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SUGGESTED INVESTIGATION OF OFFICIALS OF THE CENTRAL INTELLIGENCE AGENCY

Mr. MONRONEY. Mr. President, the Senate is soon to be faced with a very important decision.

Last Thursday the Senator from Wisconsin [Mr. MCCARTHY] gave notice on the floor of the Senate of his insistence on the right of the investigative subcommittee of the Committee on Government Operations to investigate officials and employees of the Central Intelligence Agency.

This puts the Senate up to the choice of giving the distinguished Senator from Wisconsin carte blanche authority to fully explore, via any type of hearings which he may so determine, televised, or otherwise, the innermost secrets of this highly confidential and secret arm of national security. Such an investigation would be done under the authority and in the name of the United States Senate.

Under his proposal a precedent will be set which would deny to the President, and officials at the highest level of government the right to keep this Agency's operation completely and definitely secret and confidential.

May I call to the attention of the Republicans of the Senate that this act was passed by the 80th Congress with Senator Chan Gurney as chairman. The committee report on the Senate side was 12 to 0. The report which dealt with the entire National Security Act of 1947 declared:

To meet the future, with confidence, we must make certain that our foreign and military policies are mutually supporting; that a Central Intelligence Agency collects and analyzes that mass of information without which the Government cannot either maintain peace nor wage war successfully.

Further, the report places squarely on the National Security Council the full responsibility and authority for the supervision of this Agency and makes the President of the United States its presiding officer. Other members include the Secretary of State, the Secretary of Defense, the Secretaries of the Army, Navy, and Air Force, the chairman of the National Security Resources Board, and other members as the President may designate from time to time. President Eisenhower has made the president of the Senate, the Vice President, a member of this Board as well.

Up to the time of the demand of the Senator from Wisconsin, Congress has respected the necessary confidential nature and secret operation of Central Intelligence. No printed testimony is made available even to the individual members of the Senate on their requests for appropriations. No listing of appropriation is even provided for in the appropriation bills which Congress passes, so secret is the nature of this operation.

This respects section 403g of the act establishing its policy. This act reads:

In the interest of the security of the foreign intelligence activities of the United States and in order to further implement the proviso of section 403 (d) (3) of this title that the Director of Central Intelligence shall be responsible for protecting intelligence sources and methods from unauthor

ized disclosure, the Agency shall be exempted from the provisions of section 654 of title 5, and the provisions of any other law which require the publication or disclosure of the organization, functions, names, official titles, salaries, or numbers of personnel employed by the Agency; provided that in furtherance of this section, the Director of the Budget shall make no reports to the Congress in connection with the Agency under section 947 (b) of title 5.

I believe that most of the Members of the Senate know the extreme investigations, many of which have been made by the FBI, and now by other intelligence agencies before employment of members of this important Agency. I am sure you know the high degree of secrecy that surrounds its work, its members, and even the nature of its reports which go directly to the President's desk. I am informed that not even Cabinet members are generally informed as to the full text or origin of the material thus laid before the President by this Agency.

It could hardly be called a New Deal Agency, and thus subjected to the general suspicion so assiduously built up to create doubt in the people's minds of the

loyality of its then Democratic leaders.

It was headed under the Democratic administration by a distinguished general, the former Chief of Staff in Europe for the now President of the United States. I do not know his politics-Gen. Bedell Smith, that is-but his loyalty and ability were recognized by President Eisenhower, and he was made Under Secretary of State in this new Republican administration.

His deputy chief, the Honorable Allen Dulles, brother of the Republican Secretary of State, was appointed by President Truman and has been promoted by President Eisenhower to succeed Gen. Bedell Smith.

Those few men in this Agency whom I have learned were in positions of administrative authority under President Truman also were supporters not of my party, but of the Republican Party.

As I view this new demand to have a McCarthy investigation of this sensitive Agency, for all the world to see, I believe that it would disclose to our enemies information and data that even the Kremlin's best spy apparatus could not get for them.

Certainly, we want to protect this Nation's security against Communist infiltration. But in protecting it we must be wise enough to not turn over to them secrets and information of tremendous value to them and of great danger to us to lose.

I question the oft-stated claim that only the Senator from Wisconsin stands between us and complete internal subversion. I doubt that he has a monopoly within this Government of despising, exposing, and prosecuting Communists and their fellow travelers.

I wonder if Messrs. Cohn and Schine, J. B. Matthews, or even the distinguished junior Senator from Wisconsin measure up in ability to the FBI.

