperation, American Republics and DOTS-Comparative summary of obligations by activities

In Latin America the United States technical cooperation has just completed its 11th year. Here many of the cooperative techniques have been worked out which are now being applied on a wider scale throughout the underdeveloped areas of the world. Here also technical assistance has had time to demonstrate its effectiveness and its value to other countries. Hundrdes of individual projects-financed largely at their inception by the United States, as war measures-have been more and more taken over by the local ministries until eventually these projects have been taken over entirely as parts of the permanent program of these countries-while United States technical assistance has gone on to assist in other pressing development problems.

When the inter-American technical cooperation program began, our assistance was largely directed to the basic fields of agriculture, education, and public health. As the program proved iself in these limited areas, however, United States representatives were increasingly asked to make American know-how available for a wider range of developmental activities including industry, trade, public administration, and finance. During recent years American private investment has found its greatest overseas opportunities in our Latin American neighbors. Over $7 billion of United States private and public capital has been put to productive use in Latiin American enterprise. So effective have our good neighbors become in attracting United States enterprise and financing that special economic aid or financial grants have never been seriously requested of the Western Hemisphere. On the other hand, it has been clear for several years that increased technical assistance in selected industrial and administrative fields was necessary if sound economic development was to continue to attract American investors and businessmen.

Twelve months ago a system of country directors was established throughout Latin America. With the assistance of economic advisers or program officers, their function was to study the overall developmental needs of each country and recommend selected technical assistance projects which would best contribute to the overall balanced development of these economies. Over the past 12 months a number of proposed joint projects have been critically examined and agreed project proposals resulting are included in the fiscal year 1954 program request. It is to provide this rounding out of United States technical assistance programs as a means of assuring a better balance between agriculture, industry, and other sectors of the Latin American economies that approximately a 10-percent increase in the appropriation for part IV is requested for the coming year.

THE AREA AND THE PROBLEM

This part of the inner citadel of free-world defense includes well over twice the area of the United States and close to 176 million people. More than 150 million of these live in the region in which the United States technical coopera

1 Dependent overseas territories.