members on what we call the council of the committee, but the committee will be larger than that. Senator DONNELL. I understand, then, you are going to furnish this other information? Mr. CLAYTON. Yes, sir; I will. Senator DONNELL. That is fine. Now, Mr. Clayton, were you in the Department of State as late as February 14 of this year? Mr. CLAYTON. No, sir. Senator DONNELL. When did you leave the Department of State? Mr. CLAYTON. I resigned as Under Secretary of State for Economic Affairs in October 1947; but I stayed on for about a year as adviser to the Secretary on certain economic matters. Senator DONNELL. Did you have anything to do with the negotiation of the North Atlantic Treaty? Mr. CLAYTON. No; I did not. Senator DONNELL. Did you hear the matter discussed from time to time in the Department of State? Mr. CLAYTON. No, not specifically. I resigned definitely from the Department of State, I think, the 1st of November or the middle of October 1948, and went back to Texas. Senator DONNELL. That is, your formal resignation was presented in October 1947, but you stayed on until about 1948, and then you went back to Texas? Mr. CLAYTON. Yes, sir; that is right. Senator DONNELL. Have you studied this treaty itself in detail, Mr. Clayton? Mr. CLAYTON. No, sir; I have not. Senator DONNELL. Have you read all of it? Mr. CLAYTON. No, sir. Senator DONNELL. Are you familiar-well, I shall not examine you on this particular article, but are you familiar with article 2, which is the one which says that the signatories will seek to eliminate conflict in their international economic policies and will encourage economic collaboration between any and all of them? Mr. CLAYTON. I have not read that. Senator DONNELL. You have not read that? Mr. CLAYTON. No, sir. Senator DONNELL. How much of the treaty have you read? Mr. CLAYTON. I have not read any of the treaty itself, but I have read several reviews and digests of it from time to time that appeared in the magazines and in the newspapers; and I have read statements of Secretary Acheson on the treaty and I have read other statements of authoritative people in connection with it. Senator DONNELL. Have you read any statements by anyone who was raising any question as to the advisability of entering into the treaty? Mr. CLAYTON. Yes; I have read some of those statements. Senator DONNELL. Can you tell us who were the authors of those statements? Mr. CLAYTON. I do not recall just now. I read the other day some church statement that was opposed to it. Senator DONNELL. Was that the Methodist organization? Senator DONNELL. You read that in the newspaper, did you not? Mr. CLAYTON. Yes. Senator DONNELL. Did you see the entire resolution of that organization? Mr. CLAYTON. No; I did not, Senator Donnell. I just read the newspaper account of it. Senator DONNELL. How recently have you been in Europe, Mr. Clayton? Mr. CLAYTON. My last trip was in September 1947. Senator DONNELL. So you have not observed at first hand whether or not there has been an increase in the confidence of the European nations since the signature which occurred here on April 4? Mr. CLAYTON. No; I have not, Senator Donnell. Senator DONNELL. I do not think I will ask you any further questions, Mr. Clayton. Thank you very much. The CHAIRMAN. Senator Watkins. Senator WATKINS. Mr. Clayton, some of the questions I will ask you may have been asked in part before, but I want to be sure that I get your point of view as you want to give it. NEED FOR NORTH ATLANTIC TREATY As I understand it, you feel that this is a necessary step, the adoption of the Atlantic Pact, in order to form a federal union? Mr. CLAYTON. No, sir; I do not. I said that I felt that this was a step on the road to federal union; but I do not think that it is necessary to the formation of federal union at all. Senator WATKINS. In what respect do you think that it is necessary, then? Whether you say it is on the road Mr. CLAYTON. I think that this is a step that is necessary in order to convince Soviet Russia that the members of this Atlantic Pact will stand together for the preservation of their independence and integrity. Senator WATKINS. As I understood from your main statement, you thought that there was no imminent danger of a shooting war? Mr. CLAYTON. I think I said, Senator Watkins, that my opinion was of no value on that subject. Senator WATKINS. Well, for whatever it is worth―― Mr. CLAYTON. That is, my opinion for whatever it is worth, that there has not been and is not now in the near future danger of a shooting war. The CHAIRMAN. May I interrupt a moment. I do not know whether you know it, Mr. Clayton, but the State Department has announced, and so has New York, that the airlift and the counterblockade are to be lifted within a few days. That is the agreement of the Four Powers. That is good news. Mr. CLAYTON. Thank you, sir. The CHAIRMAN. I thought it might help you in your being interrogated to know that. Mr. CLAYTON. I would like, Senator Watkins, if I may, to amend the statement a little bit and say that I do not think that there is serious danger of a shooting war, and I have not felt so for a long time. 90614-49-pt. 2— -5 DEPARTURE FROM TRADITIONAL POLICY Senator WATKINS. Do you not agree that this entering into the Atlantic Pact will be a departure from a very old and much revered foreign policy of the United States? Mr. CLAYTON. Yes, certainly it is; and times have changed so greatly that we are departing from many things that 50 years ago we would have thought we never would have departed from. Senator WATKINS. That is, sometimes from policies, but have we departed from principles on which some of these policies are based? You may have a difference of policy, but a new application of an old principle. Mr. CLAYTON. Senator Watkins, the world has gone through such a revolutionary change in the last few years that I cannot help feeling that if George Washington and our other forefathers lived in this present time, they would do exactly what we are doing; because I think they would realize that the times require it. Senator WATKINS. The reason I ask the question: I am not passing on the wisdom of Washington's statements about foreign policy, but I am trying to get your state of mind and whether or not you agree with me that in the changing of our policy, we should have a complete investigation and have all the facts laid before us so that we know whether or not it is a wise move to make. Mr. CLAYTON. Indeed. I am in full agreement that all the facts should be before us in these matters. Senator WATKINS. And, in other words, the burden of proof, the burden for getting the evidence, is upon those who propose the change in our foreign policy. Mr. CLAYTON. I think they should lay all the facts before the public. Senator WATKINS. And should