The fiscal year program for fiscal year 1953 is also shown in the tables before you.

Now, as far as the Philippines are concerned, the situation with respect to funds already appropriated is that shipments to March 31 amounted to $30 million. Shipments to be made after March 31 against funds already available, $36,750,000. Those are available in sheets supplemental to the main booklet.

The Philippine Military expenditures and the percentage of those expenditures to the Central Government budget we have already discussed, and it is shown in the charts in the blue booklet.

Military expenditures, as Congressman Judd has noted, have declined in the last 3 years, and are now running at about $90 million a year. That represents just under 30 percent of the total Central Government budget.

The Philippines program is primarily a program of technical assistance and related supplies, with emphasis on transportation, power, agriculture and forestry. There is lesser emphasis on manufacturing, education, and public administration.

As you will note from the chart in the first table of these two related to the Philippines, the counterpart which is generated as a result of this program, is matched almost 2 to 1 by funds made available by the Philippine Government for the same project.

The illustrative program for next year is one of $17 million, as compared to a $20 million program for the current year. Again, there is emphasis on agriculture and transportation and lesser emphasis on public health and education.

The Philippine Government budget was brought closely into balance during the last 2 years after serious deficits in the past. There is a slight surplus this last year, which Mrs. Bolton I am sure will be glad to make note of.

One of the reasons for the improvement in the Government budget has been the improvement the Philippines undertook in its tax-collection system and in the rates of tax collection which were undertaken as a result of the agreement with the Philippine Government, entered into about 22 years ago.

The details of the Philippine program are in the green book and I do not think it necessary to repeat what is already before the committee.

Chairman CHIPERFIELD. I might say that Secretary Robertson wishes to make a statement on Thailand.

Mr. ROBERTSON. Dr. Judd, we thing that this is an extremely important area, particularly at this time. I think we ought to check the latest figures on what they are doing in a military way, too, because, according to my information, they are appropriating nearly 45 percent of their entire budget for military purposes, 44.8 percent. Mr. JUDD. This shows only 21 percent. Your figures are twice as high as this? Did you say 44?

Mr. ROBERTSON. My figures are as of the 1st of February of this year. Their total budget is $190,300,000, according to these figures, and their military budget is $85,254,000, or 44.8 percent.

Mr. JUDD. I should think those ought to be checked somehow.

Mr. ROBERTSON. Just by comparison-you were talking about the Philippines-I think the Philippines have appropriated for military purposes about 27.5 percent of their budget.

Mr. JUDD. That is so if your figures are correct, but his figures show Thailand contributing less although it has a much larger armed force. Mr. ROBERTSON. That is why I think we ought to check the figures. Mr. WOOD. They may be of different dates, and we can correct the record on that.

(The information requested follows:)

THAILAND EXPENDITURES FOR DEFENSE

The total budget for military expenditures in Thailand for calendar year 1953 is 1,819,647,000 baht, including expenditures for internal security (national police) and including approximately 685 million baht for cost-of-living allowances which are not carried in the budget for individual ministries. This amounts to approximately 35 percent of the total national budget of 5,248 million baht.

Converted at the average open market rate of 16.7 baht to the dollar, total defense expenditures are equivalent to approximately $109 million equivalent including the living allowances, and approximately $67.9 million, excluding the living allowances. The chart in the blue book setting forth military expenditures from 1950 through 1953 was drawn up on the basis of military expenditures exclusive of living allowances amounting to the equivalent of approximately $40 million in 1953 (as set forth in the footnote to the chart) because the amount of the living allowances is not available for years prior to 1952. Conversions for the chart were calculated at a rounded figure of 17 baht to the dollar.

The calendar year 1953 budgetary expenditures for the police amount to approximately 458 million baht. The police are an important force for the maintenance of internal security and these expenditures are therefore considered to be a part of military expenditures. If these expenditures are excluded, however, on the basis that the police are intended for maintenance of internal security only, the amount expended for external security is approximately 1,362 million baht. This expenditure constitutes approximately 26 percent of total budgetary expenditures. Again on the basis of 16.7 baht to the dollar this is equivalent to approximately $81.5 million.

Mr. ROBERTSON. For many reasons, we consider this a particularly vital area where we need to work to increase our influence.

