will be brought out later by Mr. Gray and other witnesses from the Department of Defense.

CONCLUSION

Mr. Hollister plans to discuss with you the detailed legislative provisions which we are requesting for this 1957 program. Altogether we believe that these appropriations, subject to the approval of Congress, will

(1) provide adequate means to continue to strengthen our allies;

(2) continue soundly and affirmatively our economic program, which in itself is the best answer to new Soviet activities;

(3) achieve a greater measure of flexibility so urgently needed; (4) supply a limited element of continuity in our aid program. I have presented in very brief outline the problem we face and the proposal of the executive branch for the solution of that problem. It is our earnest hope the committee will approve this program.

Mr. Chairman, that is the completion of my statement.

Chairman RICHARDS. Thank you, Mr. Secretary. There will be some questions no doubt that the committee members will want to ask you.

We are proceeding now under the 5-minute rule, and then we will follow up with general questions. Mr. Gordon.

Mr. GORDON. No questions at this time.

Chairman RICHARDS. Mr. Vorys.

Mr. VORYS. Mr. Secretary, I believe you are a graduate engineer; isn't that correct?

Mr. HOOVER. Yes, sir.

Mr. VORYS. How many of the countries involved in this program do you suppose you have visited before you became Under Secretary of State? Could you give us a guess?

Mr. HOOVER. I would have to stop being an engineer and count them up. I would think probably somewhere between a half and twothirds.

Mr. VORYS. I think it is a great idea, with your background and experience, to have you backstopping this program in the Department of State. I have no questions or comments at this time, Mr. Chair

man.

Chairman RICHARDS. Mr. Carnahan.

Mr. CARNAHAN. Mr. Chairman. Mr. Secretary, on page 2 of your statement, the third paragraph, you state:

In this campaign the Soviet Union and its satellites have expanded their trade relations with the free world, they have offered their technical and advisory services to the less industrialized countries, and they have provided long-term lowinterest loans for economic development.

I was just wondering if they have actually provided any loans or if they have offered to provide loans?

Mr. HOOVER. They have offered certain loans, and they have committed themselves in some cases. I think the total commitments, as nearly as we can determine at this time, is probably somewhere around, the equivalent of $275 million to $300 million.

There are other offers we believe that have been made which will bring the total to probably somewhere around $500 million, if these offers are consummated.

Mr. CARNAHAN. Are those offers very widely distributed, and are the loans very widely distributed over the world?

Mr. HOOVER. They seem to be concentrated in certain countries and certain areas. They seem to be preponderantly in the Middle East, South and Southeast Asia and, to some extent, in the Far East. Mr. CARNAHAN. That is all, Mr. Chairman. Thank you. Chairman RICHARDS. Mrs. Bolton.

Mrs. BOLTON. I am very happy to have you here, Mr. Hoover. will have some questions later.

Chairman RICHARDS. Mr. Zablocki.

I

Mr. ZABLOCKI. Thank you, Mr. Chairman. Mr. Secretary, undoubtedly, in future testimony several aspects of the bill and provisions, particularly the new provisions will be discussed in detail. However, I would like to ask at this time whether the announced Krupp type proposal, the so-called Krupp point 41⁄2 proposal, has been taken into consideration by the executive department in preparing the mutual security bill of 1956?

Mr. HOOVER. It is my understanding that it has. I would like, if I might, to defer that in detail to Mr. Hollister and his staff to be gone into later.

Mr. ZABLOCKI. That is my only question, Mr. Chairman.
Chairman RICHARDS. Mr. Smith.

Mr. SMITH. Thank you, Mr. Chairman. Mr. Secretary, is the chief emphasis in this legislation upon the military?

Mr. HOOVER. I think from that it would be found that on the basis of the rate of expenditure, which is the thing that I think we are primarily concerned with, the emphasis is, in terms of dollars, slightly more on the defense side than it is on the economic side.

That, however, is not the emphasis insofar as the importance of what we believe the programs may be. The real emphasis is on the entire balanced program.

Mr. SMITH. Does this place us at a psychological disadvantage so far as the Soviet is concerned?

