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British, a reiteration, last December-the Byrnes-Bevin agreement it is called-of what we call this first charge principle. We do hope to recover from Germany and Japan all appropriated funds, that have been expended for the support of those areas in the past as well as those we will expend in the future.

"PRINCIPAL OBJECTIONS TO PROVISO "Our principal objection to this provision is that it seems to us to remove completely any discretion on the part of the Government in a determination of how much it is possible to recover, in the first place, and in the second place, how much we may wish to recover.

"In other words, when we come to the establishment of a German peace treaty, it may be in our interest not to demand, for a variety of reasons, the last farthing of what Germany owes us. Because in the final analysis we may only be able to get repayment from goods which we may not want.

"What I am trying to say, Mr. Chairman, is that we have demonstrated throughout in the operation of the military government in both Germany and Japan, that we intend to recoup the last nickel that we can from these countries, that will not jeopardize other advantages we may wish to achieve and that will not put us in the unenviable position of having to accept in payment, in order to make the payment complete, goods that we do not want."

Mr. GILLETTE. Mr. President, in connection with the colloquy which just occurred between the eminent Senator from New Jersey and the able Senator from Illinois, I may say it is said that the $2 billion write-off is based on the amount of the claims and that the authority for doing so is the ECA Act of 1948, which in the view of the Department established the principle that the debts could be scaled down according to capacity to repay. They show that the scaling down of the German obligations is comparable to what was done in connection with other countries.

But that is not the important point. There is nothing in the ECA legislation which authorizes the writing off of claims of the Government of the United States for the express purpose of settling private claims at the expense of the taxpayers. Moreover, the money involved in past claims was not expended under ECA, but in connection with a program called GARIOA, Government and Relief in Occupied Areas. The argument that the negotiators ought to have authority under ECA to make a settlement of the kind they made is to my mind utterly fallacious.

Mr. President, I have taken more time than I expected, because of the interrogations. I repeat, I am anxious to see all American claimants receive as much as they are legitimately entitled to receive. I have no objection to Germany's rehabilitation in an economic way, in fact, I am in favor of it; but I am absolutely opposed to a negotiated agreement whereby a group of creditors, in the settlement of their cases, are placed in a position of unfairness relative to one another, one creditor receiving 100 percent, the other creditor receiving substantially 33 percent, with the entire burden loaded on the backs of taxpayers of the United States.

Mr. GEORGE. Mr. President, it has been my intention merely to explain why I was going to vote for the debt-settlement agreements which are really treaXCIX-543

ties, and the State Department, in 1952 and 1953, thought they partook of the nature of treaties.

The agreements were actually signed on February 27, 1953, though negotiations had been carried on over a period of appromixately 2 years before the settlements were finally reached.

Mr. President, there is nothing that is mysterious about the pending agreement, unless one wants to make it so. Anyone who looks at the ECA Act will see precisely what the negotiators were undertaking to do. It must be borne in mind that the German prewar external public and private debts total $1,637,600,000, of which only $546.6 million is a dollar debt, most of which is estimated to be due to American bondholders.

It is true that the committee was not given a detailed or itemized statement of the creditors of Germany, either of the German Nation, of any state within Germany, of any municipality within Germany, or of any private concern or corporation within Germany, which issued some of the securities which were sold. It is true also that the State Department was asked who held the bonds, how the bonds were acquired, and so forth. As nearly as I could ascertain from trying to follow the discussion, the Department received its most dependable information from two sources only. One was the number of people who had written in from time to time saying they were holders of certain bonds of a German municipality, a German state, the Krupp Iron Works, and so forth-corporate bonds which had been issued. The other was the records furnished to our Government by the German people, or by the existing German Government. I reached the conclusion that the State Department's most dependable basis for the estimate that approximately $400 million or $500 million of bonds were held lion or $500 million of bonds were held by Americas consisted of reports made by the German Government to our Government upon inquiry. But we had no itemized statement, we had no specific list of the bonds or of the securities, nor did we know by whom they were held.

