way, and that the answers to those questions as they apply to this program, are reflected in our presentation.

Mr. FULTON. I was before the appropriation subcommittee wanting to get some Ohio River locks repaired that do not even have structural steel for their support-they are ancient locks about ready to collapse and not even in my district. But they will tie up 50 million tons of strategic United States defense materials going through these locks if they fail.

Now when that project is cut off the current budget and cannot be done by this country, then I wonder about including in this bill a railroad development in Africa, or development of a kind of material that they have not even found yet clear back up some jungle valley, or an experimental project such as a trackless railroad, which "if feasible" according to the proponents, will be a great aid to the backward area.

Now between that type thing and the strategic necessities that we have-you are not convincing one person here that there has been that screening and adequate justification.

I do not want to take the committee's time.

Mr. BENTLEY. Let me ask one question about this zinc problem, Mr. Wood. Assuming world demand for this thing fluctuates, to what extent are you relating supply sources that you are building up abroad to that fluctuating demand, that is the point?

Supply has to go in proportion to demand. Are we taking the world demand into consideration when we go out and spend money to build up these sources of supply abroad in the event of another world war?

Mr. WOOD. We are taking all supply-demand factors into account, insofar as it is given to our experts to estimate such factors correctly. Mr. FULTON. Along that line, even with the top year of production in the defense program all over the world, you build up tremendous surpluses. What will the future years be?

Mr. WOOD. Well, the Paley report is very interesting on that subject, Mr. Fulton, particularly on the longer range aspects of it. It shows the tremendous deficiencies which are likely to develop in the case of a great many of these materials, even on the basis of a relatively conservative estimate of the further industrial and productive development of this country alone.

Mr. FULTON. But that is further industrial and productive development not for the purpose of immediate United States internal security. That is for future expansion and of course to me, that goes over under the International Bank for Reconstruction and Development, on a loan and not on a Mutual Security Program.

Mr. Wood. To the fullest extent possible, it should be other forms of financing. It is only in those cases where it seems that the best experts on this subject urge it, that any projects are put into this program.

I suggest we proceed with Dr. FitzGerald.

Mr. FITZGERALD. There has been a statement circulated on the dependent overseas territories program for fiscal year 1954.

This is the first year in which we have proposed for your consideration a program specifically related to the situation in the overseas territories, primarily in Africa, with the exception of Liberia and 1 or 2 other small countries.

Most of Africa is composed of dependent territories of the European countries.

We contemplate, for reasons which I will summarize shortly, a program that involves, on the one hand, technical assistance of the know-how and show-how character, and on the other hand, a program of economic development in the amount of $24 million for the African territories and and $1 million for overseas territories in Asia and the Pacific.

The technical-assistance element in the overseas-territories program I do not believe I need to elaborate on. You are familiar with the character of such assistance and the illustrative individual projects are enumerated in this document.

The total estimated cost of these illustrative technical assistance projects for Africa, for fiscal year 1954, are estimated from $1 million to $2 million.

The illustrative economic development projects recommended for your consideration for the overseas territories of Africa in fiscal year 1954 are also summarized briefly in the document that is before you.

They involve some $21 million in British overseas territories, $14 million in French overseas territories, and smaller amounts in Italian, Portuguese, and Belgian overseas territories.

In each instance, Mr. Chairman, it is contemplated that the assistance if given will be less than or no more than 50 percent of the total cost of the project. These projects have been selected because of the real interest that these particular projects have for the United States and for the security of the United States and for their assistance to the metropoles. One of the real difficulties, of course, is that there is not available in London, Paris, and other capital cities sufficient capital resources to cover all the investments that are desired or necessary in these overseas territories.

By proposing to join with the metropoles or private enterprise in the metropoles we can multiply the effect of the aid proposed in this area.

Congressman Fulton has raised some really basic questions as to whether in the light of our own United States situation any investment of United States funds in Africa for development is warranted, whether it has a high enough priority at the present time to warrant any assistance at all.

It is, obviously, sir, a matter of judgment. These projects have been reviewed very carefully from the point of view of potential contribution which they do make.

Some of them-particularly the transportation projects are of outstanding importance if we anticipate at any time we will have to rely on Africa-particularly Africa south of the Sahara-for bases, for economic contribution generally, to our economic and our military efforts.

Africa south of the Sahara is a major source of many very important raw materials.

Congressman Fulton has raised a question about zinc, for example. Currently the Congressman is right. Zinc and lead both are in long supply in the United States, and prices are relatively low. I have an estimate here based upon the Paley Commission report which indicates that within the next 25 years zinc requirements will be

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increased by 50 percent over the current 1952 level of consumption, which was just over 2 million tons.

