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Mr. RIBICOFF. When everything is said and done about the Marshall plan and all of these aid programs the basic problem will be to get industry to solve the dollar gap and commerce going back and forth between here and Europe.

Mr. HARRIMAN. That will continue with us, and, of course, one of the things which is of such great importance is the encouragement of private capital investment abroad, which is one of the important ways in which trade can be balanced.

Mr. RIBICOFF. And yet ECA has been very reluctant to encourage private investment abroad. I think even when we talk about possible guaranties and getting private investment abroad the greatest block to the entire program comes right from ECA in Washington. When you go to Europe and talk to the administrators of ECA they feel that guaranties will help the solution. When we were considering it here and in the Senate we had the feeling that ECA does not want to bother with it at all.

Mr. HARRIMAN. That is not the feeling; no, sir.

Chairman KEE. I think we are now going rather far afield from the question of military aid.

Mr. HARRIMAN. I would like to have you address that statement to Mr. Hoffman, because that is not at all my impression of his attitude. Chairman KEE. Are you through, Mr. Ribicoff?

Mr. RIBICOFF. Yes, I am, Mr. Chairman, thank you.

Chairman KEE. Mr. Javits.

Mr. JAVITS. I have a report here which says that Ireland's Foreign Minister which is not among the North Atlantic Treaty powers, has suggested that military aid be sent to it.

Mr. HARRIMAN. I do not know what is in it, so I cannot comment on that.

There has been no proposal before this Congress to give military aid to North Atlantic countries, except those which are in the North Atlantic Treaty organization. However, Mr. McBride is a very fine fellow, and he has been very cooperative in OEEC.

Mr. JAVITS. This bill would permit aid to be given to Ireland, would it not; it would open the door for that, would it not?

Mr. HARRIMAN. I think under this bill there is some authority given to the President in case of an emergency where our national interest is involved, to give some percentage of aid to certain countries.

Mr. JAVITS. And also to give aid to any countries whose defense would be vital or important to our security.

Mr. HARRIMAN. Well, one way for Ireland to get in, is for them to come in.

Mr. JAVITS. What restrictions are you putting on the export of the machine tools and the military equipment which is manufactured, to the Soviet or its satellites?

Mr. HARRIMAN. These countries all have restrictions against military equipment going behind the iron curtain.

Mr. JAVITS. Well, that means any of the bilateral agreements that we make now unless actually those excepted?

Mr. HARRIMAN. It is simply arms and different types of equipment. I would not, however, think it would change the bilaterals at

all.

Mr. DICKINSON. I think that would be covered by the present bilaterals.

Mr. JAVITS. The present bilateral arrangements you feel would cover it?

Mr. DICKINSON. Yes.

Mr. JAVITS. I note that you place great dependence on the economic defense with respect to Russian communism. You say on page 3:

real hope must be given to the low-paid workers for a decent life in a free society to belie the false promises held out by Communist propaganda.

Do you believe that the reconstruction programs which we are not engaged in, the Point IV program, and the European recovery program, are broad enough to make material progress in accomplishing that result, or do you feel that we really have not in terms of amount of money and in terms of the amount of technical skill made available begun to deal with this problem?

Mr. HARRIMAN. May I answer it this way, Mr. Javits, that we in the North Atlantic community have the key improvements and the vital industrial production of the world. We are dependent upon imports which we also must be able to realize. I know that you understand Europe is very much dependent on them, and it becomes clear, as I said, for the future of Europe, if it is to have hope for the kind of expanding economy, and the development of a decent life in underdeveloped areas of the world must be developed together with Europe.

Therefore, the Point IV program becomes increasingly important as we go along. As there is expansion of industrial production, there is need for the products of industry in these underdeveloped countries, and there is need for food and raw materials in Europe. Therefore, the concept of Point IV becomes more and more important. I think we should do it together with Europe, and because Europe may need expanding capital to continue its investments it becomes in that sense of speaking an ordinary investment. Yet they can contribute to the development of the underdeveloped countries and make a substantial contribution to them. So, I think the concept of Point IV is essential to develop the expanding economy in the industrial areas of the free world, including our own, and I am delighted to see that the Congress has started this. I think we all hope that it is a start only, and that we will find ways and means of pushing it further ahead.

