General STEWART. That is in the 1954 program in the Navy; yes, sir. That is at the end of calendar year 1953, we will have deliverd none of the 1954 program.

We have similar charts for every country.

Chairman CHIPERFIELD. I want to say this, General.

I think you have done a tremendous job in getting this material since last Friday for this committee and we appreciate it very much. I just cannot understand how you could get all these things together that you have furnished us in that time.

You have been more than responsive to what we have asked for and we appreciate it. I think I speak for the entire committee when I say that.

General STEWART. You are very kind, sir.

We actually had the information. We simply did not have it in the form you wished it.

Mr. VORYS. Wait a minute. Can I go back to that 4 percent? That is stuff that we buy out of the new money. I thought it was slow deliveries, but that is awfully fast delivery Four percent you are going to deliver of the new money?

General STEWART. That is right. That will be stuff we get off the shelf from stocks.

I took the liberty of bringing one representative from each service. STATEMENT OF COL. J. B. CORBETT, CHIEF, FOREIGN MILITARY AID BRANCH, OFFICE OF THE ASSISTANT CHIEF OF STAFF, G-4 Colonel CORBETT. There are some items of maintenance for example which are in stock and which could be delivered immediately.

After we had gone over a number of these programs, we had found from experience that you will get 4 percent of your program delivered the first year; 32 percent the second, and 56 percent the third and ending up with 8 percent in the fourth year.

It is a statistical analysis of all the programs we have had so far to date.

Chairman CHIPERFIELD. Are there further questions at this time? If not, I believe we will adjourn until 10: 30 tomorrow morning. (Whereupon, at 4:37 p. m., the committee recessed to reconvene at 10:30 a. m. Friday, May 22, 1953.)

MUTUAL SECURITY ACT EXTENSION

FRIDAY, MAY 22, 1953

HOUSE OF REPRESENTATIVES, COMMITTEE ON FOREIGN AFFAIRS, Washington, D. C.

The committee met in executive session pursuant to call in room G-3, United States Capitol, at 10: 45 a. m., Mrs. Frances P. Bolton (presiding).

Mrs. BOLTON. The committee will be in order.

The committee will continue to hear testimony of witnesses regarding the Mutual Security Act of 1953.

Mrs. Church has asked that a question be transmitted to the military [reading]:

Are the Navy's carriers expected to be a substitute for strategic airpower? As long as we have abandoned the hope of being able to maintain air superiority in Europe, will we formally abandon the 3 years' work we have put into creating NATO, or will we continue to keep up a pretense?

I would like to ask who says we have abandoned it and who says it is a pretense?

This comes out of the budget questioning of Mr. Wilson yesterday in the Senate.

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

Mr. WOOD. Mrs. Bolton, I would think there is no one here who is sufficiently familiar with this particular problem to answer it. I have myself heard nothing which would indicate that we have abandoned that or that the word "pretense" is properly applied to this situation. Mrs. BOLTON. You pass it on to the Army.

Also this:

What part did the Joint Chiefs of Staff play in preparing the new defense budget which cuts out $5 billion in new money requests and $2.3 billion in actual spending in the year starting July 1? Did the Joint Chiefs approve the budget cuts?

Those are questions that we should have answered in our testimony if we do not already have those answers.

Mr. WOOD. I know General Bradley answered those questions specifically in the Senate testimony. I did not hear General Bradley in his testimony before this committee and therefore do not know that he did answer it.

Mrs. BOLTON. If we could have a very thorough reply made to it, we would appreciate it.

Thank you very much.

Mrs. BOLTON. Mr. FitzGerald is here to tell us about the problems that come within his responsibility.

Mr. GORDON. Possibly the staff would inform us whether those questions referred to were already answered by General Bradley. I think there was something like that.

Mrs. BOLTON. If the staff does not have that, will you secure it, please?

Mr. WOOD. Dr. FitzGerald will round out the picture for the United Kingdom by describing the economic situation there and the assistance which we propose for the United Kingdom in the form of defense financing and defense support.

STATEMENT OF HON. D. A. FITZGERALD, DEPUTY TO THE DIRECTOR FOR MUTUAL SECURITY

Mr. FITZGERALD. I will refer to the tables entitled "Status of the Proposed MSA Programs."

There is a table for each country and I would appreciate it if you would turn to the table headed "United Kingdom."

You will see summarized there the same form.

Mr. Wood. The second chart from the last is the one referred to. (A classified chart was referred to entitled, "Status of the Present and Proposed MSA Programs as of March 31, 1953 (In Millions of Dollars), United Kingdom.")

Mr. FITZGERALD. For the United Kingdom, shipments through March 31, 1953 have amounted to $3,314,800,000.

Mrs. BOLTON. Does that mean shipments from here?

Mr. FITZGERALD. Shipments from all sources, about 50 percent of which in recent years were from the United States.

Mrs. BOLTON. May I ask what the other sources are?

Mr. FITZGERALD. The other sources are primarily Canada and Latin America. Other dollar sources of supply. There is some Middle East petroleum in some of the earlier figures where it was paid for in dollars.

Mr. WOOD. I may say for the record, Madam Chairman, that we have available what we call our Paid Shipments Booklet. Copies are also available for the members. It shows in great detail the commodities which have been shipped to each country and the sources from which these commodities have been shipped. It is in such detail that it is impossible to put it all on a chart or a short table. However, I call it to your attention since it contains, I believe, the answer to any question on this particular subject which would occur to anyone.

Mrs. BOLTON. Does it indicate from what ports that Middle East oil came and from what sources?

Mr. Wood. No, it does not, Mrs. Bolton. As to sources, it contains data as to the countries from which a commodity comes but not on the specific ports from which it was shipped.