Mr. HOOVER. No, sir; I do not believe it does. One must bear in mind that at the present time the Soviet Union and its immediate bloc countries have an excess of 6 million men under arms. These men are well equipped and they are well trained.

That is a force which from our point of view requires, and from the point of view of the free world requires, that we and other countries should maintain adequate defensive forces, with the idea of deterring aggression. And we hope and think that that will in turn eliminate aggression.

Mr. SMITH. Aside from political aggression, is there any evidence of military aggression?

Mr. HOOVER. At the present moment I think not.

Mr. SMITH. Do you know of any move by the Soviets in their offer of aid to have that in the form of gifts or is the Soviet aid confined almost entirely to loans?

Mr. HOOVER. Soviet aid has been in two forms. One is technical assistance, and the other has been in the form of long-term loans at a very low interest rate.

When I say "long-term," I mean the length of term of 50 years and more, and it also includes extremely low interest rates.

As far as I know, we have no equivalent loans that we have ever made from this country. They also engage in direct barter. Barter, I think, is an extremely important point.

It should be realized that part of the problem is that barter is, in many cases, a legitimate operation, an economic operation of the Soviet Union. They have great shortage of agricultural products and food. They have managed through their controlled economy to have a surplus of some types of industrial products and of industrial goods. They are therefore bartering agricultural products for these industrial goods. In the process of setting up factories, plants, operations of various types in countries with which they barter, they have undoubtedly gained a considerable amount of economic penetration. Mr. SMITH. What percentage of this request is in grants and what percentage in gifts, or grants or loans?

Mr. HOOVER. I think Mr. Hollister will be able to give you those figures on that when it comes to his turn, sir.

Mr. SMITH. Thank you, sir, and thank you, Mr. Chairman.
Chairman RICHARDS. Mrs. Kelly.

The increase this year

Mrs. KELLY. Mr. Chairman, I thank you. is almost double that of the request of last year. is not the answer to this Soviet new move, new look. other plans as answers, other than this program? that you are going to recommend?

Yet you say this
Have you any
Any other policy

Mr. HOOVER. I would like to refer, if I might, Mr. Chairman, to my statement, where I said that we believed in presenting these appropriations, subject to the approval of Congress, that they would (1) provide adequate means to continue to strengthen our allies; (2) continue soundly and affirmatively our economic program, which in itself is the best answer to new Soviet activities; (3) achieve a greater measure of flexibility so urgently needed; and (4) supply a limited element of continuity in our aid program.

I would like to say this, if I might: That I don't know of any program that I have had occasion to see myself which has had more effort, more time, and more devoted application than the development and presentation of this mutual security program this year.

We do not believe that we are infallible. We are always willing and we are ready and eager to receive constructive suggestions, to have any suggestions of any sort which the committee members may wish to give us in the process of presenting this program.

I know that in particular the ICA, the Department of State, and the Department of Defense have deeply appreciated the time and the effort which the members of this committee have given to Government departments closely concerned with this program, when, as a result of their trips around the world and being in contact with many of these areas and many of these programs, have given of their time and of their effort in coming to us and giving us their ideas.

Wherever it has been possible and we could do so, we have tried to work those ideas into the presentation of this program. We will continually be open and receptive to any suggestions that can be made.

As to the second question, other programs such as the United States information program, are not included in the presentation of the mutual security program but will be presented to the Congress separately.

Mrs. KELLY. I have made many suggestions, Mr. Secretary, but they are not always carried out. I hope they will be this year. However, I would like to discuss flexibility. Is that going to include the unexpended balance?

Mr. HOOVER. The matter of the unexpended balances is an extremely technical matter which I would like to refer to the Defense side of the operation. I would like to leave that, if I might, for Mr. Gray, for Admiral Radford, and for General Gruenther, all of whom are appearing in the next 2 or 3 days.

I would like to make one comment, however, and that is in regard to the flexibility. I think there are three major new elements of flexibility in the proposed legislation for fiscal year 1957.

There is the matter of the longer term commitments, which I touched on in my first statement.

The second is the Middle East and African fund. In view of the rapid movement of developments in the Middle East and Africa, it is important that the United States be equipped to move efficiently and effectively to meet new situations in that area as or before they arise.