Mr. FULTON. Could I ask you a question before I leave? Is there any strategic urgency for the expansion of the production of lead and zinc in the fiscal year 1954, or the fiscal year 1955, under present conditions?

Mr. FITZGERALD. Our best estimate sir, is that by 1962, present known production of zinc and lead will not be adequate to meet the expected requirements by 1962. It takes time and it takes considerable time

Mr. FULTON. Could you read that question again?

(The question was read by the reporter.)

Mr. FITZGERALD. That is somewhat of a loaded question, Mr. Fulton. The way it was asked, I would have to say no to it, but I do not believe it is the way the answer should be given.

Mr. MARTIN. May I suggest that that question deserves first a "no" answer, but it also deserves another question.

Can the Congressman guarantee that present conditions will be continued?

Mr. FITZGERALD. The way it was asked, sir, I would have to say "no."

Mr. FULTON. I am looking for what program we think is the most urgent, but I would like your explanation.

Mr. FITZGERALD. In answering no to that, sir, I would simultaneously have to say that if the estimates that have been made of the zinc and lead supply situation by 1962 are correct-and they may be wrong; they may be wrong-it is desirable to make some investments this year, and these, to begin to make some investments this year in future lead and zinc production.

Mr. FULTON. Thank you.

Mr. Wood. I think Mr. Martin's point is well taken.

No one can guarantee that present conditions will continue. It is another way of saying what I said to you earlier, Mr. Fulton, that one has to look ahead beyond the immediate need, especially when these things take some time to develop.

Mr. FULTON. I agree with him on that, because I do not know whether the present high urgency, which is of the highest order, with our program of security and defense now going at the greatest rate possible under our economy, can be continued. There is great likelihood that the program for 1955 will be less, and therefore there will be a greater surplus of both lead and zinc.

If you continue under the same program, we have your judgment as to how urgent you think it is. But you take it off the ground of urgency and put it on the ground of desirability for the year 1962.

Mr. FITZGERALD. It is urgent to do it this year if you want the supplies in 1962, sir.

Mr. WOOD. I am afraid we are all crystalgazing a bit.

Mr. FULTON. Is the program for our security in the next fiscal year that we are working on, and not a long-term development for 1962? I ask you that very fairly. Is the place for that material, development, and so forth, in this program for the fiscal year 1954 labeled "Mutual Security program"?

Mr. FITZGERALD. We believe so, sir, but it is a matter of judgment. Mr. FULTON. Thank you.

Mr. Wood. We do have to look beyond this year in thinking about our security. It seems to me that is the main point.

Now, Dr. FitzGerald, we are attempting to rush through a lot of material in the balance of the afternon. Unless there are questions from members here, can we have the privilege of putting some of these things into the record?

Mr. FITZGERALD. I would like to suggest if it is agreeable to all that we insert a summary of this in the record.

(The information referred to is as follows:)

MUTUAL SECURITY PROGRAM-BASIC MATERIALS DEVELOPMENT PROGRAM

1. OBJECTIVES AND GENERAL FRAMEWORK OF BASIC MATERIALS PROGRAM MSA is requesting an appropriation of $25 million for fiscal year 1954, which together with use of 10 percent counterpart funds equivalent to $25 million would provide total obligational authority of $50 million to carry out the basic materials program for fiscal year 1954 under section 514. It is expected that a large portion of the dollar authorization requested will be used to meet necessary local currency expenses.

The basic materials program for fiscal year 1954 has been formulated to serve high priority security interests and economic objectives of the United States in Asia, the Pacific, the Middle East, Africa, and Europe.

The program will contribute to United States objectives in helping to overcome economic problems in Western Europe and promote stability and development in Africa and other areas-largely through development of additional sources of industrial raw materials in the DOTS in Africa and elsewhere.

The United States interest in relieving the serious economic difficulties of Japan and increasing the economic strength and stability of other Asian and Pacific areas will be advanced by development of additional sources of food and other raw materials in accessible areas outside Communist control.

Availability of materials to meet United States requirements for defense and for further United States economic growth will be improved by the development of additional worldwide sources of materials which would relieve European and Japanese pressure on total supply. (However, acquisition of strategic materials for the United States is not included in the basic materials program, since Congress has separately provided for that purpose.)

The basic materials program is designed as part of our overall effort to reduce financial aid burdens on the United States. Provision of funds to develop new material sources in nondollar areas and to expand production and trade on a regional and total free world basis should reduce European and Japanese dollar requirements for commodity imports.

