The What about Russia? That is not the first question to be answered. first question is, What about the United States? We ourselves are the crux of the present situation. We ourselves must offer to lead the way. It is futile for us to wait for someone else to take the lead. Only when we, the strongest nation, make the offer, will Russia have the first chance to make a choice. Suppose when the issue were squarely raised, Russia refused to go along. Should we abandon the effort to strengthen the United Nations and, perhaps, proceed under article 51? Resolution 59 does not attempt to answer that question. It simply recommends that we make the start to establish a limited world juridical order. It seems to me that that is wise. It would be premature at this time to even suggest the possibility that Russia would refuse. Procedings under article 51, however, before the fullest effort had been made to strengthen the United Nations, would simply be a hostile coalition and the continuance of the outworn policy of alliances and power politics. The character of war has been revolutionized, and we must change our habits of thinking about war and peace, if our civilization is to survive. In the immediate future we must keep ourselves the strongest Nation in the world, economically, politically, and militarily. We must help to strengthen western Europe. But those are negative things, a shield behind which to gain time for accomplishment of an ethical and effective objective. We must do two things at once: work on both the short-run and the long-run problems. But what is our objective? So far as any expressions of our statesmen indicate, our Nation's objective is the indefinite continuance of the same. In contrast, the leading statesmen of England of both parties, including Mr. Churchill, have clearly stated that the only solution is world law and order. Leading statesmen of Belgium and France have said the same. The constitutions of France and Italy authorize the joining into a world government. What says the United States? If the world is to take the only road to peace, the American people themselves must take the lead through their elected representatives. The Executive Department can hardly be expected to make the offer to substitute an international system of security for the war-making power unless it clearly will be supported by the legislative branch. Resolution 59 is not "back-seat driving"; it is a removal of the ghost of Senate ratification and an effort to give assurance and encouragement to the Executive Department to adopt the only objective that offers hope of enduring peace. SUPPLEMENTAL STATEMENT SUBMITTED BY HON. OWEN J. ROBERTS, MAY 24, 1948 I agree with those who think it important to preserve and perpetuate the United Nations. I agree that for at least this fiscal year European recovery program is essential to bridge the economic gap in western Europe. But I believe that neither the United Nations nor European recovery program can preserve the system of individual freedom and democratic institutions either in western Europe or the United States. The proposals now before your committee stem from a similar belief; but I feel that they, in turn, will prove inadequate to save the free way of life in the world. The proposal to attempt a reform of the United Nations by abolishing the veto is impractical both in method and in results. Experience shows that any move to this end within the United Nations will involve a delay of years. Witness the discussion of the atomic energy plan, of the United Nations armed forces, etc. The crisis is too great to permit this delay. Abolition of the veto cannot be accomplished without the consent of Russia and the United States. Russia will not consent. The United States should not consent if the United Nations remains a league of sovereign nations. Russia says she entered the league only under a solemn covenant that the veto could not be abolished without her vote; and she is right in this position. The United States ought not to attempt to force abolishment of the veto over Russia's objection, because (a) This will force Russian and her friends and some neutrals out of the United Nations. While I agree that the United Nations, as presently set up, cannot keep the peace, I think it valuable as an international forum, as a force for voluntary progress in many fields, as was the League of Nations. 75921-48-35 (b) The proposal seems to be that if Russia and other nations leave the United Nations, we are to lead in the formation of a reformed United Nations, thus dividing the world into two camps. (c) If we break the United Nations by a great moral drive to abolish the veto in matters of aggression, then we would seem morally bound to stand by that principle in organizing our new league, with the divergent group of states that, for good reasons or bad, stand with us in the show-down. The new league must then be set up on the basis of no veto on matters of aggression. If states can be forced into war over their negative votes, no state, large or small, ought to have a veto on the conduct of the war. So we shall start on a road whereon we must face putting up most of the men, material, and money, while other states control them and the ultimate peace treaty; or we must buy our way out of this position by loan or lend-lease to this or that nation; or we must reverse our nonveto policy after we have broken up the United Nations. That would hurt us morally worse than the reversal of policy as to Palestine. The