The aid presentation which will be made for that area is based on evaluation of existing programs and needs as related to United States interests and objectives. In the past several months, however, a major new factor of Soviet activity has been injected into the area, coupled with the emergence of major economic problems.

Rather than request funds for expanding the continuing programs, the President is asking the Congress for a special fund of $100 million for nonmilitary programs for the Middle East and Africa to take advantage of new or changed opportunities to promote United States interests.

This amount is less than the total required to meet all foreseeable needs, but it is believed to be adequate if provided on a flexible basis. That is the Middle East and African fund. The third major new element of flexibility is in relation to section 401. Section 401 of the act now provides the President with a discretionary fund of $100 million usable anywhere for any of the purposes of the act but without regard to certain provisions of law.

The same section also authorizes the President to transfer up to $50 million from authorized programs for the same purpose. The uses to which it has been possible to put these funds have been invaluable and have justified the confidence of Congress.

The President now asks that the same amount of funds, $100 million, be made available in the coming year. In addition, because of the need for greater flexibility, the President also asks that the $50 million transfer authority be increased to $200 million.

The present legislation limits the uses of funds under this project to $20 million in any country. For the same reason, the President asks that the authority permitted to him to aid any country be increased to $40 million.

The President further asks that of the total amount for which flexible use is provided under section 401, $100 million be usable without regard to requirements of this act or any other act.

Chairman RICHARDS. Mrs. Kelly, your time has expired. Mr. Jackson.

Mr. JACKSON. Thank you, Mr. Chairman. I have no questions at this time except one directed to the Chair. That is to ask if at the initial open hearings of the committee at least we might be able to get something more adequate in the way of a hearing room.

I have gone for a handkerchief twice and picked Karl LeCompte's pocket both times. Too, there are a lot of people who would like to see and hear these initial hearings, but are unable to do so because of the seating available. Certainly we don't have the facilities here to care for them.

Chairman RICHARDS. I am in accord with Mr. Jackson's viewpoint on this thing. We tried to get a room from another committee where the press and the public could get in. We could not get another

room.

If the gentleman will be here 3 years from now, we will have plenty of room.

Mr. JACKSON. I sincerely hope so, Mr. Chairman.

Chairman RICHARDS. They are building another building over there. Mr. JACKSON. That is all, Mr. Chairman.

Chairman RICHARDS. Mr. Dodd.

Mr. DODD. I have no questions at this time.
Chairman RICHARDS. Mr. LeCompte.

Mr. LECOMPTE. Thank you, Mr. Chairman. Mr. Secretary, on page 3 of your statement you state in about the center of the page:

We are not asking for additional appropriations. It is contemplated that this kind of assistance will be furnished in special cases where the recipient country cannot carry out a major project with its own resources.

I have in mind such projects as river development, improvement of ports, highways, railroads, or other means of communication and important large industrial projects.

I was only going to ask if that contemplates grants or loans? Mr. HOOVER. It should be sufficiently flexible so that if it is not possible to get some of these projects started on the basis of loans they still can be started on the basis of grants.

We believe that it is possible that instead of being limited to 1 year projects, as at present, or very limited in terms of 1 or 2 years. under the present authority, that we be allowed to undertake projects that might require from 5, 6, 7, 8, or even 10 years, perhaps, for completion.

I feel quite certain that in the case of quite a number of those projects, by our being able to furnish a limited amount of the underlying funds, we can thereby release proportionately much larger funds from such institutions as the World Bank; we can bring about the greater use of internal resources of the countries themselves; and we can increase the likelihood of having other countries join with us in such programs.

I believe it would form a far more efficient way of getting the major projects underway and that it would do this with a smaller expenditure of United States funds than at present possible.

Mr. LECOMPTE. Thank you. All I was going to say, then, was to ask what you practically said. You think it is highly desirable to have a great deal of flexibility as between loans and grants?

Mr. HOOVER. Yes, sir.

Mr. LECOMPTE. Thank you very much. I have no other questions. Chairman RICHARDS. Mr. Hays of Ohio.