Only a small part of the total financing necessary to expand production of raw materials and foodstuffs will be provided by the basic materials program. Other countries will make much larger expenditures, but they cannot accomplish all that is necessary because they must devote substantial government funds to defense. Private industrial companies and investors will undertake the great bulk of the financing of mineral production projects but they cannot be expected to provide ports, roads, and other ancillary or general development facilities. Projects which the Export-Import Bank, the IBRD and DMPA are willing to finance will not receive basic materials funds.

The basic materials program will help provide part of the financing necessary to carry out the most essential survey, exploration, port, transportation and other ancillary facilities projects required for raw materials and food production where the program is necessary for regional or global needs and is acceptable to the countries concerned. In some instances, the need for increased supplies of materials in a region may involve technical assistance or may require assistance in developing specific materials production facilities.

This moderate United States assistance will help to open up large new resource areas, stimulate further private investment and foreign public investment in materials production, and move forward projects essential for United States objectives which would otherwise not be carried out.

Political and social conditions in most of the areas concerned make it highly important to initiate both materials development and general development programs as rapidly as possible.

II. WESTERN EUROPEAN PROBLEMS AND BASIC MATERIALS PROGRAM FOR DOTS IN AFRICA AND ELSEWHERE

•Western Europe cannot live up to its commitments for defense production, cannot reduce sufficiently its dependence upon the Soviet bloc, and cannot maintain even its present standard of living if it does not obtain additional raw materials at reasonable cost.

Accordingly, European countries and their territories are making large efforts to develop production of raw materials which will not require dollar payments and which will earn dollars in trade with third areas. The magnitude of European efforts to date may be illustrated by the fact that for the period from 1946 through 1952 the United Kingdom and United Kingdom territories made public investments in the United Kingdom. DOTS totaling well over $1 billion in addition to private investments. Similarly, the French, Belgians, Dutch, and Portuguese and other metropole and territorial governments have made large public investments. Moreover. European private investors and, to a lesser extent. United States investors have expended very large sums for exploration, blocking out reserves and expansion of materials production. Those efforts have made a substantial contribution to free world supplies.

But additional assistance is necessary to carry out port, transportation, power, and other general development projects essential to meet European and African problems and United States objectives.

Proposed basic materials program assistance may be illustrated by projects under consideration for the south central region of Africa, which is one of the richest mineral areas of the world. At present expansion of material production is hampered by inadequate energy supplies and by inadequate transportation facilities to move coal within the area, to bring in equipment and other supplies and to take out copper, cobalt, and many other minerals. The proposed SinoiaKafue cutoff project would shorten the railroad haul from the south central minerals region to the east coast port of Beira by more than 500 miles and would permit more efficient use of equipment to relieve the general transport shortage. Another proposed project, to expand coal production at the Wankie colliery in Southern Rhodesia for use there, and for shipment to Northern Rhodesia and the Belgian Congo over improved transport facilities, would contribute to expanding production of copper, cobalt, chrome, and asbestos. These projects, and others under consideration, would permit substantial increases in the production and transportation of minerals such as copper, tin, cobalt, columbite, tungsten, tantalite, manganese, asbestos, chrome, aluminum, and production of food grains, rice, and other raw materials essential to meet needs in Europe, the United States, and even in the Asia-Pacific region.

III. PROBLEMS OF JAPAN, THE ASIAN-PACIFIC REGION, AND THE MIDDLE EAST For United States security and economic interests, it is very important to alleviate the serious food and raw material deficiencies and related economic difficulties faced by Japan and other countries throughout the entire AsianPacific region. The political and social stability of the food deficit countries in that region may be determined in large part by the extent to which rice production will be increased in Asian countries. The food deficit of the region currently requires outside purchases of $700 million per year. More specifically, in 1952 Japan's food deficit was more than $400 million, much of which was secured from the United States, while Indonesia, which was self-sufficient in prewar years, found it necessary to purchase over $100 million from outside sources. The need for rice is rapidly increasing because of population growth. Japan, however, can no longer depend on Formosa, Korea, and the Chinese mainland for foodstuffs and industrial raw material resources, and must seek other sources of supply and markets. Although U. N. military and other activities in connection with the Korean war, and the stationing of United States security forces in Japan, have provided a temporary prop to the Japanese economy (and financed high-cost food, fiber, coal, iron ore, and other raw material imports including large imports from dollar sources), it should not be expected that Japan's present special earnings will last indefinitely.

From the standpoints of the Asian-Pacific region, highest priority must be given to programs designed to increase food production. In addition, however, development in the area should have regard for the capacity for mutually advantageous exchange and seek to develop the plentiful raw material resources