It was testified very clearly that the State Department was glad to have organized committees representing bondholders and different types of security holders so the negotiations could be conducted more intelligently. It was very clear that it scrutinized the particular committees selected to represent bondholders, and did not permit them to charge anything like exorbitant fees. The representatives of the Department said they were very careful about that. So it must be assumed, from the testimony before the committee, that this is a fact.

If we go from the field of testimony into the realm of human imagination, particularly in the Senate of the Unit

ed States, I do not know where the end

will be. But so far as the record is concerned, there is not a scintilla of evidence that any attorney who appeared on behalf of the bondholders, or any representative of the bondholders or security owners, whether the securities curity owners, whether the securities were issued by private corporations, by the German nation, by any state in Ger

many, or by any municipality, had charged or had been permitted to charge excessive fees or commissions.

It is true that trading in these bonds on the established markets in our country was cut off in 1941. It is quite true that thereafter the owner of a bond issued by Municipality X or by industry Y may have been willing to sell the bond and may have sold it to somebody for less than par. It was his property,and, I presume, he had a right to sell it; but at any rate some were sold.

I am not by any means willing to say that if these bonds and securities were gathered in at a cutthroat rate, we should become a party to undertaking to collect from the German people more than their just or equitable obligation to the bondholders. But so far as we know, the bonds were not traded in, prior to 1941, or early in 1941, except on and thereafter established markets;

they could not be legally bought and sold in our country; so, if there was trading, it was done between the holder of the bond and a private individual or a bank or an institution that was willing to buy, and that was willing to take the speculative risk of carrying the bond, in the hope of realizing something from it. So much for that part of the transaction.

Since the war, the United States had given Germany ECA aid and had extended aid from the Government and Relief in Occupied Areas fund, set up for certain areas, in a total amount of approximately $3.1 billion, as I recollect the facts given when the witnesses were testifying before the committee.

It is true that in that case the larger part of the money which went to Germany in the postwar period-that is, to the present Western German Republic-came to it and was advanced to Germany out of ECA funds, although, in occupied areas there might have been quite a large percentage of it from Government relief funds.

Germany agreed to pay $1 billion over a long period of years, with an interest rate of 22 percent. They paid, as I recollect it, approximately 333 percent of the money which we had advanced during the postwar period. I read:

Section 111 (c) of the ECA act provides that of the assistance thereunder, made available to participating countries—

Germany was not a participating country in the ordinary sense, but we made her so and advanced her money, just as we advanced money to France, Italy, The Netherlands, Great Britain,

and so forth.

Let me read it again:

Section 111 (c) of the ECA act provides that of the assistance thereunder, made available to participating countries, repayment, if required at all

not require it, in many instances. We

We did not have to require it and did

did not require a high percentage of it in any case. A large part of it, in each case, was a grant.

But if any repayment is required at all, it depends upon the character and the purpose of the assistance, and upon whether there is reasonable assurance of repayment, considering the capacity

of such country to make such repayment without jeopardizing the accomplishment of the purposes of the act.

There was a plain effort in the very beginning to put Europe on its feet. Germany, a vital sector of Western Europe, was willing to participate in the distribution of the funds. It did so. Then with no peace having been finally settled, because our armies of occupation were in Germany another payment to Germany was called for to take care of obligations incurred in that regard, with the net result that here was an external debt, prewar, of $1,637,000,000, of which some $500 million was estimated to be due to American security holders.

There is the picture, Mr. President. Now we have a bankrupt debtor. What are we going to do about it? Time after time every lawyer and every businessman knows very well, if he has gone into a bankruptcy court, that the creditor has paid what he could.