Since 1947 the FBI has been devoting much of its time and force to hunting down subversives in and out of Government. As the greatest crime detection agency in the world, I do not think that

J. Edgar Hoover and his well-trained men have wasted the $470 million that the Congress has given them since 1947.

The FBI hunts these subversives with

the same ruthless, determined, and widespread efforts that, during World War II, succeeded in rounding up Nazi agents so effectively that not a dollar's worth of German sabotage disturbed our war efforts.

While the Communist agents and their friends are not hunted by the FBI in headlines or in televised hearings, I am inclined to the belief that they are doing a far better job than those whose publicity makes a circus of the chase.

On top of that, evidence gathered by the FBI has resulted in convictions of Communist leaders, agents, and spies, instead of charges from the committee rooms and the Senate floor.

The reason I believe it unwise for the Senate to permit by implied authority the McCarthy investigation of this secret agency not only stems from the law itself-but from the necessary constitutional division of powers. More and more the Senate and the Congress have infringed upon the necessary administrative prerogative granted to the President as Chief Executive by the Constitution. More and more we seem to neglect our own duties as we eager-beaver ourselves into assuming legislative direction of the executive department.

In the field of loyalty, I necessarily felt that after the people had spoken with such distinct endorsement of President Eisenhower for the job as Chief Executive, that this clipping and the "creating of the big doubt" technique would cease.

I felt more certain when in his state

of the Union message President Eisenhower declared:

Confident of your understanding and cooperation, I know that the primary responsibility for keeping out the disloyal and the dangerous rests squarely upon the executive branch. When that branch so conducts itself as to require policing by another branch of the Government, it invites its own disorder and confusion. I am determined to meet this responsibility of the Executive. The heads of all executive departments and agencies have been instructed to initiate at once effective programs of security with respect to their personnel.

Without lessening the vigor, but perhaps with fewer headlines, the protection of our internal security, I feel, rests in better hands with the President, his National Security Council, and the FBI than with the McCarthy committee.

It would seem to me that the lessons of the past-namely the shambles made of the career service of the State Department by the attacks against that Department at a time when it must be relied upon to be one of the principal agents in our efforts in the cold warhave done more harm than good.

It would seem to me that attacks upon the Voice of America program made what should have been a strong voice for freedom at the time of Stalin's death a stammer that rendered it ineffectual.

It would seem to me that the "book burning" incident, even if it does remove books by Communist authors from overseas libraries, has done far more harm than good in foreign countries. It has

made us look ridiculous to the Europeans because the techniques employed were so reminiscent of the totalitarian governments and their thought control which we so despise. Surely in such a sensitive area, such books which might have been dangerous, could have been quietly removed instead of by the "keystone cop" chase of Messrs. Cohn and Schine across all Europe.

It would seem to me that the memory of these incidents would cause the Senate to "stop, look, and listen" before permitting in its name and by its authority the prospect of another shambles being made out of the Central Intelligence Agency through a McCarthy investigation.

Let President Eisenhower do it, let the FBI do it, or even a special commission with congressional representation do it, if the investigation is determined to be necessary. But please, please, let it be done without headlines and television.

Sooner or later I should like to see emanating from this greatest legislative body a philosophy of "I believe," instead of "I doubt." We have, and we must have if we are to make democracy work, a basic faith in our governmental institutions and in the men who head

them.

I have, and I will retain, confidence that the men placed at the head of the executive departments are loyal and patriotic. I have that faith now, and I had it under the Democratic administrations.

Certainly in an area as sensitive as

government, subversives will attempt, as they do in the case of certain commercial activities, such as shipping, de

fense production, communications, et

cetera, to attach themselves to certain of our governmental agencies. It is

primarily the job of the Executive, using the best skilled and most efficient and, may I add, constitutional means possible, to search them out, discharge them, and convict them in our courts of law. But attacks such as the one made on the floor of the Senate in the 1st session of the 82d Congress-see the CONGRESSIONAL RECORD, volume 97, part 5, page 6602-on the General of the Armies, later the Secretary of Defense and Secretary of State, Gen. George C. Marshall, are not in this constitutional pattern or the moral pattern of our Government.

The junior Senator from Wisconsin [Mr. MCCARTHY] said, in part, on that occasion:

How can we account for our present situation unless we believe that men high in this Government are concerting to deliver us to disaster? This must be the product of a great conspiracy on a scale so immense as to dwarf any previous such venture in the history of man-a conspiracy of infamy so black that, when it is finally exposed, its principals shall be forever deserving of the maledictions of all honest men.