Mr. JAVITS. Do you think that the order of magnitude of Point IV is commensurate with the problems with which we have to deal, even as a start?

Mr. HARRIMAN. One of the series of European studies now starting, will cover types of trade which will have to be developed, and I think studies also will be made here.

One very interesting development of the meetings in London, which you are undoubtedly familiar with, can be of great importance, and that is the invitation on the part of the United States and Canada to study matters that are agreed to be of mutual interest in connection with the development of the underdeveloped areas, and it would be, I would hope, one of the subjects that could be profitably discussed together.

Mr. JAVITS. That is all. Thank you very much, Mr. Harriman. Chairman KEE. Mr. Ambassador, I think you have given us a very comprehensive statement, and I would like to ask you a question or two if you have no objection.

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I feel that the people in this country recognize quite keenly the great menace of the Soviet.

We recognize the fact that unless we can give a degree of security, a very high degree of security, to Western Europe that all of our previous efforts represented by the Marshall plan and our future efforts under the Point IV plan, and all of the other aid we have given or will give to the peoples of Europe will have been wasted. Do you believe that the prosecution of this program promises to those people what you might say is reasonable security?

Mr. HARRIMAN. That is their hope, and that is our hope.

I am firmly convinced that the security of Europe is our security, and that we would have a most difficult, if not unmanageable situation, if there was Kremlin domination of Europe. You faced that in 1947 when you first started interim aid and made a most wise decision that our security was tied up with the security of western Europe. Chairman KEE. I thoroughly agree with you on that.

It has always been my feeling that if any Member of Congress is not convinced that it is to our national interest and for our national security to render aid to the peoples of Europe then he has no reason whatever for voting for any aid. In other words, he is justified in voting against it if he does not believe in his heart that it is for our national security. I know that is the position I take, and I knɔw there is justification in taking the position that it is entirely in our national interest and for our national security to preserve the freedom of the nations of Europe which are still free.

Do you believe that the people of Europe recognize the menace of the great Soviet Empire with all of its tremendous military strength, as we recognize it?

Mr. HARRIMAN. They certainly recognize it as much as we recognize it. In fact, those countries under the gun recognize it even more than we do. Of course, there are in most countries limited populations, those who follow the Communist line, and except for them they recognize the menace.

Chairman KEE. I know that we look at it from that standpoint in this committee, because it is not only the people of Europe that we recognize are in danger, but people all over the world, especially those in the Asiatic countries.

Mr. HARRIMAN. They look upon it as the Red army coming into their homes, taking the men out and shooting them, or sending them to Siberia or destroying the life of the country so, it is a very close reality to them.

Chairman KEE. In view of their recognition of this menace, is it your opinion that they will be willing to join with us in this program and make a contribution in each of those countries up to the limit of their national resources?

Mr. HARRIMAN. There is complete acceptance of the principle of balanced collective force, and several of the great important countries are already spending for military appropriations as much, or more than we are spending in relation to their resources, and they are ready to contemplate expanding those expenditures.

There is a recognition, frankly, that without the United States the problem is insurmountable. Not only aid, but the whole force and strength of the United States joined with them gives them the hope that we can develop an adequate defense force.

Chairman KEE. It is your view, then, Mr. Ambassador, that if we continue this program, these countries, individually and collectively, will be willing to help us in our effort to help them?

Mr. HARRIMAN. I am utterly convinced that they will do their share; yes, sir.

Chairman KEE. I know that you have incidentally answered the next question by your testimony as a whole, but do you think it is necessary to our national interest to support both the present appropriation as proposed and also to continue the program until it has accomplished its objective?

Mr. HARRIMAN. Yes, sir; most decidedly, and the reason why I said I thought that otherwise we would have a most difficult, if not unmanageable situation can, perhaps, best be described in industrial terms. Taking steel as an example, we have something over 90,000,000 tons of steel capacity in this country. Western Europe has something over 50,000,000 tons of steel capacity, and Russia has about 30,000,000 tons of steel capacity plus her satellites. Between Europe and ourselves it is 140,000,000 tons of steel capacity, a preponderance of economic strength which, if mobilized in terms of reasonable defense force, I think would be certainly a deterrent.

