time. They are very quick to capitalize on our differences. They always come to us with a solid front.

Thank you very much. Are you through with me now, Mr. Chairman.

Chairman CHIPERFIELD. Yes. We have enjoyed having you here very much.

Mr. ROBERTSON. It has been good to be here and I think I have a much clearer understanding of some of your problems.

Chairman CHIPERFIELD. May I call the committee's attention to the fact that there has been a letter from the office of the Director of Mutual Security, which has just been released and placed before each of you.

If there is no objection, I would like to have this letter placed in the record. It is so ordered.

(The letter referred to is as follows:)

DEAR MR. CHAIRMAN: Testimony before your committee on the Mutual Security Program for fiscal year 1954 has indicated that its implementation would require authority for new appropriations in the amount of $5,828,732,500 and actual new appropriations of $5,798.732,500, plus specific congressional authorization for the utilization of local currencies in the amount of $98,396,000.

Witnesses presenting the program have further stated that as the result of a rigorous screening of previously authorized programs, substantial savings would be effected in the execution of those programs. They have promised to keep your committee, and the comparable authorizing committee of the other Chamber, continually advised of the progress being made in determining the probable amount of such savings, thus enabling appropriate adjustments to be made by the committee in the authorizing legislation before reporting it.

This letter is sent in accordance with the foregoing promise and is designed to report on the results of this rigorous rescreening by the Department of Defense and Mutual Security Agency of previously authorized programs. This rescreening indicates that on June 30, 1953, there will be $404 million of previously appropriated funds which will not be needed in order to meet normal requirements under fiscal year 1953 and prior programs. Therefore, except to the extent that (1) New and urgent requirements need funding from this source between now and the end of this fiscal year or (2) such funds are employed during the next 30 days to cover requirements of the fiscal year 1954 program, the above amount will remain unobligated and unprogramed on June 30, 1953. Since there are a number of contingent requirements that should properly be classed, if they mature, as new and urgent ones, demanding of immediate funding, and which might aggregate $50 million, it will be necessary to hold this latter amount as a reserve until at least mid-June. At that time, our program will presumably be in the appropriations stage, and a final decision can be reached as to whether this $50 million can be applied to reduce the new obligational authority required to finance the fiscal year 1954 program which is authorized. With the exception of this $50 million, the balance of $354 million can, and we propose should, through congressional authorization to continue it available for use in fiscal year 1954, be applied to reduce, in an equivalent amount, the $5.828 billion of authority for new appropriations which has heretofore been requested. Representatives of the executive branch will, during the course of the remainder of your hearings, give your committee the precise figures and indicate the specific appropriations to which they apply.

I should like to point out certain important factors with respect to the situation which I am reporting in this letter.

First, it should be emphasized that the reduction in the new obligational authority required for the fiscal year 1954 program below the $5.8 billion originally requested does not mean a reduction in the physical activities and programs which it is proposed should be carried out and financed during the next fiscal year. The activities and programs proposed remain the same, but the $5.8 billion which is required to finance this program can now come from two sources (1) approximately $5.474 billion from new obligational authority and (2) about $354 million from appropriations for prior years which are no longer required for their originally programed purpose, that is, the savings to which we referred above. Moreover, to the extent that the $50 million reserve of sav

ings subsequently proves to be unnecessary, further adjustments aggregating this amount can be made in the two foregoing figures.

Second, the fact that certain previously appropriated funds can be classed as "savings" does not mean that valid existing and not properly deferable requirements under current programs will not be met. For the most part, the "savings" come from sources such as the following: lower costs than originally estimated for various items still included in the program; changes in actual requirements which have permitted the deletion of originally programed items or the substitution of less costly ones; the deferment, for one reason or another, until a later year of the fulfillment of certain military end-item requirements; overestimate of the amount required to cover the expenses of packing, handling, crating, and transporting military end-items during fiscal year 1953; lesser costs than anticipated for certain military training activities; deferment of certain defense support projects and activities that could as readily, or better, be postponed to a later date, etc.

Third, the submission to you at this time of a specific estimate of savings does not mean that the process of review and rescreening of previously authorized programs has now been terminated. On the contrary, this process will be continued. Additional savings, if any, which are disclosed as a result thereof, together with any portion of the foregoing reserve of $50 million which is not required for new and urgent needs before the end of this fiscal year, should, at the appropriations stage, be applied to reduce the amount of new obligational authority required to finance the fiscal year 1954 program which is authorized. The submission of this specific figure does mean, however, that we have reached the point where we believe that a relatively firm estimate of these savings can be made and that the increase, if any, in this estimate is likely to be extremely minor.