Who constitutes the highest circles of this conspiracy? About that we cannot be sure. It is when we return to an examination of General Marshall's record since the spring of 1942 that we approach an explanation of the carefully planned retreat from victory.

*** The President is not master in his own house. Those who are master there not

only have a desire to protect the sappers and miners-they could not do otherwise. They themselves are not free. They belong to a larger conspiracy, the worldwide web of which has been spun from Moscow. It was Moscow, for example, which decreed that the United States should execute its loyal friend, the Republic of China. The executioners were that well-identified group headed by Acheson and George Catlett Marshall.

Nor have the attacks by the junior Senator from Wisconsin been only upon President Truman, Secretary of State Acheson, or General Marshall. We all remember the big hand of the junior Senator from Wisconsin in the smear of former Senator Millard Tydings, the holder of a battlefield medal for valor in World War I, and for years a distinguished Member of this body. The same technique of questioning the loyalty of former Senator William Benton, of Connecticut, and of other candidates for the Senate, and of implying the disloyalty or dishonesty of anyone who dares question the McCarthy methods, has been the rule, rather than the exception.

Mr. President, only recently we observed that a distinguished citizen of the United States, who had been nominated by President Eisenhower to be a United States Ambassador, was criticized on the floor of the Senate, and his nomination was opposed, on the basis of anonymous charges; and, according to the press, we learned that only if Ambassador Bohlen would submit to a liedetector test would those who opposed his nomination be willing to withdraw their opposition. Only last week we had further opportunity to observe the great

services Ambassador Bohlen has ren

dered, although again he was attacked

on the floor of the Senate.

Even Gov. Adlai Stevenson was not

immune from a similar attack a few nights before the last general election.

On the record, then, Mr. President, the question is whether at this time of crisis we can afford to permit the destruction, by means of the use of similar methods, of so important a part of our Government as the Central Intelligence Agency.

I know a little about the Congressional Reorganization Act which gave to the junior Senator from Wisconsin whatever authority he has to conduct, with his committee and his staff, his world-wide exploratory forays.

The Reorganization Act provides the following jurisdiction of the Committee on Government Operations, formerly the Committee on Expenditures in the Executive Departments, to which committee shall be referred all proposed legislation, messages, petitions, memorials, and other matters relating to the following subjects:

(a) Budget and accounting other than appropriations.

measures,

(b) Reorganizations in the executive branch of the Government.

(2) Such committee shall have the duty of

(a) Receiving and examining reports of

the Comptroller General of the United States and of submitting such recommendations to the Senate as it deems necessary or desirable in connection with the subject matter of such reports;

(b) Studying the operation of Government activities at all levels with a view to determining its economy and efficiency;

(c) Evaluating the effects of laws enacted to reorganize the legislative and executive branches of the Government;

(d) Studying intergovernmental relationships between the United States and the States and municipalities, and between the United States and international organizations of which the United States is a member.

Mr. President, I have read and reread the authority given by this act, and I fail to find that even by the most generous stretching of its jurisdiction has the committee the carte blanche authority to act in the name of the United States Senate in many of the fields it has preempted.

Under former Republican control of the Senate it did not; and under former Democratic control it did not. This committee, a valuable committee, and an important arm of the Congress, then stayed in its field and within its authority. Its investigations properly were directed along lines of efficiency and economy, as provided for by the Senate rule. It exercised its rightful power of investigation upon irregularities in Government departments, and not only established a good name for itself, but won recognition by the Nation for its thoroughness, fairness, and diligence.

It would seem to me that in its newfound activities which offer greater headline opportunities, the committee is duplicating the specific work of the Judiciary Committee through its authorized Subcommittee on Internal Security.

Sooner or later-and I believe soon

er-the Senate must be willing to take

full responsibility for acts of its committees and subcommittees, and must be prepared to defend them as its own. Since the committees act as an arm of the Senate, our people have the right to hold us personally responsible for whatever is done in the name of the Senate and under its authority. We cannot wash our hands of this ultimate responsibility.

If an agency of the Senate can, by its excesses, weaken or destroy a vital agency of the executive branch, then it is not enough to blame one Senator, his Republican colleagues on the full committee, or on the subcommittee, or even the Republican Party. The responsibility is that of the entire Senate.

