agricultural extension service. Construction is under way on 4 gravity irrigation projects to irrigate 115,000 acres, and plans are ready for a fifth to irrigate 70,000 acres. Approximately 700,000 acres of public land have been subdivided into 25,000 farms and 20,000 home lots. At the College of Agriculture and the Central Experiment Station, enrollment has increased from around 400 in 1950-51 to more than 900 in 1952-53.

In the field of public health.-Equipment to rehabilitate 35 provincial hospitals is now being distributed. MSA-financed equipment and supplies are currently being used by 17 malaria-control teams; and 11 more teams are being trained. Twenty-six rural health units will begin operations in June 1953.

In transportation and public works.-Roadbuilding and earthmoving equipment, ordered early in the program, has arrived and actual construction has begun on roads and bridges which will facilitate the development of areas newly opened for settlement, particularly in Mindanao. Eight river-control projects are also under construction.

In mining.-Surveys have been undertaken with MSA assistance to determine the extent of Philippine coal and mineral resources.

In the education field.-Eleven industrial and agricultural vocational schools have been rehabilitated and bids have been invited to equip 22 more.

In public administration.-An institute has been established to provide instruction for students planning to enter the civil service, and inservice training for present Government employees. Improved tax enforcement and new tax measures, which were carried out with MSA technical assistance, stabilized the Government's financial position and resulted in more than doubling tax revenues between fiscal year 1950 and 1952.

The Philippine Government has appropriated funds for more adequate Government services, and the principle has been established that all recurring peso expenses of MSA projects will be included in the regular budget of the Government to assure continuance of these activities after termination of United States assistance.

In many instances, the Philippines is supporting substantial development activities similar to those stressed by MSA, such as provision for additional power-generating capacity, using its own funds and loans from the ExportImport Bank.

The Philippine Congress has appropriated 75 million pesos for deposit to the counterpart fund and 8 million pesos for overhead costs of MSA projects. An additional appropriation of 25 million pesos has been requested for counterpart and 8 million more for project overhead in the Philippines fiscal year 1954 budget.

D. CURRENT AND ANTICIPATED PROBLEMS

1. Political and administrative stalemate.-While no major administrative improvements can be anticipated in the Philippines until after the election, it is expected that present development projects can move forward without interruption.

2. Internal insecurity.-Guerilla activity has been reduced, but the basic cause of dissidence-depressed economic conditions in rural areas-needs to be corrected before permanent political and social stability can be attained.

3. Inadequate food production.-While food production has increased substantially, further progress is needed to permit not only foreign-exchange savings but a more satisfactory level of local consumption.

4. Low levels of investment.-Improvement in the Philippines' foreign-exchange position is contingent to a considerable extent upon expanded industrial activity which, in turn, requires increased investment either foreign or domestic. To date, conditions in the Philippines have not been made sufficiently attractive to invite foreign investment on a large scale and the mobilization of domestic capital has also lagged.

5. Insufficient Government revenues.-International financial stability has been achieved, but at a level of budgetary expenditures still inadequate to provide effective Government services while maintaining the present military buildup. Revenues need to be increased by improved tax legislation and more effective collection methods.

6. Other problems.-Despite the United States assistance program and economic gains, the following problems also remain to be solved: diversification and expansion of exports, unemployment in cities and underemployment on farms, increase of national income, fuller utilization of resources, land-tenure adjustment, and improvement of basic transportation facilities.

1 Calculated as follows: MSA foreign service and PHS personnel at $15,000 per man-year; contract personnel at stipulated or estimated cost per contract (estimates based on experience or other available cost data).

2 Calculated at $5,000 per trainee for full year.

3 Includes $2.5 million fertilizer imports which yiela sales proceeds.

Includes an estimated 66 contract and 128 noncontract personnel in field during course of year- 86 for full year and 42 for shorter periods. As of June 30, 1954, however, noncontract personnel will total only 95 (the employment target for that date),

Includes $1.6 million for noncontract and slightly less than $1.4 million for contract field personnel (salaries, home office backup, and administrative support). Noncontract personnel cost reflects mean average employment permitted under targets set for June 30, 1953, and June 20, 1954 (109 and 95, respectively) Includes 127 trainees for 6 months each; balance for full year.

Mr. FITZGERALD. In the case of Thailand, our shipments to March 31, which are shown in the separate tables distributes this morning, amount to $10,970,000. The shipments yet to be made from funds already appropriated, $11,100,000.

The illustrative fiscal year 1954 program for Thailand, as you will see, is a small one, $5 million, with $6.2 million in fiscal year 1953. The program is entirely one of technical assistance and related supplies, public health, agriculture, transportation, handicraft, and manufacturing, and education. There is some small assistance in public. administration.

It is true that Thailand for better than 2 years had a surplus on its foreign account and was earning dollars and accumulating dollars, as well as other foreign exchange.

During the last 6 to 9 months, due to the decline in the price of tin and rubber, Thailand has been losing foreign exchange earnings have been declining. That does not necessarily mean they are in any major trouble, but the very favorable position which they had for a couple of years has now disappeared and the Thais are becoming quite concerned about their foreign exchange holdings.

We think the program is very important in maintaining the attitude of cooperation and support we have had on the part of the Thailand Government, both in the area and in such bodies as the UN, and others.

The program includes funds for training Thais in this country at high school and slightly higher levels in agriculture and other technical fields.

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. Woop. 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.