new league, recognizing national sovereignty, will be as far from international government as the United Nations. If we seek a closer form of union with all the backward nations of the world, we shall have to limit the electoral representation of their people, or face the certainty of another break-down. The alternative to that may well be the crass assertion of our national power. Many persons, in official life and in private capacity, put their trust in certain half measures to prop up the free peoples. First, the European recovery program: It has already become clear that this alone is not enough. All the money and goods we pour into Europe will go down the drain if the people of Europe doubt their own security against aggression; if each nation builds its own defense force; if there is no assurance that we will see the thing through economically and militarily. So the European-recovery-program legislation is no sooner passed than we have proposals for lend-lease or military alliance with the European-recovery-program nations. We ought to know how weak a reed a military alliance is. We have seen enough work badly or go on the rocks. Worse still, they are terminable at the will of any of the sovereign allies. A United States of Europe is urged. Can such a federation, standing alone, and without our aid and support, bring recovery? I firmly believe it cannot. Then why divide the free into two camps? In any of these alternatives how long can we bleed our economy for vast independent military preparation and for the economic support of 16 nations, each of which will maintain its own military establishment? The way to promote economic recovery in western Europe and the remainder of the world is to form a union of the peoples whose nations practice individual freedom under law-the nations who have held the front in spiritual and material progress; to weld them into a common society; a society which as a federal unit cares for the common defense and promotes the common welfare of its citizens; a society governed by the peoples' law; a society that protects that individual liberty which is the essential of man's welfare, progress, and prosperity. Such a federal union of free men will solve the great rearmament-recovery dilemma we now face: We must strengthen freedom's defenses, and at the same time speed European recovery. For this we are already running short of resources. If we arm ourselves and our European friends at the cost of their living standards, we risk the winning of these countries by communism. If we speed European recovery at the cost of defense, we risk the taking over of these countries by the Red Army with hardly battle-as Holland was taken by the Nazis. We must find a way to enormously increase the defensive power of freedom, while saving enough in men, materials, and money to hasten recovery. Amending the United Nations Charter or making alliances will not solve the dilemma. Union of the free alone can solve it. Merely by thus ending all doubt that Europe's bases are tied inseparably by organic union, we can gain far more effective sea and air protection at a saving of at least $5,000,000,000 a year. Nothing in the Charter of the United Nations precludes such a union. It or its members should remain in the United Nations. It should invite and encourage other nations to join, as they are able to qualify. It will be the nucleus of a free self-governing world. No other proposal meets the urgent need of the times. Instead of the resolutions before you, I hope the committee will frame one calling for a convention of delegates of the democracies of the world to explore this proposal, and report to the people of their nations a plan or constitution for such a union. THE AMERICAN ECONOMIC FOUNDATION, CONGRESS OF THE UNITED STATES, House of Representatives, Washington, D. C. GENTLEMEN: Since having the honor of testifying before your group on the proposed United Nations reform embodied in Resolution 163, certain events suggest that the following remarks be added, if possible, to my testimony. I am still unalterably in favor of three specific steps: (1) The elimination of the veto regarding matters of aggression; (2) The extension of the legal power of the World Court so that it may judge agression, and (3) The creation of a neutral, professional, superbly equipped police force under a United Nations general staff. I can see no assurance of peace without all three. However, the approval of Senator Vandenberg's "Working Paper" changes my feeling as to the timing of debate on Resolution 163. The Working Paper's proposals do not conflict with the ABC plan; they move in the same direction, but toward a much more limited objective. In other words, the failure of the Working Paper's efforts (and I am morally certain they will fail) will merely serve to reinforce the need for the ABC plan and, in the meanwhile, will have broken trail in the right direction. Therefore, as a sponsor of Resolution 163, I would like to see it emerge from your committee as something that should be immediately brought to the floor of the House, when and if the Working Paper measures prove inadequate. May I repeat that I deeply appreciate the courtesies shown to me by your committee. Very sincerely, R. S. RIMANOCZY. DEPARTMENT OF STATE, MEMORANDUM FOR THE CHAIRMAN, COMMITTEE ON FOREIGN AFFAIRS OF THE HOUSE OF REPRESENTATIVES The following comments are submitted with respect to the bill authorizing the President to accept on behalf of the Government