make a case that would convince us that it ought to be changed. Mr. CLAYTON. Yes, sir. Senator WATKINS. Otherwise there should be no change. COST OF COLD WAR Senator WATKINS. I do not want to ask you too many questions, but I am interested in your statement that, in effect, we are now losing the cold war. As I get it from your main statement, which I did not get to hear you read, but I glanced over rather hurriedly, you said on page 3: Soviet Russia's principal objectives in the cold war are to frighten democratic governments into excessive expenditures for defense, and to frighten private capital and initiative so that it will not operate freely. If both objectives can be achieved, economic disintegration will likely ensue. Economic disintegration is usually followed by political disintegration. Are you aware that under the proposed North Atlantic Pact, a part of the program is to rearm Europe partly at their own expense and partly at ours? Mr. CLAYTON. Well, I know that that is the program, because measures to that effect have been introduced, I believe in Congress. Senator WATKINS. At least this committee probably has been advised that the cash outlay, or the first year's price tag, on the program is about $1,100,000,000. Mr. CLAYTON. Yes, sir. Senator WATKINS. And in connection with that, it has been said, and I think it was probably admitted by General Bradley yesterday to be substantially true, that we expect Europe to more than match that by putting up about six times as much for the defense rearmement as we are putting up. Mr. CLAYTON. Yes, sir Senator WATKINS. What would you think such an expenditure now on the part of these European countries would do to their economy? Mr. CLAYTON. Well, it is going to have an influence, of course, on their rate of recovery; and that is the reason that I say I think Russia is winning the cold war, because while we are doing the right thing in my opinion to enter into this pact, just the act of entering into it is going to increase the cost to the democracies of fighting the cold war. But they have no other alternative, in my opinion. As that increase takes effect, it is going to naturally have an ill effect on the economies of the countries that are involved. Senator WATKINS. Can they afford to lose the cold war at the expense of rearmament? In other words, is that a wise policy? Mr. CLAYTON. If they do not get ready, and if we do not assist them in getting ready, and if we do not assist them economically, then I think that the Russians will step in. I do not think that Mr. Dulles made an overstatement this morning when he said that if we failed to ratify this pact, he thinks we would lose Europe. I think we would. I have spent a great deal of time in Europe since the war and have taken considerable part in connection with the Geneva Conference on Trade and Tariffs, and in connection with the early organization of the Marshall plan there with those countries. I had some opportunity to observe conditions there. It is my opinion, as Mr. Dulles said, that if we should fail to ratify this pact we will lose Europe to communism. DANGER OF LOSING THE COLD WAR Senator WATKINS. What I am trying to get at is the statement that you have made in effect that we are likely to lose the cold war irrespective of whether we enter into the pact. Mr. CLAYTON. If we do not change our course Senator WATKINS. In what way Mr. CLAYTON. And fight it in a different way. I think, Senator Watkins, that the only way to fight the cold war is in union. Senator WATKINS. In a federal union? Mr. CLAYTON. Yes; I do. Senator WATKINS. In other words, you do not think we can win that cold war the way we are going? As you say here, there will be economic disintegration, and that will bring political disintegration if we do not win that cold war. Mr. CLAYTON. I do not state it dogmatically, but I think there is grave danger that, if we and the other democracies go on spending Mr. CLAYTON. That is the way I look at it. I think it gives a breathing spell. Senator FULBRIGHT. That seems to me to be its principal function. We long since learned that we cannot rely on permanent protection, unless they turn into a politcal affiliation. If that should come about, then there might be what we call permanent solutions at least to that part of the world. WEALTH HOARDING IN EUROPE I think that is about right. You mentioned one matter that is not related to that, and a good deal of interest has been evidenced by the committee at other times, as to how much wealth is in hiding, so to speak, in western Europe, say in France and Italy, because of this condition. Would you venture to make an estimate at all? It is a matter of some curiosity. Mr. CLAYTON. I could not, Senator Fulbright, but I am sure it is a very large sum. It is not only the money, but it is the daring and the initiative and the enterprise of the people who own that money that is lost. They are off on a holiday somewhere, they are taking things easy at home, they have their money outside of the country or in the case of the peasants in many countries, they have got it soaked away in gold, maybe. Anyway that money is not working and the people who own it are not working and using their ingenuity and their enterprise as they would if they could freely employ their money. This means that you throw a great deal of the burden of recovery and reconstruction on governments, and governments cannot do the job. Senator FULBRIGHT. It is your view that if that could be brought out of hiding by restoration of confidence, it would have a great effect upon the ECA program; that is, it would lessen the necessity for an ECA program? Mr. CLAYTON. Well, it would probably, if it could be brought out completely and if Europe could be relieved of the awful fear of war; then I think that the objectives of ECA would be accomplished by 1952. Otherwise, I do not think they will be. The I. M. F. has just published some very interesting figures which show that Europe was in the red with the rest of the world last year by $5.600.000.000 in 1948. That is a decline of $2,000,000,000 from 1947, which is very gratifying. But nobody who studied the matter carefully and thought over the matter believes that Europe will be in balance with the rest of the world by June 1952 if we go on as we are. The best opinion that I have been able to get on it is that Europe will still be 21% to 3 billion dollars in the red a year in 1952, Senator FULBRIGHT. That was approximately the estimate made from their own programs? Mr. CLAYTON. That is right. Senator FULBRIGHT. I believe that is all, Mr. Chairman. Thank you very much. The CHAIRMAN. Mr. Clayton, we have here, with the permission of the committee, Senator Donnell and Senator Watkins, who desire to interrogate you. if it is agreeable to you. |