With respect to the $9 million request which is now before you, we have not proposed the continuation of the present limitation of onethird, including the local resources, for the reason that these local contributions are running so heavy.

It is our feeling, and I have been asked to put this before the committee, if I may, for your earnest consideration, that it is better for the limitation on our contribution to be in the terms of the moneys paid in to the central fund, exclusive of the local contributions, because in that way we are able to provide more of an inducement to other governments to make contributions to the central fund.

We propose, sir, that we make our contributions to the UNICEF central fund in the same manner that we now make our contributions to the U. N. technical assistance fund, namely, to limit those to 60 percent of that total. We will still be well under the third, taking into account the local recipient country contributions, but, as I mentioned, it seems to us that we are able to persuade and induce other governments to make these contributions to the central fund better this way than under the present formula.

Mr. BENTLEY. Do I understand, then, that this $9 million is to be roughly 60 percent of the entire amount contributed to the central account?

Mr. HENDERSON. It would be, sir, not more than that.

Mr. WOOD. Mr. Chairman, may I have the privilege of putting the answer to Mr. Vorys' question into the record?

Chairman CHIPERFIELD. You may.

Mrs. CHURCH. Mr. Chairman, I am in receipt of a letter dated May 28, 1953, from Rabbi David Polish with regard to the request of the President for relief and rehabilitation of refugees and for maintain ing economic and political stability in the Near East.

If there are no objections, I would like to have this printed in the record.

Chairman CHIPERFIELD. Without objection, the letter referred to will be included in the record.

(The letter referred to is as follows:)

BETH EMET, THE FREE SYNAGOGUE,
Evanston, Ill., May 28, 1953.

Congresswoman MARGUERITE STITT CHURCH,
House of Representatives,

Washington, D. C.

MY DEAR CONGRESSWOMAN CHURCH: I am writing to you in your capacity as a member of the House Foreign Affairs Committee to bespeak your interest and good offices in behalf of the Mutual Security Program in the Near East. As you well know, the authorization of the $5.8 billion Mutual Security Program submitted by the President requested $194 million for economic development, for relief and rehabilitation of refugees, and for maintaining economic and political stability in the Near East. The administration also proposes to spend $469 million for military assistance to the Near East, with safeguards designed to prevent aggression within the area.

These authorizations will (1) help Israel complete its humanitarian task of settling the more than 700,000 refugees who have found sanctuary in the new state; (2) help the United Nations program to resettle a similar number of Palestinian Arab refugees in the Arab States; (3) raise living standards and improve the health of large numbers of men, women, and children in the Arab countries, and give them an incentive to join in the defense of freedom; (4) strengthen the defenses of the Near East, give concrete expression of American friendship for all the peoples of the region and stimulate peace by encouraging regional cooperation for economic development and defense.

It is apparent that the passage of such a program will do much toward relieving the refugee problem in the Near East and thereby hasten the political and economic stability of that area, a factor which is so important to the preservation of peace and to the cultivation of an outpost of democracy in a crucial area of the world.

It is my feeling that the economic assistance which this program proposes will go far toward achieving harmonious relations among elements in the Near East, so that together they can stand solidly with the free world in all of its endeavors. The State of Israel has manifested in many ways its wholehearted identification with the ideologies of the free world and its eagerness to establish a stable economic and political situation in the Near East. Given proper economic assistance it will prove to be a source of strength to the democracies far beyond even the magnificent stand which it took during World War II before it was even a state. Its greatly increased population, manpower and resources stand ready to serve the cause of democracy in every way.

I trust that you will give these observations your fullest consideration. Should you feel that you would wish to discuss this with me further and at greater length, I am prepared to meet with you either in Evanston (should you be here in the near future) or in Washington. I should be most grateful to you for your response.

With all good wishes, I am,
Cordially yours,

Rabbi DAVID POLISH.

Chairman CHIPERFIELD. The hearing is adjourned until 2: 30 p. m. (Whereupon, at 1: 10 p. m., the committee adjourned, to reconvene at 2:30 p. m., the same day.)

AFTERNOON SESSION

Chairman CHIPERFIELD. The committee will be in order.

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

Mr. WOOD. Mr. Chairman, we have, this afternoon, a return of that virtuoso on charts, Mr. Halaby. By unanimous request I understand he is here to discuss the very important and somewhat complicated question of the unexpended and unobligated balances from prior appropriations which exist now and which will exist in somewhat smaller amounts at the end of this fiscal year. He is supported by witnesses from the various departments of the Department of Defense. If I may, I should like to turn over further testimony on this subject to Mr. Halaby. May I say that if we do have time after the completion of this testimony, I would like to have the opportunity of discussing chapter 3 of the bill relating to special weapons planning. Chairman CHIPERFIELD. Mr. Halaby.

STATEMENT OF HON. N. E. HALABY, ASSISTANT SECRETARY OF

DEFENSE

Mr. HALABY. Mr. Chairman and members, I am about to start on a very complicated story and if I may give you a very brief summary of it and then go through it first without interruptions, I think we could get along faster.

It is Friday afternoon, and I know you gentlemen have a lot of other things to do. I had intended with these charts and with the tables that are in front of you to cover it in two phases.

First, I will give you a picture of the entire obligation situation, and as the second phase a picture of the expenditure situation. We have it organized in a way that I think will meet your wishes. If I could just go right ahead up to a point, and then have the questions, I think we might go faster. I am not trying to avoid questions, but I am just trying to save your time a little.

