Now, actually a lot of the Dutch money is coming out of counterpart but at least it is a guilder and Belgian franc purchase.

In figuring the capacity for aircraft in fiscal year 1954, since the production lines in Belgium and Holland for the airframe have to be activated and the lead time is long even to get the 1953 United States offshore procurement out, we did not want to encumber the commitment of these countries to build planes with their own money and their ability to get deliveries at a reasonable future date by also planning any fiscal year 1954 offshore procurement in Belgium and Holland.

This capacity figure in aircraft assumes that we will not place a dollar of procurement for additional aircraft in Belgium and Holland during that year.

We did the same thing with every other single item.

If there is going to be a question of a contest between offshore procurement and something that these countries under their planned programs or reasonably expected programs ought to buy for themselves, we left the road open for them.

Mr. VORYS (presiding). Proceed.

General FINLAY. Of course, Mr. Halaby mentioned that there is going to be some offshore procurement in the Far East.

From the standpoint of building up a sound defense production base in Europe, however, it does not make any difference where the end items resulting from offshore procurement in Europe go, since there would be an equally valuable contribution both to the defense production base in Europe and to the economies of Europe if end items for the Middle East, or Far East were procured there the same as for the European countries themselves.

Mr. VORYS. Did you state whether it is your purpose to use this capacity so that there could be conceivably $1,855 million devoted to offshore procurement in fiscal year 1954?

General FINLAY. Mr. Halaby will speak later on what the prospects are for a program. This is just a statement on what could be done depending on funds and several other factors.

There is one last thing I would like to mention. When you were examining this 3.5-inch rocket, the question was raised as to whether it was loaded or not. Actually those 2 shells, the rocket and the 105 shell are inert and there are no charges in them. While, of course, that is a safety factor, it is really symbolic of one of the problems we have in Europe which is a critical shortage of powder capacity.

The International Staff of NATO-its predecessor, actually, the old Defense Production Board over in London-made a study of the capability of the European ammunition industry to maintain the European forces in time of war.

(Discussion off the record.)

Mr. VORYS. Where does the raw material for those propellants and explosives come from?

(Discussion off the record.)

Mr. HALABY. In general, the terms come out of the source of production.

General FINLAY. Obviously copper would have to come from South Africa or South America.

Mr. VORYS. I said propellants. Propellants was down was it not?

General FINLAY. That is right. That is because of the fact that they were very heavily bombed and destroyed by the retreating Germans and much of the equipment that was left was hauled off by the Germans into safe rear areas or was taken off by the Russians as reparations.

(Discussion off the record.)

Mr. VORYS. That is what I wondered. Are the raw materials for the propellants available there in Europe?

General FINLAY. I think in general, with some limited assistance in certain categories of raw materials, they would be self-sufficient. (Discussion off the record.)

Mr. VORYS. I am wondering if there is anything that is hard to get that goes into gunpowder, explosives, and propellants. I do not know. Maybe the rest of the committee would know.

I understand that our forefathers could make gunpowder at nearly any blacksmith's shop and so forth and I would think, knowing as little as I do about it, that the easiest thing in the world to do would be to make the propellants and the explosives.

General FINLAY. The only trouble is, if you want to get the prices down you cannot make it the way our forefathers did.

One of the big problems on prices is that propellants in Europe today range anywhere from 2 to 3 times in cost to the price of propellants coming from huge facilities such as those of Du Pont in this country.

One of the ways of getting the cost of the armament down is to help them get modern production.

It is the same way with these shells. They could turn them out by hand, but if you want to do it the efficient, low-cost way it is done in this country you have to have automatic shell lathes that just bounce those things through a few seconds apiece.

A part of our program has been to try to teach the Europeans modern American production methods.

For example, one of the most critical items of all in war is this brass cartridge case here. Brass, as you know, is a critically short item in wartime.