If you look at it the other way, if Russia had overrun Europe, or if as she planned to do in 1947 she had taken over Europe by other means the U. S. S. R. would have had 50,000,000 tons, plus 30,000,000 tons steel capacity, and it would come too close to balance to make it comfortable for us to live. We would have had alternatives facing us which would have been extremely burdensome.

Those figures explain why I have such confidence that if we work together we can attain our objective of security and peace, and that is why I feel by the same token that we would have an unmanageable situation if we had Kremlin domination of Europe.

Chairman KEE. Mr. Merrow.

Mr. MERROW. I have one or two questions.

Mr. Ambassador, on page 2 of your statement you spoke about initiative being revived in Europe. Do you believe from your contact with the various countries over there that there is a genuine growing desire to bring about unity, that there is a desire to achieve unity economically and militarily and, perhaps, finally politically?

Mr. HARRIAMN. That is a rather hard question to answer in the way you put it. I think there is a determination to do their share to develop a balance collective force. There is a growing recognition of the fact that the countries of Europe must work together in developing their economy. They cannot any longer live an independent economic life.

The political development has been slow. It is extremely difficult, and the Council of Europe has made certain progress. There are differences of opinion within each country as to how fast they should go, and I would think that the political development would be relatively slow, but progress is being made on a step-by-step basis, and I think probably that is the only way it can be done.

Mr. MERROW. We hear a great deal about integration these days, and in discussing it here a few minutes ago it would seem to many that unity or integration of the Continent is necessary if the Continent is going to survive. We have been talking a great deal about western unity. It seems to me that there is developing on the part

of these countries a desire to get unity in the various fields which have been mentioned.

I wonder if it would be proper to ask this question in connection with this whole matter of integration: Would you care to say anything about the attitude of Great Britain in reference to the proposed Schuman plan?

Mr. HARRIMAN. I went into that in a good deal of detail earlier, Mr. Merrow, but I will be glad to repeat it very briefly, to say that I think that Britain's desire to know more about how this is going to develop is understandable on their part. They have indicated that they want to join, but they want to discuss the principles before agreeing to accept them as a basis for negotiation. They are ready to sit down and negotiate the principles, but they were not willing to accept them in advance.

The French, on the other hand, had invited all of the countries to come in. The Benelux countries and Germany had accepted the invitation, and they have decided that they want to go forward. There is a remarkable agreement between them, and they have indicated a desire for Britain to join, and the French have offered to keep the British fully informed of developments, and expressed their own intent to do everything they can to make it possible for them to join.

It is my hope and my expectation that if the continental countries get together, Britain will join in some manner which will be appropriate to their situation, which is somewhat different than that of the countries of the lower Rhine Basin.

Mr. MERROW. I think that is most encouraging.

I think this touches on the discussion with Dr. Judd a few minutes ago. Do you think it is possible for us to exercise more vigorous leadership in bringing about western unity that seems to be so desirable?

Mr. HARRIMAN. I think the most important step we have taken is the leadership that we have given to the North Atlantic Treaty, and that will develop even greater economic unity. Our influence is constantly increasing, and I think EPU is another major step forward, a step which I have mentioned, which is being made by the European countries, indicating that they intend to maintain the OEEC as a vital organization after the Marshall plan.

Mr. MERROW. They look to us for leadership, though, do they not? Mr. HARRIMAN. Yes, they certainly do look to us for leadership on certain things.

On the other hand, there is no great desire on the part of any country to have someone else tell them how to run their internal affairs. We find as individuals or States here that we are not always anxious to have the Federal Government get into our affairs. Mr. MERROW. Thank you, Mr. Chairman.

Mr. JUDD. May I ask a question about the additional military production program? Liberalizing the present limitation would permit other equipment than machine tools to be sent. What other industrial equipment do you have in mind?

Mr. HARRIMAN. That is going to be given to this committee by the staff and the group here, and I think it is better to give that in executive session.

Each one of these projects is very carefully gone over and screened by our military, and no project is approved unless it is considered to be an important contribution to the military effort.

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