Fourth, we are requesting that Congress, as it has done in previous years, authorize the carryover of all previously appropriated funds, whether they are obligated or unobligated on June 30, 1953, and continue such funds available in fiscal year 1954. This applies not only to the savings referred to above; the remainder, whether obligated or unobligated, must also be continued available in order to fulfill requirements under past and current programs, and the fiscal year 1954 program assumes, and was constructed on the premise that, these requirements will actually be met and financed from these prior funds. In fact, if such other funds were not to be continued available for their original purposes by congressional action, it would be necessary to increase the fiscal year 1954 request for new obligational authority by an equal sum. Witnesses who will appear before your committee will be prepared to indicate the extent to which, and the reasons why, certain programed funds will remain unobligated on June 30, 1953, and the important considerations which require their continued availability after that date to finance the segments of current programs for which they are earmarked.

Finally, I should like to refer to my earlier reference to the necessity, under section 1415 of the Supplemental Appropriations Act, 1953, for specific provision for the use of the local currencies required for the program in fiscal year 1954. I do not believe that any witness, with the exception of the Director for Mutual Security, has as yet discussed this subject, although the necessity for such provision, and the amounts involved, were indicated on the summary table presented to the committee. I raise this point now since the committee, if it should accept our proposal for handling this local currency problem, will undoubtedly wish, when making an adjustment in the authority for new appropriations to reflect savings, to take account of these local currency requirements.

As you know, under the provisions of the Mutual Security Act and its underlying legislation (particularly the Economic Cooperation Act and the Mutual Defense Assistance Act), the United States receives certain local currencies for its own use in the form of (a) 5 and 10 percent counterpart and (b other contributions from host governments. As you also know, we have been authorized in past years to utilize local currencies which are derived in this fashion in furtherance of the program without any reimbursement from dollar appropriations. These local currencies have enabled us to meet certain necessary expenses abroad in connection with the program without the necessity for placing the burden of these expenses on the American taxpayer or incurring additional dollar expenditures therefor.

Section 1415 of the Supplemental Appropriations Act, 1953, while in no way altering this fundamental situation, does require a change in the methods by which such currencies are made available for actual use in the Mutual Security

Program. Specifically, it requires that such currencies shall only be available for use in the program to the extent which is provided annually in appropriation acts for purposes authorized by law. The requirements of this provision could be met in a number of different ways, but it is the view of the executive branch that the simplest and best way of meeting this requirement is to authorize in the enabling legislation, and to include in the proper appropriations, new obligational authority in an amount equal to the dollar equivalent of the local currencies required. The inclusion of this amount would not, of course, insofar as the Mutual Security Program is concerned, represent the addition of any real dollar requirements or any added burden on the taxpayer since the local currencies whose use would be authorized are, or will become, the property of the United States Government in any event and, in the normal course of events, the $98 million involved would merely be exchanged for such local currency on the books of the Government and never leave the Treasury. The handling of local currency in this fashion merely reflects an orderly method of bookkeeping and imposes, and quite properly, the necessity for adequate justification and accounting for local currency as well as dollar assets.

In fiscal year 1954, we have estimated our local currency requirements for new obligations as $98,396,000. The local currencies which are available, or will become available in fiscal year 1954, as a result of our program will be substantially in excess of this amount. However, under the method we recommend for complying with section 1415, the $98,396,000 should, in calculating the total authority for new appropriations to be included in the enabling legislation, be deducted from the savings. If no savings were to be realized, this $98,396,000 would of course be additive to the $5,828,000,000, although, in either case, the inclusion of this sum represents, as we have stated before, a method of bookkeeping and not a real requirement for any additional dollars in this program. As in the case of other points covered in this letter, witnesses of the executive branch can go into this subject in greater detail with your committee. Sincerely yours,

WILLIAM M. RAND, Acting Director for Mutual Security. Chairman CHIPERFIELD. You may now proceed with point IV, Mr. Wood.

Mr. WOOD. Thank you, sir.

We have put before you an outline of what we think is the most orderly and rapid way to cover the technical development and progress program. It includes these two major categories that I have mentioned before, the point IV program, as it is popularly known, on the one hand, and, on the other hand, the special economic assistance in certain countries, notably India, Pakistan, and Iran, where it is felt by the executive branch that something beyond the traditional type of point IV program of technical assistance and demonstration equipment is needed in the interests of the United States.

As I have said before, we have made this separation for the first time this year in the interests of making crystal clear exactly what we are asking for.

I might just say, before I introduce Mr. Andrews, who will be the first witness on this subject, that as indicated in the summary table placed before the committee, the request for regular technical progress and development, which is akin to the point IV type of program, is for all areas in which such programs are proposed and amounts to $153,985. The special economic assistance comes to a total of $405,225.

If it suits the committee, I would ask, if I may, that Mr. Andrews start off with a brief general introductory statement on the technical assistance program, and then that we proceed as indicated in the chart before you.

Mr. Andrews is the Administrator of the Technical Cooperation. Administration, and is in charge of the technical progress and development program throughout the world.