In this country we went into steel cartridge case manufacture, and we would like to be free-as I have mentioned in a statement on this facilities program, to spend a small portion of that $50 million to help finance the actual production of steel cartridge cases on an experimental basis in Europe, because brass would be, of course, dependent upon the import of copper which is critically short and it would require transportation. The steel is there in Europe and once they get into production on it, the cost I do not believe would be any higher and would probably be lower than the cost of brass. However, in the initial stages, with the cost of going into the new equipment and a new process, the indications are that the cost of the steel cartridge cases would be higher than brass and we have to provide some assistance to get them moving in the right direction on that.

Mrs. KELLY. I understand steel is unsatisfactory and unsafe. It bent and stuck in the weapon. It cannot be used.

General FINLAY. I understand that has been overcome.

Mr. HALABY. I might say, Mr. Vorys, at this point, that in going over this program with Secretary Wilson and Secretary Kyes, who, as you know, had a great deal of experience in military production,

they had two reactions that I think the committee might be interested in. The first one was that they wanted to use that program to get prices down. We already have 1 or 2 instances where foreign defense ministers have thanked us because they are now able to place contracts, as a result of our coming into the market and working the prices down through negotiations, they have been able to buy more for their money.

The second thing that they are particularly determined to do is to improve the productivity of these plants to which we are giving these contracts.

As General Finlay has just been pointing out here and there we would like a little flexibility to use some of these funds where we can get a good deal, to get better tools, get better know-how, specifically applied to higher volume, higher productive kinds of production. General FINLAY. To answer your question, Mr. Vorys, there would undoubtedly have to be an importation of cotton linters and glycerin, and also possibly toluene, unless the Europeans went into the manufacture of synthetic toluene from petroleum such as was done in this country during the war.

Chairman CHIPERFIELD. I would like to ask Mr. Wood what he has in mind for his program. He said something about going ahead on a point 4 program.

They are trying to get together, as I understand it, the things that the committee asked for last Friday. They are having what he calls a Friday rundown at the Pentagon to see that they have everything, and he does not want to come before this committee and not have every request that they made in good shape. I did not mean to speak for him but I just wanted you to talk over for a moment with Mr. Wood the situation so that we can determine what we should do tomorrow.

Mrs. KELLY. Mr. Chairman, could I ask one question before you get into that?

Chairman CHIPERFIELD. Yes.

Mrs. KELLY. I understood that the contracts for NATO, for these shells and so forth, have not the priority that the contracts have in these countries for fulfilling their own particular obligations or contracts to other nations. Is that correct? Are there any contracts in Great Britain for this Hawker-Hunter to any country outside NATO? General FINLAY. The only conracts they have are our own offshore procurement contracts and their contracts for their own production in defense of the British Isles. As you know, the British Isles make a very important base to us. I believe it was explained yesterday by Colonel Taylor that the first planes are going to the British themselves under this program and under their own contracts. But these planes are just as valuable in our defense if used by the British as they are if taken over by us under OSP, so that there was a calculated decision on our part that we would be well advised to let them have some planes first and to receive our own deliveries later.

In the case of this Mystere Mark IV, we get the entire production of that item in France. They are going to build an intermediate model which is the Mark II, which we were not willing to finance because it is not as progressive a model as this, and we wanted to help force them into more advanced methods of production.

Mrs. KELLY. Thank you.

Chairman CHIPERFIELD. Mr. Wood.

FURTHER STATEMENT OF HON. C. TYLER WOOD, DEPUTY TO THE DIRECTOR FOR MUTUAL SECURITY

Mr. WOOD. I will try to give an estimate of the situation, as the military would say.

We are having this afternoon, starting at 2:30, a dry run covering the material that the committee has requested from us. We want to be sure that we have everything in good shape. As a result of that dry run, sometime around 4:30 or 5 I expect to know whether we really have what you want and can present it to you tomorrow morning.

I am sorry I cannot be sure until after this dry run as to whether we will be wasting your time by coming up here tomorrow on Europe and NATO. I want to avoid that if I possibly can.

Chairman CHIPERFIELD. What do you have to say, Mr. Vorys? What would your suggestion be? Or Mrs. Bolton or any member of the committee?

Mr. VORYS. I would like to know whether the chairman and the executive department have any plan in mind as to when we are going to attempt to get a bill out. It seems to me that our plans ought to build somewhat backward from that date.