It would seem to me that the Senate must face the fact that the investigative function of the Congress is too important and too vital to be granted indiscriminately and indefinitely for any purpose for which a committee chairman might wish to use it be it in a genuine effort to protect the Nation's welfare and security, or be it for purposes of politics and headlines.

The Senate has authority to make this decision.

Every Senator should assume the responsibility of voting for or against an investigation headed by the junior Senator from Wisconsin [Mr. MCCARTHY], of the Central Intelligence Agency. As individual Senators of either the Demo

cratic or the Republican Party we should welcome the right to give the full steam ahead signal to the junior Senator from Wisconsin to investigate the CIA or to vote against such a proceeding.

I will vote against it, Mr. President, for I believe in-rather than doubtthe patriotism of President Eisenhower, Secretary of State Dulles, and the others on the National Security Council under whose direct responsibility and authority this highly secret agency operates.

Mr. President, unless America can follow its historic course of "I believe," instead of "I doubt," the totalitarians of the world will have weakened us here at home beyond their fondest dreams of success. If we adopt the "I doubt" creed, they will be justified a thousand times over in their efforts and expense to subvert our Nation and our Government.

The issue is, Shall we be their unconscious but willing accomplices to this fatal end?

Mr. President, I yield the floor.

THE PURGE IN THE PRESIDIUMITS FATAL CONSEQUENCES Mr. KNOWLAND. Mr. President, I interrupt the proceedings sufficiently to read into the RECORD for the information of the Senate a statement which was issued by Dr. Robert J. Kerner, professor of history and director of the Institute of Slavic Studies, University of California, at Berkeley, relative to the purge in the Presidium and its fatal consequences.

I believe that the Members of the Senate will be interested in this statement, because Dr. Kerner has been a professor of Slavic history at the University of California for a number of years. He recently returned from a tour of Europe, along the borders of the Iron Curtain. Over a long period of time I have found that both his own personal knowledge and his sources of information have proved to be very accurate. Of course, no one can underwrite the accuracy of this particular statement, but in view of his background and the high degree of responsibility Dr. Kerner has, I thought the Members of the Senate who may have missed his judgment on the proceedings in the Kremlin may find the statement of great interest. It is as follows:

1. The fall of Beria is the first public indication of serious, if not fatal, conflict within the Moscow Presidium-the citadel of Soviet power-a conflict which has been brewing under cover since Stalin died. The present writer was the first to point out this undercover crisis on March 17, when he was forced to conclude that the Old Guard had clipped Malenkov's wings. The purge of the Presidium has begun.

2. The public charges against Beria are obviously false and artificial. He was purged because one faction in the Presidium was strong enough to destroy one of its opponents in the struggle for power. The public reasons given need not concern us.

3. The interpretation of William L. Ryan, Associated Press foreign news analyst, as well as that of other press services at present, is that Malenkov and his group purged Beria. Time will prove this to be false. The evolu

tion of incidents connected with the physicians' trial indicates that the Old Guard (Molotov, Voroshilov, Kaganovich, and Mikoyan), possibly joined by Krushchev and

Bulganin, carried the day in the Presidium

of 10 members. Beria's relation to the physicians' trial indirectly involved Malenkov. There appears sufficient evidence that the trial had been planted originally to purge both Beria and Malenkov. As head of the Presidium, Malenkov had to make the announcement that purged Beria. This is in correct Communist style wherein one sacrifices his brother or his pal to prove he is "orthodox."

4. Instead of strengthening Malenkov, the purge of Beria weakens him before the Old Guard. Logically one should expect a final struggle between the Old Guard and Malenkov. Will Malenkov be able to save himself?

5. The crisis of power in the Moscow Presidium cannot but react in favor of the mass movements in active and passive opposition in Soviet Russia and the satellites. They are definitely pointed toward liberation. The Czechoslovaks led off, followed by the East Germans and other satellites. At present Moscow has the army, but for how long?

6. For the Western Powers to stand by in a daze of neutralism is to miss the greatest opportunity in a generation to liberate the captive peoples and to hasten the fall of the Communist empire and communism as an organized world movement, the only actual threat to world peace.

I repeat, Mr. President, that because of the background and standing of Professor Kerner I think his analysis of conditions in the Kremlin is of vital interest and throws at least a little different light on the recent purge of Beria in the Soviet Union.

REGULATION OF THE SALE OF NATURAL GAS AT THE WELLHEAD

Mr. TOBEY. Mr. President, I noted the other day that my esteemed colleague the Senator from Wisconsin [Mr. WILEY] placed in the RECORD a resolution forwarded to him by the Milwaukee Common Council on behalf of regulation by the Federal Power Commission of the sale of natural gas at the wellhead.

