A three-way agreement was made between the Navy, a company in Italy, and Raytheon. Each one of the three participants-the Navy agreed to the progress payments and for local inspection. Our company guaranteed the quality of the equipment and the Italian group guaranteed the price in shipments.

This agreement was signed June 30, 1952. Please remember it is an extremely complicated piece of equipment and has never been made in Italy before this time.

During this 10-month period which ended April 30, 1953, factories had to be built, machinery had to be installed and many subcontractors and parts suppliers had to be established in Italy, Germany, France, and some in Switzerland. Any building of electronic equipment depends a great deal upon the component parts. Basically it is an assembly sort of an operation made out of pieces that are peculiar to themselves. In other words, you have tubes and condensers and lots of other parts that are a specialty type of apparatus.

There are 3,500 of these parts that had to be built and obtained from Europe. There were some 3,500 drawings that had to be sent over there. The drawings had to be changed from the English system to the metric system, and the factory had to be installed with the costing system and the production-control system, the bookkeeping, the same as we have. At the end of this 10 months, there were 4 of these complicated pieces of apparatus that were shipped and they are maintaining a schedule that will be increasing up to 20 a month. It is the only apparatus for the NATO group that serves this particular purpose.

During this 10-month time, that company, together with its subcontractors, are employing 2,300 people who were not otherwise employed so that as a result of this effort of this offshore procurement plan, it not only has satisfied on a large extent unemployed people there, it has trained them in technical procedures along the line of American techniques in industry. It was felt that this experience with one country might be of interest to this group. Here at least was one concrete case of where the offshore procurement program has not only helped the people themselves but has provided a reliable source for complicated equipment of this character.

I have many pictures here of this. It was written up in Business Week.

It says Italy is getting the dollars, they have a new industry, the NATO forces have the equipment, and everyone seems to be fairly well satisfied.

If the desire is there and the technical knowledge is there, I am sure that the offshore procurement if handled correctly can be a success. Mr. SMITH. Thank you very much. Are there questions?

Mr.VORYS. How much did the program amount to?

Mr. ELLIS. $12 million.

Mr. VORYS. Are there further orders on hand?

Mr. ELLIS. Yes.

Mr. VORYS. It is a continuing project?

Mr. ELLIS. Not only on this particular type of equipment but on other types as well.

Mr. VORYS. If it is not security information, for what use is this radar, for airplane protection?

Mr. ELLIS. Yes. It is long distance aerial warning plane detection apparatus. It can detect fairly large sized planes, that is, the bomber size, 150 miles away.

Mr. VORYS. Is the workmanship over there satisfactory?

Mr. ELLIS. Yes, the workmanship is quite satisfactory, particularly in the mechanical end of things. The Italians always have made good engines, of course. We have had to supply many technicians, more of the electrical type, you see.

One of the stipulations in this contract was that over 90 percent of the material content of this equipment was to be from Europe so that we not only had the job of the 1 company but the establishment of 35 or 40 small companies to produce the component parts.

Here is the heart of a radar set. This is called a magnetron tube. There are some 300 different parts that go into just this one piece and there are 3,500 of these assemblies in the complete job. This one here will be manufactured in Genoa by one of the subcontractors. This is the heart of the radar set. This is called a magnetron tube. There are many of those types of apparatus that had to be manufactured.

Mr. SMITH. Mrs. Bolton?

Mrs. BOLTON. No questions.

STATEMENT OF BORIS SHISHKIN, DIRECTOR OF RESEARCH OF THE AMERICAN FEDERATION OF LABOR

Mr. SMITH. Will you give your name and your organization, please? Mr. SHISHKIN. Mr. Chairman, Mr. Smith, and members of the committee, my name is Boris Shishkin. I am here to represent the American Federation of Labor.

I have a statement I would like to read. It is very brief. Before I do that, I wanted to make one observation first, and that is that President Eisenhower's move yesterday, in submitting a reorganization plan to Congress, which involves the program now before you, to set up a Foreign Operations Administration, I hope will not be an invitation to Congress for surgery.

Mr. SMITH. It is an idea.

Mrs. BOLTON. It certainly is.