I am purposely, Mr. President, not getting down to the point which seems to be so disturbing to the Senate at this moment. My distinguished friend from Iowa said that they first ascertained how much was due for the postwar advances. They had to do that. They had to find out all that Germany owed. The external debts had to be compromised, somehow, or paid. Do you suppose, Mr. President, that the holders of the external debt knew they would be in a better position than those who advanced postwar obligations? In our case, it is not even a fairly liquidated obligation on the part of the German Government. It was a mere advance. It had never been in final adjustment until those who were negotiating this arrangement got together and said to the Bonn government, "You owe us $3,100,000,000 postwar debts. You owe some other things which we are not going to include in this item. You owe us $200 million for surplus property we sold you since the war ended. We are not going to compromise that. But the money we let you have under ECA and the money we paid through the occupation arrangement we estimate at approximately $3,100,000,000."

That can be compromised, because they thought they were operating within the very clear limits of the ECA Act.

The total post-war aid to Germanywe speak as if we were the only country that aided Germany-was $3,800,000,000. The prewar debt, including accrued interest, totaled more than $2,500,000,000.

We were dealing with a bankrupt state, Mr. President,

My distinguished friend from Iowa [Mr. GILLETTE] read from the statement made by Mr. Riddleberger. I do not think he read the complete statement. I think that if he had, it would have been very clear what he was trying to say. It is found on page 40 of the hearings:

In the first place, in respect of this intergovernmental aid settlement, we tried to give to Germany roughly the same kind of treatment that was accorded to other recipients of governmental postwar aid.

Let me indicate, Mr. President, what actually was done. The ratio of grants to loans in the case of France was 8 percent. The balance was a grant. In the case of Italy it was approximately 10 percent. But we made Germany pay 33% percent, or 34 or 35 percent. I do 33% percent, or 34 or 35 percent. I do not say we should not have made her pay it. Perhaps we should have done so. But that is the situation.

I have always thought that a monumental mistake made by our Government in World War II was the unwarranted assumption that because the Russians professed humanitarian principles, they were Democrats somewhat after our fashion, whereas they were not at all.

Another great mistake which we made, and which we are almost chargeable with primarily, was to destroy-I care not how we look at it-two great producing countries in the world outside our own continent, Germany and Japan, thereby creating a vacuum into which inevitably any nearby selfish, aggressive power would rush. But, at any rate, the post-war obligations were not debts that Germany contracted, except in the same way that the United Kingdom, France, and Italy contracted them.

Of the post-war obligations, Great Britain is paying 13 percent, France 8 percent, and Italy only 10 percent. Yet we say Germany has gotten off too lightly because she is paying 33% percent, or approximately that.

The distinguished Senator from Iowa reminded me a few minutes ago that Germany was our former enemy. So she was. I do not hold the statement against him at all, but I had always thought that when we laid down the sword and dealt honorably with a vanquished people, we dealt with them on the same basis on which we dealt with all free people.

Mr. GEORGE. There is no legal preference. I read from Mr. Riddleberger's testimony:

I don't know that this Government has ever taken the position that because we made a grant to, let us say, a recipient country under the Marshall plan that we would say that the private debt could not be repaid because that assistance was granted.

We What you say, sir, is entirely true. have written down the postwar aid claim approximately two-thirds, and that is done in order, shall I say, to make possible the reestablishment of the credit, normal credit, of Germany and fully recognizing that in this case the Government was making a considerable sacrifice, we attempted to do it so that it would be in line with other settlements that are made with the Marshall plan recipients, but we do not for a moment deny that there has been this large reduction in the postwar aid claim.

I call special attention to the following:

Before we undertook this negotiation, the principles of it, as I recall, were explained in some detail to, I think, this committee

He was speaking of the Committee on Foreign Relations, and I think in that respect his recollection is correct—

we had, of course, the approval of the National Advisory Council, and may I say that if there is to be any attempt to reestablish the normal credit relationship of Germany anywhere throughout the world, then a settlement of the prewar external debt was in our opinion essential.

As we stand today, German foreign trade cannot be financed in what you would call the normal channels of bank credit. It has to be financed from the reserve of the German Central Bank, and we hope with the restoration of the normal trade and credit fabric, that Germany can return to a state which will enable it once more to not call upon us for aid, but be able to stand on its own feet.