Mr. JUDD. Nobody believes that more than I do, but I still am not sure that giving them money they do not need is a means of increasing our influence or their strength in that area. If, as he says, they have an unfavorable balance now, that changes the picture somewhat.

Last year and the year before I questioned our programs for Thailand and Burma, because giving people money they do not need, instead of getting them to see that it is their own interests which require them to go along with us, is in my judgment not the most effective way to get their support or to use the money.

Mr. ROBERTSON. If they do not need it, I agree with you.

Mr. JUDD. I suppose the argument is that if we do not give it to them they would not spend their own funds for these purposes which we think are important.

Mr. WOOD. There is a matter of pump priming and demonstration in this, Dr. Judd.

Mr. JUDD. It is their country and they are under the ax, and for us to be putting in $1 out of every $3 when they are in relatively good shape, seems to me more than ought to be necessary. In countries where there is a dollar gap, we are told we have to give it for that reason. Where there is no dollar gap we have to give it in order to get them on our side, but in every case we have to give it.

I just hope that this is not weakening in the long run our standing there when your desire and everybody's desire is to strengthen our position and that of the Thailand Government.

I have nothing further to say on this point. Mr. ROBERTSON. On the economic assistance, this is one of the smallest programs we have-it is only $5 million, if I remember correctly. Mr. JUDD. When you come here on this bill and there are two or three hundred projects in amounts of only $150,000 for a project. here and $500,000 for another there, and here is a country that is relatively well off and we are giving them that much money-all I say is, while I shall vote for it, I just hope that we constantly keep in mind that it is going to be harder and harder to get these bills through.

Mr. FITZGERALD. I agree with Congressman Judd, that Thailand is relatively one of the better-off countries in southeast Asia. It is not fabulously wealthy, but as those countries go, it is well off.

Mr. WOOD. The program in Thailand, Dr. Judd, is in its nature very similar to the point 4 operations. It consists very largely of technicians and demonstration equipment. If you will notice in one of the summary tables, this aid is not listed as defense support, but as technical progress and development.

Now, you will recall-and I need not go over all the discussion of last year-that we advised the committee that in countries where there is a mutual defense assistance program, we felt that assistance of this kind could properly be called defense support because without the kind of development produced by this type of assistance, the kind of relationships developed through it between us and the people of that country, and the kind of economic progress and strength that comes out of this form of aid, the military program would be seriously undermined and jeopardized. For that reason last year we called this form of assistance "defense support," and you could just as well list it that way in this program. However, because of the actual nature of the assistance, namely, technical assistance and demonstration equipment in Thailand, we have this year put it in the column "Other than defense support."

Mr. VORYS. Well, you have $3,185,000 out of the program that is for supplies and equipment. That is not technicians. There is a million and a half in agriculture.

We just went down there and had a teller vote on $400,000. It was a big issue-$400,000 for New York Harbor.

Now, here is a country that is comparatively a rich country, and we are to furnish a million and a half of supplies and equipment. Mr. SMITH. Will the gentleman yield?

Mr. VORYS. I yield.

Mr. SMITH. I wonder what would happen to the relationships if these items for Thailand would be knocked out on the floor.

Now, you referred a few moments ago, Mr. Wood, to the fact that this is comparable to the technical assistance program, but I dare say in all those countries where technical assistance is given, that they are in very poor shape. They are not in the shape that Thailand is in.

Now, it is entirely possible that you will knock out this assistance for Thailand on the basis that it can afford to pay its own way. It looks to me like we are going in here, trying to purchase friendship again, a policy that we know has never worked. We are sticking our necks out, it seems to me, on this proposition.

Mr. ROBERTSON. May I comment there: I hesitate to express myself on this subject before this committee, because representatives of this committee have recently been to Thailand, as I understand it, and saw conditions firsthand.

I would like to elaborate a little off the record what I said to you awhile ago.

Off the record.

(The then following remarks were not reported.)

Mr. WOOD. In the interets of being frank, this year we have separated the point IV type of technical assistance, from the special economic assistance so that you can look them both in the face and decide for yourselves whether you want one or both or none.

Chairman CHIPERFIELD. You have been very frank about it. Mr. VORYS. We are not complaining about lack of frankness. We are trying to seek out what the policy of our Government is.