Mr. SHISHKIN. The United States has reached a crucial point in the task of welding together a community of interest, of purpose, and of action among the free nations. It cannot be denied that the past year was a year of hesitation and delay in pressing forward toward the established goals of mutual security and economic reconstruction. In large measure, this was due to the watchful waiting on the part of our allies to see whether the change in the administration in Washington would bring about a change in the future policy objectives of the United States. It is gratifying to know that these doubts were without foundation. President Eisenhower has reasserted the leadership of the United States and has called upon Congress to affirm our purpose to carry on the mutual security effort. It is now up to Congress to sweep away the last vestiges of uncertainty and to revitalize and accelerate the Mutual Security Program.

I think it is quite clear, Mr. Chairman, I might point out here, that in evaluating what has happened in the past year, particularly,

that there has been hesitation, there has been delay, there has been a breathing spell in terms of action in many of the areas of activity, and I think that must be recognized in appraising what we must do. During the past year, also, there has been a change in the autocratic rule of the Kremlin, brought about by the death of Stalin. This event has given a new and greater opportunity to the Communist policymakers to arouse fresh hopes of readymade peace around the free world, and to instill new doubts among the free peoples about the necessity of their carrying on the burden of defense.

The issue squarely before this Congress is whether the United States is prepared to carry on its most decisive undertaking of mutual defense against Communist aggression or whether it will succumb to the blandishments of the Communist peace offensive.

We are confident in the answer our Congress will give. We know the answer is that the United States is to go ahead without hesitation. But, if Congress is to back the President in the leadership he has asserted, that answer must not be halfhearted. There is no value in a token Mutual Security Program. Such a program, reduced to economy size would be wasteful. It would be false economy to cut the authorization for the program now before Congress. This would be false economy, not only in the value of direct accomplishment of the future program, but also in the loss of a large investment the American people have already made in recent years to do an effective job of the mutual security effort.

Long before Stalin's death, it was clear that the Kremlin would strive to break up the North Atlantic alliance. It has sought, and is seeking now, to drive a sharp wedge between the United States and Great Britain. It is seeking now, and will continue to seek, to split off France and other associated nations and break the bond of unity among them. Our answer must be to reinforce the bond, to erase the differences and to bring the nations of the West into a closer-working and purposeful relationship.

There is no doubt that the change in the Kremlin rule has brought about internal conflicts and weakening in political controls indispensable to dictatorship. This is the Kremlin's moment of weakness and the Kremlin is playing for time. It is up to us and to the free nations standing with us to take full advantage of this period of weakness in the Communist rule and to press forward as rapidly as possible the task of rearmament and economic reconstruction.

I believe, Mr. Chairman, that the most important point that I can make here is that it is vitally important for the people generally to recognize that this is the time, this is the crucial moment, for us to exploit the weakness which is undoubtedly in that peculiar kind of a structure that goes with dictatorship, in the opponents and enemies of freedom, in the Kremlin.

There is no question in our mind that that is true, and there is no question in our mind that the public interest can best be served by going forward courageously and without hesitation in the program that has been set up.

President Eisenhower has submitted to this Congress a proposal for a 5-year Mutual Security Program. He has made specific recommendations for a provision in the coming fiscal year of $5.250 million for defense and defense support, and $550 million for technical and economic aid and assistance to economic development.

We wish to emphasize the need to reinforce the defense purposes of this program with adequate economic aid. As President Eisenhower said, "Military strength is most effective-indeed, it can be maintained-only if it rests on a solid economic base." And he correctly stressed the central point that our success depends on aid which would help the free nations "in eradicating conditions which corrode and destroy the will for freedom and democracy from within."

I might say, Mr. Chairman-I didn't say so at the outset, but as members of the committee know, I served for 3 years as Director of the European Labor Division of the ECA from the beginning of the Marshall plan and have since that time followed very closely developments in that entire program. My testimony isn't just on the basis of that knowledge alone. Our work in the federation, and very close day-by-day work with the democratic institutions and particularly free trade unions abroad give us daily evidence of the fact that one of the most important things that we can do is not to say that all we are doing now is carrying on a strictly military defense project, and forgetting about everything we have said before.

If we do that, we are going to create a terrific problem for ourselves and a terriffic problem, actually, for the administrators of the military program. They will be in difficulty; they will not get support; and will not be operating in the kind of climate that is necessary to have harmonious progress and speedy achievement in the rearmament itself.