I think the question you want to know is how much you have made available to whom, where is it, what is being done with it, how much is actually at work and how much is not, what are the savings, why is some more needed.

Chairman CHIPERFIELD. And, whether these savings have been put into the bill, or whether you have just obligated more of these remnants that Mr. Stassen testified about the other day and said that these sav ings came from the remnants of the old program, which means nothing at all.

If we were going to obligate those remnants and then you tell us that you are saving $74 million, that is something we want to know about.

Mr. HALABY. All right.

In brief summary of the $15.5 billion made available to the Defense Department for military assistance, we have obligated all but $580 million in accordance with the service estimates of June 30 of this year.

We will have unexpended approximately $8 billion on June 30.
If I can just very briefly introduce this with some definitions

now.

The first phase of this thing is authorization, which this committee and Congress deals with in the first instance. The second phase is appropriation. That is to the President under this program, and has been consistently. He delegates most of his authority over the funds to the Director for Mutual Security. He approves or modifies or rejects programs. When we say "Approved programs," that means that one of the services has submitted to the Secretary of Defense, who has recommended it to the Director of Mutual Security, who has allocated money to the Department of Defense to finance a program he has approved. The Secretary of Defense suballocates money to the three services. After the money has been suballocated to the three services, obligations can commence. Obligations take two general forms. The first is, orders out of service stocks which have been procured with service funds. The second general form is procurement contracts for goods and services with these funds. The last phase is expenditures, actual disbursements, which take the form of progress payments, largely on ships and aircraft, and final payments when the goods are delivered, or shortly thereafter.

Now, if I may, using these charts, start in on a broad summary, and then a service-by-service presentation.

I might point out that this data is worked up or provided by these officers who are here today to back me up with details.

We start off with the total amount you have appropriated in the last 4 years. As you know, those programs are based on the buildingblock concept. If this is fiscal 1950 and this is fiscal 1951, fiscal 1952, fiscal 1953, and fiscal 1954, the total of those 5 blocks is the program.

General Stewart has demonstrated to you, I hope and believe, that this fifth block of this building-block program is not for anything

that is already in the program, but is for requirements additional to the first 4 years.

In the first 4 years you have already voted $16.5 billion. Of that amount, $968.9 million has been made available to other agencies, $25 million has been reserved for Spain, and there has been earmarked for the Department of Defense, $15.5 billion.

Mr. Wood can break down this $968.9 million, if you wish it. Of the $15.5 billion earmarked for defense, the Secretary of Defense has suballocated to the Army, $8,265.4 million. To the Navy, $1,819.3 million. To the Air Force, $4,911.4 million.

Within the Office of the Secretary of Defense, there has been allocated $333.2 million, a total of $15,229.3 million.

Army programs are in the process of approval for an additional $126 million of this available amount, making the total approved programs as of June 30 at $15,355.3 million. Of this total amount that has been made available, we have withheld in the Office of the Secretary of Defense $151 million against the possibility of making savings out of the program submitted by the services.

The services, out of these approved programs which I just mentioned, working together with the Office of the Secretary of Defense, came up with what we will later define in detail as savings. We are hoping and planning to realize an additional $16.9 million, making a total of what we call savings of $378 million. This amount can be applied in accordance with the Director for Mutual Security's letter against 1954 requirements.

(The table referred to is as follows:)

DEPARTMENT OF DEFENSE

MDAP-Utilization of available fiscal year 1950-53 funds

[Millions of dollars]

Appropriations for military assistance, fiscal year 1950-53-
Available to other agencies_.

16,500. 3

Reserve for Spain---

968.9
25.0

993. 9

Estimated fiscal year 1950-53 programs, June 30, 1953_---

Savings:

Withheld by OSD__

15, 355. 3

Estimated savings as presented by military departments_.
Additional expected savings___

Available for fiscal year 1954 programs___

151. 1

210.0

16.9

378.0

Mr. HALABY. Each one of you has in front of you a full set of these charts, but I will try to run through them very quickly.

This is intended to give you the obligation picture. Of the $15.5 billion, we had obligated, as of April 30, $13,056.8 million. We esti

mated we would obligate $1,490.1 million during the last 60 days. Subtracting this total of $14,546.9 million, we have an estimated unobligated balance on June 30, 1953, of $959.5 million. Against that, we subtract the savings of $378 million, leaving a net unobligated balance on June 30 of $581.5 million.

We would like to proceed, if we may, to show you the status of the obligations by service. I am asking Col. George Boylan of the Air Force very briefly to go through the Air Force obligations picture. (The table referred to follows:)

DEPARTMENT OF DEFENSE, MDAP-STATUS OF OBLIGATIONS

you

sub

Mr. FULTON. Could I ask you right at that point, why do tract the savings from the unobligated balance?

Mr. HALABY. Because the savings are included in the total amount earmarked for defense, and if we take them out of the fiscal year 195053 programs we will not obligate them and they will not be chargeable against the obligations.

STATEMENT OF COL. GEORGE S. BOYLAN, JR., UNITED STATES AIR FORCE

Colonel BOYLAN. Mr. Chairman, starting on page 3 of your booklet is a series of charts depicting the Air Force materiel program. The first gives you an order of magnitude of where our funds go. The Air Force program, $4,811.4 million. The bulk of that is materiel, 93.5 percent. The balance is in these other categories.