of the United States, the convention on the privileges and immunities of the United Nations. The bill would amend the United Nations Participation Act of 1945 (Public Law 264, 79th Cong.) by providing, among other things, that— "(b) Insofar as any provisions of said Convention and the International Organizations Immunities Act (Public Law 291, Seventy-ninth Congress), as applied to the United Nations relate to the same manner, the two provisions shall, wherever possible, be treated as complementary to each other so that both provisions shall be applicable and neither shall narrow the effect of the other; but in any case of absolute conflict, the provisions of the Convention shall prevail." A comparison of the provisions in the convention with those in the Immunities Act will show that some provisions are virtually identical, while others add new elements or modify corresponding provisions in the Immunities Act. In the view of the Department of State, there are no conflicts between the convention and the Immunities Act. The only question which has been raised in this regard relates to the problem of so-called "reciprocity" with respect to the granting of privileges and immunities to representatives of member nations to the United Nations. In a letter dated April 29, 1948, addressed to the Honorable Lawrence H. Smith, chairman, Subcommitee No. 6 of the Committee on Foreign Affairs, the legal adviser of the Department analyzed the background and provisions of the Charter, the United Nations Headquarters Agreement, the Immunities Act, and the general convention on privileges and immunities bearing on this point. The conclusions were reached that the Charter of the United Nations imposes an obligation on member states to grant certain privileges and immunities not conditioned on reciprocity and that the International Organizations Immunities Act merely leaves the Secretary of State with such authority to enforce conditions of reciprocity in the granting of privileges and immunities as he may possess apart from the Immunities Act. In other words, there is no conflict between the convention and the Immunities Act in this or any other respect. The bill also would amend the United Nations Participation Act of 1945 by authorizing the President, following appropriation of the necessary funds by the Congress, to bring into effect on the part of the United States, the loan agreement between the United States and the United Nations. The Participation Act would be amended, among other changes, by providing that the President could bring the loan agreement into effect "with such changes therein not contrary to the general tenor thereof and not imposing any additional obligations upon the United States or relieving the United Nations of any obligations, as the President may deem necessary and appropriate." The quoted language is put in solely as a safeguarding clause and the Department of State does not have in contemplation any changes in the loan agreement. However, the safeguarding clause is suggested in order to obviate the necessity for new legislation in the event language corrections or changes in detail prove to be necessary, provided that such changes or corrections do not in any way impose any additional obligations on the United States or relieve the United Nations of any obligations arising under the loan agreement in its present form. ERNEST A. Gross, The Legal Adviser. DEPARTMENT OF STATE, MEMORANDUM FOR THE CHAIRMAN OF THE FOREIGN AFFAIRS COMMITTEE OF THE HOUSE OF REPRESENTATIVES RE EXEMPTION FROM FEDERAL INCOME TAXATION ON SALARIES AND MONEYS PAID BY THE UNITED NATIONS TO OFFICIALS WITH UNITED STATES CITIZENSHIP This memorandum analyzes the actual operation of the proposal in section 7 of the bill pending before the committee which would allow United States citizens who are officials of the United Nations to deduct from their Federal income taxes amounts paid to the United Nations in the form of staff contributions. Such a United States citizen would be required, as are other citizens, to file an incometax return reporting his entire income, in accordance with the Internal Revenue Code. The United Nations would compute all salaries paid to its employees on a gross basis and would, in the employment contract with each employee, provide for payment by the employee to the United Nations of a determined percentage of his salary. This percentage would be computed essentially in the same way as the United States and other governments compute income taxes and the contribution paid by the employee would go into the treasury of the United Nations and would be available for expenditures of the Organization. In the case of United States citizens, employees of the United Nations, the proposed United Nations staff contribution scheme would actually involve contributions by citizens to the United Nations greater than they would be required to pay under the Internal Revenue Code as income taxes to the Federal Government. The reason for this is that certain other governments levy higher income taxes than does the United States Government and the objective of the United Nations staff contribution scheme is to equalize the wage and salary levels of its employees. United States citizens employed by the United Nations would therefore not constitute a privileged class of citizens since they would not have immunity from the Federal income tax. The United States citizen would be entitled to claim a credit on his Federal income tax not greater than the