In urging Congress to meet the President's request in full, the the American Federation of Labor submits the following comments

and recommendations:

1. Provide for 2-year, rather than 1-year programs. The basic purpose of the program is the long-term security of the United States. Defense buildup, sufficiently effective to deter aggression, calls for a sustained effort over an extended period of time. Experience has shown that programing for only 1 year ahead is a costly and, in some ways, wasteful procedure. Sound, effective programing, and economy of administration cannot be achieved unless the agreed-upon program objectives are set over at least a 2-year term. We ask that funds for the share of the United States in the Mutual Security Program be authorized on a 2-year, instead of the present 1-year, basis. Defense and economic programing undertaken by the cooperating countries should likewise be shifted to a 2-year base.

If aid is authorized on a 2-year basis, what we would really like to see is an appropriation on a 2-year basis. Appearing here on June 2, in this present session of Congress, I would like to at least plant the seed of that thought. I know that thought has already been nurtured, to some extent, in this session of Congress, the necessity of long-term programs, and the witness who appeared here earlier emphasized also the necessity of programing on a long-term basis. It could save us a great deal of money, and greatly strengthen the kind of programing that is being done.

The defense buildup should also be on a 2-year basis. We have individual budgets, and individual legislatures in different countries, and it is not an easy task, but that can be done if that rule is applied,

now.

2. Continue needed economic aid. We emphasize the need of providing economic assistance to the few countries still in distress. I

would like to mention Greece first, and for a good reason, in talking about Europe, in particular. Greece, which fought Communists on its own soil until 1950, is today in the throes of a grave economic crisis. Its industrial unemployment has doubled since a year and a half ago.

Mrs. BOLTON. Why?

Mr. SHISHKIN. It is an economic problem, for two reasons: First, the economic assistance provided by the United States that can be called economic assistance in any sense did not begin until 1950. 1948, 1949, and half of 1950, were devoted exclusively to combating Communists right on the soil of Greece, and that is where the aid went. Right in the beginning of the recovery from devastation, in the initial period, 1950 and 1951, the aid had to be primarily devoted to dealing with human needs at the end of a civil war, the relocation of people, the reestablishment of destroyed facilities, and so forth.

Agricultural rehabilitation played a very large part. So, actually, Greece is at least 3 years behind any other country that has been assisted in this progrm, and it hasn't gotten very far, if you look at the figures and keep them on a comparative basis. It is a country with a tremendous industrial potential and a great will to live and work. We haven't done the major things yet. The electric power project is still in the debating stage. Yet, without power, how can the industry be developed? Industrial unemployment has risen from 100,000 in January, 1952, to over 200,000, now. It is a new feeding ground for Communist agitators and they are still there in different forms, although they are suppressed. An adequate allotment of economic aid that would include the development of hydroelectric power and other resources would help put economic recovery of Greece on a basis of lasting stability.

Austria, whose major part is still under the heel of oppressive Soviet occupation, and whose people, though unarmed, have shown indomitable courage in resisting Communist subversion and penetration, must also continue to depend on a measure of our aid sufficient to help increase production and raise the standard of living.

I certainly shall not repeat it, Mr. Chairman, but I testified on this before, to this committee. I made a personal trip all through Austria, including the Russian zone, at one time. In my experience, in my whole life, I have never seen such human courage and determination in trade-union people who had Communist commissars breathing down their necks and who knew that people disappeared, with their families and children, and yet the people next door took right on the fight for resistance to Communist domination of their industrial plants. They took over the job to resist, and the result is that 95 percent of the trade unions in the Russian zone are actively anti-Communist today. That takes an awful lot of courage. Yet, for technical reasons, because of bank credits-actually, the economic-aid program in Austria today is frozen and it is a distressing thing to us. We are keeping in touch with the Austrian trade unions. The unemployment is growing. They need assistance in this isolated country. This is one area in which economic aid, now, in a very small amount, could pay tremendous dividends to us, right in the area in which the Soviet promise is being tested, today, that is, the Austrian peace treaty. But, what will happen when the treaty comes, and what comes after the treaty, when and if the Soviets agree to it? We have the responsibility for being