I shall not read any further, but that Mr. GILLETTE. Mr. President, will testimony certainly shows the purpose the Senator yield?

Mr. GEORGE. I yield.

Mr. GILLETTE, The distinguished Senator from Georgia referred to the Senator from Iowa. Will the Senator yield for a question?

Mr. GEORGE. Yes; I shall be glad to yield, but I wish to finish what I am saying. I shall be brief.

Mr. GILLETTE. I merely wished to ask one question.

Mr. GEORGE. Very well.

Mr. GILLETTE. The Senator referred a while ago to the parallel of a bankruptcy court or a bankrupt debtor. Does the Senator know of any situation in a bankruptcy court or any other court in which creditors who did not have preferred status, such as by the holding of mortgages, or instruments of that kind, were not treated exactly alike in the distribution of assets?

and intent of Mr. Riddleberger in arriving at this adjustment.

Mr. GILLETTE. Mr. President, will the Senator yield?

Mr. GEORGE. I yield.

Mr. GILLETTE. I shall repeat my question. Does the Senator know of any method in a bankruptcy court or any other court by which a preferred status may be granted to creditors with respect to amounts they shall receive on obligations they hold?

Mr. GEORGE. No, I do not.

Mr. GILLETTE. Does the Senator think a preferred status should be granted in this case?

Mr. GEORGE. Yes, I think it should be granted, and I will tell the Senator why.

Mr. GILLETTE. The Senator has made a clear statement.

Mr. GEORGE. Now we have an un

Mr. GEORGE. There are always pref- derstanding. If it were not for the cloud erences in bankruptcy.

Mr. GILLETTE. Yes; preferences based on the holdings of securities or other evidences of debt.

Mr. GEORGE. But here is a preference for the purpose of getting Germany back on her feet. I shall reach that point in a moment, if the Senator will permit me to do so.

Mr. GILLETTE. Of course.

which has been drifting around over our minds today, as to whether or not bondholders were bona fide bondholders, whether or not the security holders were honest security holders, and whether or not they paid value for their securities, there would not be any question before us.

I do not know whether the holders paid full value. I do know that under any

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agreement entered into between the United States and Germany, no security that was owned outside of Germany in January 1945, before the fall of Germany, could be paid, could be validated for payment, or would be paid, unless it appeared there was bona fide ownership and that the security was kept inside old Germany.

There is the point. That is the step that has been taken. It would be reasonably effective against most securities which may not have been traded between person and person. As to that, no one can give any assurance.

If the distinguished Senator from Iowa will kindly give me his attention, I will state precisely why I believe there should be a distinction between an individual security holder and the Government. Assume the security holder is an honest purchaser for value. Assume the debtor

cannot pay his total debt without bankrupting himself and impairing his usefulness in the sisterhood of states and nations. Assuming those points, why should not the Government pay in full? Why should not all taxpayers stand the loss? Do we want individuals to take the loss, and to allow taxpayers as a whole to be relieved?

As a matter of plain equity, the thing to do in that sort of situation would be to say, "We will relieve the individuals. We will let the Government pay them."

It will be necessary to pay the individual security holders, if the credit of Germany is to be reestablished. Ger

many will have no credit in the commercial world so long as her securities are scattered all over the earth and are not honored. In such circumstances she will never get back on her feet.

We now have a plain case in which all American taxpayers equally, and ratably to the taxpayers, can put their shoulders under this debt, just as funds were voted from the United States Treasury for the Marshall plan, ECA, Mutual Security, and the other plans in which the United States participated. Such funds constitute an obligation of the whole body of taxpayers. But if the individual creditors are honest and just creditors, if they have given value for their securities, and if they hold them, they ought to be paid.