When our subcommittees came back from India, they said the Indian reaction was in general, "We'll furnish technical assistance. You give us the stuff." Although the total program was presented last year, as 12 to 1, we cut it to 7 to 1. That is, we attempted to cut down on the amount of economic aid. We now find the program is proceeding on a 14 to 1 basis in India.

Mr. Wood. Thailand is about 3 to 1, is it not?

Mr. FITZGERALD. About 1 and a half to 1. In fiscal year 1954 the breakdown of the proposed dollar cost is shown: Supplies and equipment, $3,200,000; and services, $1.8 million. It is about $3 worth of supplies and equipment, to about $2 worth of services, roughly. You cannot, I believe, reduce it much more than that if you are going to have anything to demonstrate with, and that is the intent of this program and not to give basic, wide-scale economic aid.

Mrs. BOLTON. Where does vocational education come in, in these programs, under a different name? Is that technical assistance? Mr. VORYS. It is education.

Mrs. BOLTON. I have been absolutely bombarded every time I have gone out of this room, beginning last week, with statements that if we think we are going to bring out any program for vocational education to the floor and get it passed, when we did what we did in the other bill to our own people, we can just jolly well go back to the committee. Mr. JUDD. We increased it down there.

Mrs. BOLTON. But not much.

Mr. JUDD. We had to fight to do it.

Mr. Wood. The technical assistance people, I think, can testify fully on the importance and value in these areas of some education, as well as some other technical training.

Mr. VORYS. If we ask them when they come up about $530,000 for education for Thailand, consisting of $145,000 worth of equipment, they will then say, "We will ask somebody else." Is that not correct? Mr. WOOD. That is right. The MSA witnesses can testify on the educational program in Thailand, if you wish.

Mr. ROBERTSON. I agree we should not spend money where it is not needed. I think we all agree on that. If these programs do not further our interests, there is no justification for them.

We are concerned about Thailand, and I was encouraged to think that this program was reasonable and right from the recommendation

of the committee that went out from this committee, your own survey committee. They said that in view of the strategic location of the country, it is vital that it be independently maintained and that United States assistance be continued along substantially the same lines as the persent program.

This was the recommendation after a fresh look by your committee. I have never been to Thailand, but I do know of considerations which can't be put into the record. It is a particularly sensitive area, but they are showing great willingness to work with us, rather than the other side, and our sole objective is to keep them on our side and off the other one.

Mrs. BOLTON. Are you appreciating the fact that congenitally the Thailander takes great pleasure in padding his budget and getting by with it, and whenever he can do it, he is the happiest man in creation. He has been traveling along with the feeling that we did. not know that, and he has been getting more than he thought he was going to.

Mr. JUDD. I agree that you probably cannot do anything different about Thailand today. I am in a sense fighting the battle of last year and the year before. Having started the pattern, this is not the year to be changing the pattern, because the enemy is breathing down their neck.

On the other hand, here is one of the arch-illustrations of why this whole program gets in trouble. We have a hard time defending it to our own consciences and it is even harder to defend to our collegues, the pattern of going out and looking for places where we can spend money to win people to our side when they are already on our side. I did not mean this to be so prolonged. I think we have to go through it, but it still seems strange why we should be paying so much larger a percentage of their military budget than for example, the Philippines.

I do not want to go into this any further, Mr. Chairman.

There is one question I want to ask about this Philippine presidential race and what is going on. If you have read, and you doubtless have, our recommendations on Indochina regarding the necessity for some arrangements with the French, other than those that exist at present-if we are to get the will to resist on the part of those people and have our money worth anything, I would like to have your comment on that.

I can tell you for your information that the first draft of that report was brought into this committee, and the full committee tore part of it to pieces, and threw it out the window. It was too strong. It was too blunt. We toned it down and probably it is still too strong. (A short recess was taken.)

Chairman CHIPERFIELD. The hearing will be in order.

Mr. ROBERTSON. I would like to say one thing about Thailand. I implore you, ladies and gentlemen, do not cut Thailand out of this program at this particular time. They are our friends, but we want them to be effective friends.

This program, from an overall area standpoint, is very necessary to increase the food supply and exports of rice; there are many overtones in the situation. Nothing would please the Communists more than for us to cut loose from Thailand and that area at this particular