Mrs. BOLTON. Do we get oil from the Haifa refinery? That is not really going yet, is it?

Mr. FITZGERALD. That is right.

Mrs. BOLTON. Where do we get it from?

Mr. FITZGERALD. Earlier, one of the ports was Abadan. That was before the port refinery was closed. We have not, of course, financed

any petroleum from the Middle East for the last 18 months, approximately.

Mrs. BOLTON. This is all back stuff?

Mr. FITZGERALD. This is all back stuff.

Mrs. BOLTON. Very well. I am sorry to have interrupted you.

Mr. FITZGERALD. The program still to be shipped-that is shipped after the 31st of March 1953 is $270,100,000 for the United Kingdom. The major items in that pipeline are shown to be nonferrous metals and products and machinery and vehicles.

The request for 1954 is shown in the final item on this table, a proposed $200 million, half of which would be used for a special program in the United Kingdom.

May I make one other comment about these figures: These shipments are based upon payments by the MSA controller. Those payments are made after documentation is received by the controller, including ocean bills of lading. It is usually 1 to 6 weeks between the time of the actual loading and receipt of the ocean bill of lading by the controller, and audit by the controller, so that shipments, actual physical shipment, as of the 31st of March have slightly exceeded the figures shown here by virtue of the 1 to 6 weeks' lag in the flow of paper from the time of shipment until the time of payment.

Mr. FITZGERALD. I would like to now turn to two charts which are in your folder on the subject.

(Two classified charts were referred to as follows: "United Kingdom-Defense Expenditures" and "Status of Materiel and Training Programs, United Kingdom, Materiel Program (Millions of Dollars).")

Mrs. KELLY. Are these vehicles, trucks, or what are they?

Mr. FITZGERALD. Those are some trucks. Early in the program there were some trucks. Mostly they are earth-moving equipment of various and sundry kinds.

Mrs. KELLY. This is a different type of vehicle than that procured in the offshore procurement.

Mr. FITZGERALD. This is civilian vehicles. Entirely civilian

vehicles.

Mrs. BOLTON. Is the Paid Shipments booklet distributed?

Mr. WOOD. I am not sure we have enough copies for each member, but we will furnish them. I think there were about 8 or 10 here yesterday and we are sending up some more.

Mrs. BOLTON. Will you continue, Mr. FitzGerald, with the charts. Mr. FITZGERALD. I should like to turn now briefly to the charts and in doing so, to recall to the committee's mind that questions were asked both yesterday and earlier in the session and meetings of this committee, about the defense expenditures of the United Kingdom, particularly in relation to the end-item assistance from the United States.

These charts here-copies of which are in the folders you have before you will give you considerable information on detail.

You will remember that the question was raised about the relative size of the end-item assistance to the United Kingdom, and the United Kingdom's own effort in military materiel.

This chart here shows for the last 5 years the United Kingdom's defense expenditures for major materiel categories. In 1950 the expenditures amounted to just over half a billion dollars.

Mr. WOOD. That is not the total, is it?

Mr. FITZGERALD. That is the major materiel and relates to the major materiel shown in the other chart submitted by the Defense Department.

By 1953 major materiel expenditures are estimated to rise to about $1.8 billion, and to about $1.9 billion for fiscal year 1954.

It is broken down in fiscal year 1954 into aircraft, ships, ammunition, and explosives, noncombat vehicles, and all other.

These defense expenditures for major materiel, of course, were only a portion of the total defense expenditures of the United Kingdom, as would be the case in all other European countries. The proportion is shown roughly by this bar in the left-hand chart, where in addition to major materiel costs you have personnel, operations, construction, and other expenditures. In the United Kingdom for fiscal year 1953 we estimated total defense expenditures of the United Kingdom at about $5.1 billion, and for 1954 estimated about $5.2 billion.

(A classified chart was referred to entitled "United Kingdom-Mutual Defense Financing, Central Government Finances.")

Mr. FITZGERALD. The central government finances are shown on the right-hand side of the succeeding chart. The defense expenditures are shown in black on the left-hand side of the bars. That is the same as on the left-hand side of the previous chart. As you will see, defense expenditures have become an increasing proportion of the total government budget and total government expenditures. The balance of the expenditures-nonmilitary expenditures are shown in the green part of the bar here, and you will find the actual figures in the country tables in your book entitled "Statistics for Europe.'

Receipts are shown in the bar, in the parallel bar, for the United Kingdom, and receipts exceeded expenditures in 1950 and 1951. Since that time, the United Kingdom has run a deficit in its budget.

The top small red-hatched portion of the "Receipts" bar indicates counterpart in each one of those 5 years. As you will see, counterpart constitutes only a very small proportion of the total available resources of the United Kingdom Central Government, but do, of course, help to contribute to the aggregate volume of United Kingdom expenditures. The left-hand part of this chart shows the relation between the fiscal year 1953 and the fiscal year 1954 programs for the United Kingdom. This is on the basis of obligations rather than of expenditures. The table you looked at earlier was on the basis of expenditures to date and, of course, fiscal year 1954 is shown on a proposed utilization or obligation basis.

In fiscal year 1953, aid to the United Kingdom through the Mutual Security Agency will amount to $409 million. That is to be obligated as shown by the brown bars in this chart. The recommended program for fiscal year 1954 is $200 million. That is a reduction of about half. It is to be used illustratively as shown by the blue bars in this left-hand part of the chart.

There is $100 million for agricultural commodities, and $100 million for aircraft production in the United Kingdom, an item which is specifically provided for in the proposed legislation.

We had shown you earlier the matter of expenditures compared to receipts and the gross national product and the general effort the United Kingdom has made on its own in connection with our mutual defense effort.