STATEMENT OF STANLEY ANDREWS, ADMINISTRATOR, TECHNICAL COOPERATION ADMINISTRATION

Mr. ANDREWS. Mr. Chairman, as usual I will have a formal statement. This formal statement is an attempt to answer some of the questions and bring out some of the information which Mr. Westphal and others point up in their report. It is not an attempt to discuss individual programs. We will expect to discuss the individual programs in answers to questions from members of the committee on the individual areas and countries as they come up.

The last Congress, both by law and in the reports of its committees (including the conference report of June 4, 1952 on H. R. 7005), laid down pretty clearly the guidelines which the Administrator of the Technical Cooperation Administration was to follow in carrying forward this program.

I believe the appropriations requested for fiscal 1954, as well as our work during the past year, show that we have endeavored to carry out the program of technical assistance and cooperation as Congress conceived it-a joint undertaking between the United States and the cooperating countries with major emphasis on training, demonstration, and self-help.

The final appropriation for technical cooperation in fiscal 1953the program we are now carrying on-totaled $150,540,300, including approximately $141 million for bilateral technical assistance through TCA, about $8 million for the multilateral program of the United Nations, and $1 million for the multilateral program of the Organization of American States. The request now before the committee provides for a total of $130,984,500 for all of these technical-assistance programs. Moreover, the request for the bilateral program to be administered under the Act for International Development includes $23 million for the programs in the Philippines, Thailand, and the Far East Dependent Overseas Territories. In fiscal 1953 the programs in those countries were carried out as "defense support" programs under section 503. Since Burma, on March 17, decided to terminate its technical-assistance program as of June 30, we are not asking for any new appropriation for that country and will use available funds in the liquidation of Burma's program in accordance with an agreed-upon plan of withdrawal.

The committee will find, in addition to the funds requested for technical assistance, separate requests for authorizations of $194 million for the Near East and Africa and $94 million for India and Pakistan for special economic aid, of which it is planned to ask for an appropriation of only $258 million. These funds will be used to offset growing political and economic tensions in sections of the Middle East and south Asia where it is in our national interest to speed up development beyond the present capacities of the countries to do it themselves.

Special economic-aid funds of $140 million for the Near East have been requested for reasons already presented by the Secretary of State and Mr. Stassen. Earmarking of funds for particular countries may impair their usefulness and effectiveness. Since sufficient funds are not likely to be available to meet all needs in all countries, authorization of a lump sum for the Near East permits use of the funds to meet

the most urgent contingencies as they arise. Aid can be focused where it is most needed and will do us the most good. In India and Pakistan, the $94 million of special economic-aid funds is being requested because political conditions in these countries require a more rapid rate of economic growth than technical cooperation alone can assure. In these countries, special aid will permit the expansion and acceleration of projects to be initiated with technical assistance funds.

Funds for special economic aid will be administered by TCA but they are presented separately in the legislation and they are to be treated separately before this committee. The political and emergency aspects of the program will be presented by representatives of the political bureaus of the Department of State. They will point out to you that, in a few countries, economic and political considerations are such that something in addition to point 4 is necessary.

It is my purpose and intention now to discuss the technical-assistance program as it is conceived within the framework of congressional direction.

The Congress last year laid down in the legislation on the technicalassistance program three main areas of activity for us to follow. The committee reports and the debate on the appropriation bill indicated rather definite guidelines as to what and how we are expected to carry forward our activities in the various cooperating countries. In brief, the legislation provides for these broad approaches: first, sending technicians to countries asking for them, plus supporting funds to implement their work; second, training of other nationals in this country; and, third, encouraging private investment in the industrial development of the cooperating countries.

There were further guides as to the relation of supplies to personnel, the relation of technical personnel to administrative personnel, and the "fair share" contribution which, I believe, were on the whole good and sound principles. In addition to being guides, they provided us with the means for withstanding some of the pressures for greater funds and for doing things which I doubt would have been within the spirit of the technical program or the intent of Congress. Future programs are to be judged largely by accomplishment or lack of accomplishment of past programs. Consequently, I would like to devote a few minutes to discussion of some of the problems we have encountered-some of the successes and failures of the past year in the hope that this will give us a better basis on which to judge the validity of the technical-assistance program we are proposing for fiscal 1954.

I must report frankly to you that there has been a lag in expenditures behind the appropriation and availability of funds, and in placement of technicians overseas.

I believe there are sound reasons for this lag. It is best to put them before the committee and let you judge for yourselves.

Our total obligations of fiscal-year-1953 funds as of March 31 were $90,315.163 out of an overall total appropriation of $150 million. We anticipate that the bulk of our 1953 funds will be obligated by June 30. Our expenditures of fiscal-year-1953 funds totaled $20,414,396 as of March 31, and in addition we had expended between June 30, 1952, and March 31, 1953, $45,025,185 in liquidation of obligations incurred in 1952 making a total of $65,439,581 in the current year.