I, too, have been noticing with apprehension the results on the consuming public of the Northeast of the same kind of rising prices of gas at the wellhead which the Senator from Wisconsin has noticed in the Midwest.

I ask unanimous consent to have printed at this point in the RECORd two articles and an editorial from the Wall Street Journal, the New York Times, and the New York Herald Tribune pointing out what has happened to the gas rate of the consumer of New York City by reason of the rise in the wellhead rates during the self-imposed lapse of power by the Federal Power Commission. will be noticed from the articles that the net result of the rise of the wholesale price of gas at the wellhead in Texas and Louisiana has been that the whole burden of the rise has been passed on directly to the ultimate retail consumer in New York City through transcontinental gas pipeline.

It

This is a portent of what will happen to all our citizens, whether in the Midwest, which the Senator from Wisconsin represents, or in the Northeast, which

I represent, unless the Federal Power Commission is deliberately reconstituted to protect the millions of gas consumers, instead of the handful of big gas producers in Texas and Louisiana.

There being no objection, the articles and editorial were ordered to be printed in the RECORD, as follows:

[From the Wall Street Journal of July 7, 1953]

NEW YORK CITY NATURAL GAS RATES DUE TO CLIMB-PSC TELLS DISTRIBUTORS TO PASS ON WHOLESALERS' BOOSTS TO THEIR CUSTOMERS

NEW YORK.-Customers of Consolidated Edison Co., Brooklyn Union Gas Co., Kings County Lighting Co., and Brooklyn Borough Gas Co. are going to have to pay more for the natural gas that cooks their food and heats their water.

The New York Public Service Commission has ruled the increased cost of natural gas purchased by these distribution firms from Transcontinental Gas Pipe Line Corp. should be passed on to customers. The increases will average from 3.5 cents to about 7 cents a month for kitchen use, and from 65 cents to $1.53 a month for house heating, with approximately the same relative increases for commercial users.

Transcontinental last March won from the Federal Power Commission an interim boost in the wholesale price it could charge the distributing companies who are customers of its Texas-to-New York transmission system. These higher rates have been charged to the distributing companies since then, but have been collected by Transcontinental under bond because they remain subject to possible change when the FPC makes a final determination in a rate case which is still pending.

In an opinion handed down by Public Service Commissioner Francis T. Mylott, the commission recommended a technique for automatically adjusting retail gas rates up and down according to changes in wholesale prices, without the need for protracted and expensive proceedings every time the wholesale price, over which neither the local companies nor the New York commission have control, is changed.

Under this uniform procedure, the companies will be permitted to pass on to their customers the higher wholesale price of gas since March. The new adjustments will not be shown on bills as part of the basic schedules, but will be figured separately and labeled "purchased gas adjustment.”

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But if the FPC ultimately pegs the transmission company's rates lower than those presently being charged, Transcontinental will have to make refunds to the local companies, and the local companies in turn will be required to pass on the refund to their customers retroactively to such time as the increase went into effect.

The increase in the wholesale price allowed by the FPC is now effective in all States served by Transcontinental. It is calculated to yield the pipeline firm additional revenue totaling $9,819,000 annually, of which New York's share is about $2.5 million.

Under the PSC decision, the New York firms' operating income will remain unchanged by the additional revenue now in prospect, which is being made possible only in order to maintain the various rates of return. For example, the commission found that if the boosts were not allowed, the rates of return for the various companies would drop to as low as 3.5 percent for Consolidated Edison, and to 4.8 percent for Brooklyn Borough Gas.

The Commission warned the local utilities must make every effort to keep rates down through managerial efficiency or the whole

subject of automatic rate changes would be reopened and possibly revoked.

[From the New York Times of July 5, 1953] BILLIONS MORE SET FOR NATURAL GAS-$4 BILLION IN 4 YEARS TO BE SPENT ON MODERNIZATION WORK AND NEW FACILITIES

(By Thomas P. Swift)

Natural gas-a Cinderella in modern industry-is one of the fastest-growing enterprises in the United States. There are many specialists who believe that this fuel, discovered 3,000 years ago by the Chinese, can compete successfully with other fuels in any market it can reach.

