TOTAL BUDGET EXPENDITURES AND DEFENSE EXPENDITURES

AS PERCENTAGES OF GROSS NATIONAL PRODUCT

Defense Expenditures as Percentages of Gross National Product," (A chart was shown entitled "Total Budget Expenditures and

as follows:)

Mr. VORYS. I notice your last chart is marked "Secret Security Information."

Mr. STASSEN. I think this may well be downgraded.

Mr. SMITH. Will this information be available to our committee? Mr. STASSEN. Oh, yes. We know you will respect the classification of anything that we have here that is classified.

This chart gives a little different picture. This is the total budget expenditures and the defense expenditures as percentages of gross national product.

You, of course, realize that with our very high gross national product, we can be putting much more into defense or into Government, but this would represent a lower percentage of our total gross national product.

This shows that the United Kingdom is spending the highest proportion of its gross national product for all governmental purposes; 33.7 percent is what they are putting in for all central governmental

purposes.

You also have to make an allowance that some countries do things through the central government that other countries do through the city or the county or the State and that makes some difference. We also have to make those allowances.

You can see that as to percentage of gross national product spent on defense, we are the highest. In defense related to total expenditures, we are the highest.

The United Kingdom is next with 13 percent. France has 11.3 percent. Germany in the center, below, 6.7 percent; Italy, 6 percent, and total European NATO plus Germany, 9.3 percent.

This gives you some idea of the situation and the kind of burden they are carrying.

France is putting 29.7 percent of their gross national product into central government expenditures. When you relate that, of course, to the Indochina problem and its drain and you relate it to the fact of the relative instability of the French Government that becomes a very heavy burden on France.

You also know, of course, that the United Kingdom has been talking about whether they can step up any from this present defense contribution in future years or whether they are at about the maximum amount they could carry under peacetime conditions and this reflects that kind of a situation.

Just a little further perspective on the economic side will be shown in the next chart.

Mr. VORYS. I wonder if you could secure for us a study of total Government expenditures. For example, Central Government expenditures in the United States would certainly not tell the whole

story.

Mr. STASSEN. Do you mean get all central and local expenditures of the United States and others?

Mr. VORYS. Unless you have the total burden of government, you do not have the answer. It is the total tax burden that is significant. Otherwise, you cannot compare it.

Mr. STASSEN. We can make an attempt at that. At the same time we will have to give you certain qualifying things that one country carries certain things as a government expenditure and other countries carry it in a different way, but we will try to assemble something.

I feel in Mr. Matteson I have one of the best research men in the world-he has proven it. I will have him make an attempt to take gross government burden in each of these countries and then show it in relationship to the Central Government and in relationship to defense and we will send that up to you.

(The information referred to is as follows:)

Total governmental1 expenditures and defense expenditures as percentages of gross national product

1 Includes expenditures of central, regional, and local governments, and social-insurance costs. Based on January 1953 (Truman) budget.

(A chart was shown entitled "World Production of Crude Steel in 1952," as follows:)

WORLD PRODUCTION OF CRUDE STEEL IN 1952

Mr. STASSEN. We all know the relationship of steel to economic strength and also defense strength. This chart gives you the broad relationship in that respect.

I feel it would be most constructive if at this point I emphasize the way in which we are working together on these matters and that the State Department takes the leadership and gives us the guidance on foreign policy and on the actions that are involved in foreign policy and political implications.

I should like to turn the session over to Mr. Merchant at this time and refer to the chart on the right-hand side and show the column on the coal and steel situation.

(A chart entitled "European Organizations" was referred to. See chart, p. 42.)

Mr. STASSEN. Mr. Merchant in his position now as Assistant Secretary of State for European Affairs has direct knowledge of this situation.

Chairman CHIPERFIELD. Mr. Merchant, you may proceed.

STATEMENT OF HON. LIVINGSTON T. MERCHANT, ASSISTANT SECRETARY OF STATE FOR EUROPEAN AFFAIRS

Mr. MERCHANT. Thank you, sir.

I apologize first of all, Mr. Chairman, if I seem ignorant or unimformed on some of these problems. I have only been on my present job for 10 days and I have a lot to learn.

It might be most interesting if I started off with a brief review of the EDC developments in the last few weeks. I will describe the situation country by country and where we seem to be on that central and crucial organization.

I think the developments in recent weeks have been encouraging. First of all, as you know in the last week the German Bundestag ratified the European Defense Community Treaty by a margin of over 60 votes. That was the third reading, the final legislative action in the lower House. It still, of course, has to go to the Bundesrat.

(Discussion off the record.)

Mr. MERCHANT. The second encouraging development is less than 12 hours old and that is the agreement in Paris last night, as the result of some weeks of intensive negotiation, on the protocols which the French had raised some weeks ago with the heads of the other 5 delegations of the community-protocols which were designed to be interpretative. They were raised for the purpose of improving the prospects for ratification by the French Assembly. They arose in large part from commitments made to the Assembly by the Prime Minister, Mr. Mayer at the time he took office 2 months or so ago. The third development which I think has likewise contributed to the more encouraging outlook are the visits of certain key European statesmen from the six countries to Washington, following Secretary Dulles' and Mr. Stassen's most constructive and helpful visit to the key capitals in January and February.

During the talks with Mr. Eden, the question of speedy ratification in all six parliaments was one of the key points of discussion.

Then one of the two Foreign Ministers of the Netherlands-as you know that is a unique situation where you have two Foreign Minis