I would think that we certainly ought to have hearings on some parts of this program tomorrow morning, as far as I am concerned, rather than Friday morning.

Mr. BENTLEY. What plans, if any, are made for these large numbers of private non-Government witnesses?

Chairman CHIPERFIELD. I have talked it over with some of the members, and in some instances we can get statements to save our time. They will be willing to present statements rather than come in and testify, Mr. Bentley. As far as that is possible, I think it is usually a good suggestion because a number of them are agencies that have a particular propaganda idea and they want to have a statement in the record, at least so far as this bill is concerned.

I do want the committee to know that I have talked to Mr. Wood repeatedly about it. We are trying to expedite this just as much as possible.

I think we ought to have 1 day on the bill, at least, so we will know what is in that bill-or try to know what is in the bill. I think we ought to get into this unexpended balance and obligations. I think we ought to know about that before we start in.

We have not gotten to the economic end of it yet. How long do you think it would take, about another week?

Mr. VORYS. There is $1 billion in here for the Far East.

Mrs. BOLTON. There has been no discussion of north Africa and no proper discussion of the Near East.

Mr. FULTON. What committee liaison has there been on the floor schedule?

Chairman CHIPERFIELD. That is always a difficult problem that we have, and that is one of the reasons why I have tried to have meetings in the afternoon. I am perfectly willing to meet in the afternoons, but I have tried to avoid that because some of the members of this committee have come to me and asked if it was possible not to have afternoon meetings because they cannot be on the floor.

33064-53-32

Mr. FULTON. My question really was on the time of calendar for this bill in the floor schedule so we can see what the ultimate deadline is we are running against, considering that we have this authorizing bill as well as an appropriation measure.

Chairman CHIPERFIELD. I talked to the Speaker a few moments ago. He called me down and talked to me about it and asked what progress we were making.

The leadership does not want to hold Congress up in the heat of summer and then ask Congress to give foreign aid. We do not think it is a good idea, and we have to get it out.

Mr. FULTON. What does the leadership want?

Chairman CHIPERFIELD. I talked over another matter with the Speaker, too, and they have not put any deadline on it. If you desire to have me talk to the Speaker and find out what deadline they think we should have, I think I had better do that and then tell this committee.

Mrs. KELLY. Will Secretary of State Dulles and Director Stassen be back to give us a report before we take this mutual security bill to the floor?

Mr. WOOD. They are coming back on the 29th, Mrs. Kelly.
Mr. JUDD. We will still be here.

Mr. WOOD. I am not the son of a prophet, but I would estimate, knowing the material that this committee will wish to cover and discuss in this bill, that if you hold morning hearings every day from now on you will not have finished the testimony let alone your markup, until the end of the week following next; that is, if you hold only morning hearings.

Chairman CHIPERFIELD. May I ask the committee view as to whether they would like hearings in the afternoon, too?

Mr. JUDD. Yes.

Mrs. BOLTON. When we follow the 5-minute rule on the floor it is very bad for us to be out of the House Chamber. However, if we are on general debate there is no reason in the world that I can see why we cannot be up here as a committee in the afternoons.

Is there any way to find out what is programed and see how many times we can meet all day?

Mr. JUDD. We have general debate tomorrow afternoon.

Chairman CHIPERFIELD. If they are able to come up tomorrow morning and they have something to present in the afternoonMr. VORYS. How about the suggestion that tomorrow morning we go into point 4 and some of the economic features?

Mrs. BOLTON. And meet all day.

Mr. WOOD. Mr. Chairman, may I just bare my soul on that one for a moment and discuss a problem that we have here.

Mr. HALABY. May I ask one immediate question? What is the committee's will today? It is now 12:25. Shall we go into infrastructure? We have to sort of take this from now.

If not, then infrastructure hangovers.

Mrs. BOLTON. Let us meet all day tomorrow.

Chairman CHIPPERFIELD. All right.

Mr. HALABY. We have laid our table before you today and you may find that so responsive that you do not want any testimony, but I doubt it.