The Nation's gas utility and pipeline industry will spend approximately $4 billion for the construction of new facilities and modernization of present installations in this year through 1956. In the 4-year period of 1949 through 1952, the gas industry poured nearly $4,700,000,000 into meeting the evergrowing demands for service. Natural gas, which has fast supplanted manufactured gas, is an economical method of serving both industry and the residential consumer. Its counterpart in the field of power-electricity-is the lowest cost essential commodity in the Nation today.

Natural gas currently supplies more than 20 percent of the energy used in the United States. This is approximately double the rate for 1940 and 5 times the rate of use in 1920. The Massachusetts Investors Trust, the Nation's oldest and largest investment company now in business, has confidence in the future of the natural-gas business. It now has major investments in the Nation's leading natural-gas concerns. The company sums up its attitude briefly:

"Inherent characteristics of natural gas, such as cleanliness, ease of handling, low labor factor, and high heat value, combined with an attractive price, make natural gas competitive with any other fuel, including bituminous coal."

Anticipated new construction expenditures by the gas industry during this year call for the outlay of approximately $1,400,000,000, the second largest on record for the gas utility and gas pipeline industry. The important Pacific Northwest region is the only remaining territory awaiting to be served with this prolific fuel.

The extension of existing and new transmission lines by the Nation's private gas utility industry will involve expenditures of some $810 million this year. Close to $350 million will be spent on the extension of distribution facilities this year. During 1952 more than 900,000 new customers were added to gas utility lines. There are now 26,243,000 utilizing gas service throughout the United States. Gross revenues paid annually by customers are nudging the $3 billion level. In the last 4 years, according to official statistics just issued by the American Gas Association, the average gain in customers has been 902,000 a year.

[From the New York Herald Tribune
of July 5, 1953]

THE PRICE OF NATURAL GAS Some 2,500,000 customers of 4 New York City gas companies will soon be paying more. The State public service commission has authorized increases on the ground that the wholesale price of natural gas had gone up and that the local dispensers could not be expected to absorb the increase. What happened was that the Transcontinental Gas Pipe Line Corp., which brings the fuel from Texas, received authority in March from the Federal Power Commission to raise rates. The pipeline people passed along the increase, and naturally enough the gas companies

asked the State commission for permission to add the higher costs to individual bills. This has been approved, and so the consumer in the end pays the rise which began with the pipeline company. It furthermore appears that such sequence may become established practice. Every time there is an increase in wholesale price it will be almost automatically sent bounding on down to the

consumer.

All this seems logical enough, but the trouble is that these points of rate control deal only with the middle man and the retailer. The price of gas is actually fixed at the well-head where it starts on the long journey to the consumer. As matters stand, the Federal Power Commission regulates the transportation but it has ruled that the bulk of the gas producers are outside its control. This is not much in the way of authority over rates, for production and transport are inextricably linked in the ultimate price. Only a few weeks ago the Court of Appeals for the District of Columbia ruled that the FPC does have the right to set the rates charged by producers. The case is now on its way to the Supreme Court. Unless the decision is upheld, it appears evident that Federal regulation will carry little weight. The consumer, in that event, can expect to hear of further increases.

EXECUTIVE SESSION

The PRESIDING OFFICER. Is there objection to the request of the Senator from California? The Chair hears none, and it is so ordered.

The agreement is open to amendment. If there be no amendment to be proposed, the agreement will be reported to the Senate.

The agreement was reported to the Senate without amendment.

The

The PRESIDING OFFICER. resolution of ratification will be read. The legislative clerk read the resolution of ratification, as follows:

Resolved (two-thirds of the Senators present concurring therein), That the Senate advise and consent to the ratification of Executive D, 83d Congress, 1st session, an agreement on German external debts, signed at London on February 27, 1953, by the Federal Republic of Germany and by the United States and 17 other creditor countries.

The PRESIDING OFFICER. The question is on agreeing to the resolution of ratification.

Mr. DOUGLAS. Mr. President. The PRESIDING OFFICER. The Chair recognizes the Senator from Illinois.

Mr. DOUGLAS. Mr. President, be

Mr. KNOWLAND. Mr. President, I fore we proceed to ratify this treaty,

move that the Senate resume the consideration of executive business.

The motion was agreed to; and the Senate resumed the consideration of executive business.

AGREEMENT WITH THE FEDERAL REPUBLIC OF GERMANY ON GERMAN EXTERNAL DEBTS

Mr. KNOWLAND. Mr. President, I move that the Senate resume the consideration of Executive D, 83d Congress, 1st session, and agreement on German external debts, which was under consideration by the Senate on last Thursday, July 9.