amount he had actually paid to the United Nations in his staff contribution. However, he would not be entitled to claim credit on account of such staff contributions greater than his income tax liability on that portion of his income which was derived from the United Nations. ERNEST A. GROSS, STATEMENT BY AMBASSADOR AUSTIN, FOR PRESENTATION TO HOUSE FOREIGN AFFAIRS COMMITTEE, ON INCOME TAX PROVISION OF GENERAL CONVENTION ON PRIVILEGES AND IMMUNITIES, MAY 27, 1948 General Assembly of the United Nations decided in London in 1946 that members of the Secretariat should receive the same net pay for the same service regardless of nationality. In order to achieve equality among personnel of the Organization, the General Assembly held it to be indispensable that members should exempt from national taxation the salaries and allowances paid by the United Nations. Pending the extension of such exemptions, the United Nations has reimbursed from its general funds the amounts paid by its employees to their governments as income tax on United Nations salary. The present situation is that United States nationals and Canadians (who have been resident in Canada for part of the tax year) are the only staff members who receive tax reimbursements which amount currently to $750,000 a year. During the last regular session of the General Assembly, which opened in New York on September 16, 1947, other members of the United Nations made it clear that they were unwilling to continue such reimbursements since the effect was that other member governments indirectly were paying income taxes into the United States Treasury in the amount of approximately $400,000. It was great difficulty that the United States delegation prevented a special assessment against the United States for the amount paid by the United Nations as reimbursement for income taxes to United States citizens. At present, the alternatives appear to be 1. To attempt to reverse the attitude of the General Assembly toward equal pay for equal services; 2. To except a special assessment against the United States for the amount of income taxes reimbursed to United States citizens; 3. To grant full income-tax exemption on salaries paid by the United Nations; or 4. To authorize United States citizens employed by the United Nations to offset against their Federal income-tax obligation the amount paid by them to the United Nations under a staff contributions plan. Alternative 1 does not appear to be a practical possibility in the light of the attitude taken by other governments in the General Assembly. The principle of equal pay for equal work has been reaffirmed at every regular meeting of the General Assembly as a principle which is vital to the efficiency and morale of the Secretariat. The ability of the United Nations to recruit competent Americans is important from the point of view of the United States itself. It should be specially noted that the United Nations, in establishing its pay scale, used a survey of the prevailing gross pay scales in the New York area which was made by the Commerce and Industry Association for New York business firms. The United Nations subtracted from the best prevailing pay scales the amount which would normally be paid in Federal income taxes in order to arrive at the United Nations net pay scale. For example, if it were found that the prevailing gross pay for a particular class of employment was $3,000 per year, and that Americans without dependents employed in the New York area were paying an average of $400 each in Federal income tax, the United Nations determined to pay $2,600 per year for similar employment in the United Nations. Unwillingness of the United States to grant income-tax exemption would result in a payment of income tax on the $2,600, thus bringing the pay of Americans employed by the United Nations below the pay scale of the general area. This consideration is of particular importance because it directly affects all of the 1,500 Americans now employed by the United Nations and, of course, is of most serious concern to those in the lower-income brackets. Alternative 2 is most undesirable because it would result in a special assessment of some $700,000 against the United States. A special assessment of this nature would create a precedent for the fragmentation of the budget, according to which members might refuse to contribute to the expenses of those United Nations activities to which they were opposed on political grounds. Alternative 3 represents the principle accepted by the General Assembly and originally recommended to the Congress. It is simple, easily understood, and conforms to the broad concept of the independence of the United Nations as the principal international organization. Although it is recognized that it might create an undesirable taxation precedent, it is believed that the advantages clearly outweigh the disadvantages. Alternative 4 represents an attempt to find a compromise between needs of the United Nations, as an international organization, and the understandable reluctance of the Congress to permit full tax exemption. The principle of tax offsets for taxes paid to foreign governments is well established. With United States encouragement, the General Assembly instructed the United Nations Secretariat to develop for the next regular session of the General Assembly a contributions scheme under which salaries would be determined on a gross, rather than a net, basis and assessments similar to income taxes would be paid on such |