I may say that the consideration of this agreement is to be followed by consideration of the three other agreements between the United States and the Federal Republic of Germany, as they now are listed on the Executive Calendar.

The PRESIDING OFFICER. The question is on the motion of the Senator from California.

The motion was agreed to; and the Senate, as in Committee of the Whole, resumed the consideration of the agreement, Executive D, 83d Congress, 1st session, on German external debts,

signed at London on February 27, 1953, by the Federal Republic of Germany, and the United States and 17 other creditor countries, which previously had been read the second time.

Mr. WILEY. Mr. President, I suggest the absence of a quorum.

The PRESIDING OFFICER. clerk will call the roll.

The

The Chief Clerk proceeded to call the roll.

Mr. KNOWLAND. Mr. President, I ask unanimous consent that the order for a quorum call be rescinded and that further proceedings under the call be dispensed with.

we should know more about some former questions. On last Thursday evening, when there were not very many Senators in the Chamber, the distinguished junior Senator from Iowa [Mr. GILLETTE made, in my opinion, an extremely able and comprehensive speech on this very subject. I was not privileged to be in the Chamber at the time the Senator from Iowa spoke, but I have read his speech very carefully in the CONGRESSIONAL RECORD, pages 8322 to 8336, and I believe the questions he raised are very fundamental and that the Senate should have a very thorough debate upon the issue and deal with the questions which he raised.

that the terms of the agreement are, The Senator from Iowa pointed out first, that the amounts of money advanced by the United States Government to the German Government since World War II, amounting to some $3,200,000,000, are to be scaled down to approximately $1,200,000,000, or by approximately $2 billion. In other words, the debts which the German Government owes to the American Government, and, hence, to the American taxpayers, are to be reduced by 63 percent to 37 percent of the original figure.

On the other hand, the Senator from Iowa points out that the obligations which German states, cities, and corporations, and, I believe, in one case, the Weimar Republic, owed to private citizens of this country are to be redeemed at approximately 100 percent, and that, in addition, the accumulated interest is to be paid.

Mr. President, from the tabular material presented by the Senator from Iowa, particularly on page 8324 of the RECORD, it will be found that the total German securities sold to Americans during the years from 1924 to 1930 amounted apparently to $1,352,000,000.

In succeeding pages the Senator from Iowa produced tabular lists of bonds issued which had been floated in this country by private issuing houses. I have made a summary of those issues, and if my arithmetic is correct, they amount to $1,266,000,000. So that there is a rough correspondence between the two sets of figures.

In the hearings before the Senate Committee on Foreign Relations, Mr. Riddleberger, an expert for the State Department, testified that he believed the best estimate of the outstanding securities which would be redeemed under this arrangement amounted to $547 million. He seemed to be extraordinarily uncertain as to whether this represented the face value of the bonds, or the face value of the bonds plus accumulated interest. I have read over his reply, and, although, perhaps, it is the fault of my intelligence, I am not able to reach any definite conclusion on this point from his reply to the question which the Senator from Iowa propounded. It puzzled me very much how $1,400,000,000 worth of bonds issued and widely distributed throughout the United States should now be said to have a value of $547 million. I am further puzzled as to precisely how Mr. Riddleberger and the State Department were able to arrive at such an estimate.

In any event, the issue raised by the Senator from Iowa is an extremely important one. It is, Should the private holders of these bonds have their investment redeemed at 100 percent, plus accumulated interest, whereas the taxpayers of the United States should have their investment redeemed only on a basis of 37 percent? It seems to me that an arrangement like this would be fundamentally unfair.

I am not opposed to scaling the debts down, because I realize the difficulties under which Germany is operating; but if this is to be done they should be scaled down by the same ratio for private and public holders alike. There should not be a preferential group of private holders who would be eligible to receive 100 percent of an indeterminate amount of private bonds, while the taxpayers, who have borne the burden of expenditures of $3 billion, would be required to accept 37 percent of their claims.

The Senator from Iowa asked certain further questions of a very searching nature, and on which he stated there was no direct evidence. He wanted to know He wanted to know whether the original holders of the bonds still held them, or whether they had been bought up by speculators at low prices, to be cashed in at 100 percent. This is an extremely important question; yet neither the Department of State nor those who testified before the committee were able to produce any evidence whatsoever as to who now held the bonds.

Mr. President, I hope all is well in this matter. I shall indulge in no insinuations and shall make no charges, because there is no evidence at present to support them. But certainly it is true that it would have been possible for inside interests, watching the situation closely, and knowing that the bonds were to be redeemed at 100 percent, plus ac

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cumulated interest, to have gone forth and bought up large quantities of bonds at low prices.

We all know how worthless German bond issues became after the great depression, which began in 1929, particularly after 1931, and even more so after 1933, when Hitler came into power. All of us have heard private conversations among our friends who held some of these issues, and who would refer to the handsomely printed bonds as good wallpaper. I believe I know a friend who actually used German securities for actually used German securities for wallpaper. Yet now it is proposed to redeem these securities at 100 percent of their face valuation, plus accumulated interest at a high rate.

I believe these questions involved are of such exceeding importance that the Senate should not accept the agreements in their present form, but should recommit them until the Committee on Foreign Relations, which held such hurried hearings, I may sảy, has had an opportunity to investigate and determine who owns the bonds. Have there been speculators operating to buy them up at much less than par value? Will insiders make killings amounting to hundreds of millions of dollars? Is it proper for private holders of the bonds to get 100 percent protection, while taxpayers receive only 37 percent protection?

There are not many Senators on the floor as we discuss this issue, but hundreds of millions of dollars are at stake, and perhaps much more. I earnestly hope the able Senator from Iowa [Mr. GILLETTE] will renew some of the points he made in his extraordinary speech of last Thursday and that we will recommit this treaty.

Mr. WILEY. Mr. President, last Thursday the Senate debated at some length the four agreements with Germany which are now before the Senate. As Senators will recall, the agreements will make it possible for Germany to consolidate her total external financial obligations, public and private, and pay those debts over a reasonable period of time, and within the capacity of the German economy.

The main point made by the distinguished Senator from Illinois was the one made by the distinguished Senator from Iowa, namely, a suspicion that there is a large amount of bonds on which someone will profit. That was the same argument used when Hamilton, back in the days of the revolution, stabilized the economy of the United States.

Mr. DOUGLAS. Mr. President, will the Senator yield for a question?

Mr. WILEY. Please let me carry on. I did not interrupt the Senator.

In those days, when the ploblem was to get America back on its economic feet, Hamilton said the Federal Government should assume the responsibility not only for all the national indebtedness, but also for the indebtedness of the States. The argument was made then that there were some who would make money out of the plan, and that it should not be adopted. But Hamilton had his eye on the ball. His plan was to make America

economically strong and efficient, and he accomplished his purpose. Let us now get our eye on the ball here. Possibly a few persons may make money out of the bonds, but before I finish I think I can demonstrate clearly that they are very few in number.

The important thing is to get Germany on her feet, so that she can proceed in a way that will make for stability in Europe. Our purpose is to make Germany economically healthy, so that she can again become a strong nation in the family of nations. If that is not done, then instead of getting 37 percent for our Government, we shall get nothing.

It was the last administration that negotiated the agreements, in 1952, about a year ago. It was the last administration that looked around, viewed the whole picture, and saw that the agreements would benefit Germany, America, and the bondholders both in America and abroad. All three would benefit by them.

The present administration, reviewing the facts, had its representatives come before the Committee on Foreign Relations, and then, for the first time, the question or the suspicion was raised. Is it possible that some persons have manipulated the bonds and have made something out of them, and therefore we must not consummate the agreements?

Senators heard the junior Senator from Iowa [Mr. GILLETTE] make an impassioned statement in opposition to the agreements. For a moment, I wish to examine his objections. I went into them the other day, but I have considered them again, and I shall now document what I said then.

In the first place, as the able Senator from Florida [Mr. HOLLAND] pointed out at the conclusion of our debate last Thursday, the Senator from Iowa [Mr. GILLETTE] objects to writing down our $3 billion claim for postwar economic assistance to approximately $1 billion. In other words, despite the fact that the Government books have carried this $3 billion of postwar economic assistance as a grant and not a loan, the Senator from Iowa objects to the fact that we are now getting paid back $1 out of every $3 of assistance we gave to Germany. I am pleasantly surprised and extremely thankful that we are getting anything back. We are getting more repayment from Germany than from any other western European country to which we have given assistance, with the exception of the Netherlands. Speaking for myself, I find it hard to see that this is a bad bargain.

Mr. DOUGLAS. Mr. President, will the Senator yield for a question on this point?

Mr. WILEY. I prefer to carry through, so that what I shall say may read a little more logically, rather than to get into a long discussion that may prove irrelevant reading to those who wish to ascertain the facts.

I ask unanimous consent to have printed in the RECORD at this point as a

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