They ought to be paid for another reason. The primary purpose of the whole transaction with Germany in the postwar period was to get her back on her feet, to make it possible for her to take her place in the sisterhood of nations, to make it possible for her to bring her great productive capacity and genius to

bear in the formation of a Western Europe that could stand up against the aggressor. We are merely wasting our time when we undertake to set up the defense of Western Europe without Germany. We all know that to be true. So the primary purpose of this whole postwar advance to Germany was to get her back on her feet. Now we have said to her, "You are going to pay us 33% percent of what we have advanced to you. The United Kingdom is going to get a bill for only 13 percent of what we let her have. France is going to get a bill for only 8 percent of what we let her have. Italy

is going to get a bill for only 10 percent of what we let her have."

That is the case, Mr. President. Do we want to indulge in speculation about who owns these bonds, and how they were obtained? So far as I can see, the best validating procedure has been provided to take care of any stolen securities which might come back into the market when they are again admitted to trade. If we are to speculate on that subject, of course there is nothing I can say about it. The only thing I can say is that, assuming that for the most part these are honest obligations and that they are justly held by members of the American public, the fact is that we, as all the taxpayers, should take our part of that postwar loss in order to enable Germany to settle up more than $1,600,000,000 owed externally. I do not own a German bond, and never have. Perhaps other

Senators do not. It is absolutely necessary, if Germany is to get on her feet, that this agreement be ratified.

So far as I am concerned, I want Germany on her feet. So far as I am concerned, I want to see that nation back in a position to stand against any aggressor in Europe. If we destroy this agreement, if we send it back in the face of the approaching German elections, we might as well kiss Western Germany goodby so far as the EDC organization is concerned.

Mr. KNOWLAND. Mr. President, I understand there is a message at the

desk from the House of Representatives. I ask unanimous consent that, as in legislative session, it be laid before the Senate.

The PRESIDING OFFICER. The Chair lays the message before the Senate.

MESSAGE FROM THE HOUSE

A message from the House of Representatives, by Mr. Maurer, its reading clerk, announced that the House had agreed to the report of the committee of conference on the disagreeing votes of the two Houses on the amendments of the Senate to the bill (H. R. 5710) to amend further the Mutual Security Act of 1951, as amended, and for other purposes.

ENROLLED BILL SIGNED

The message also announced that the Speaker had affixed his signature to the enrolled bill (H. R. 6054) to amend the act of April 6, 1949, to provide for additional emergency assistance to farmers and stockmen, and for other purposes, and it was signed by the Vice President.

MUTUAL SECURITY ACT OF 1951, AS AMENDED CONFERENCE REPORT

ask unanimous consent that, as in legisMr. KNOWLAND. Mr. President, I lative session, the Senator from Wisconsin [Mr. WILEY] be permitted to submit the conference report on House bill 5710, to amend further the Mutual Security Act of 1951, as amended, and for other purposes.

The PRESIDING OFFICER. Is there objection? The Chair hears none, and it is so ordered.

Mr. WILEY. Mr. President, I submit a report of the committee of conference on the disagreeing votes of the two Houses on the amendments of the Senate to the bill (H. R. 5710) to amend further the Mutual Security Act of 1951, as amended, and for other purposes.

The PRESIDING OFFICER (Mr. COOPER in the chair). The report will be read for the information of the Senate.

The report was read by the legislative clerk.

(For conference report, see CONGRESSIONAL RECORD, pp. 8683-8689.)

Mr. WILEY. Mr. President, I ask unanimous consent for the present consideration of the conference report, as in legislative session.

The PRESIDING OFFICER. Is there

objection to the present consideration of the conference report, as in legislative

session?

There being no objection, the Senate proceeded to consider the report.

The PRESIDING OFFICER. The question is on agreeing to the conference report.

The report was agreed to.

Mr. WILEY. Mr. President, I ask unanimous consent to have printed in the RECORD at this point as a part of my remarks a statement which I have prepared on the mutual security conference report.

There being no objection, the statement was ordered to be printed in the RECORD, as follows:

STATEMENT BY SENATOR WILEY ON MUTUAL SECURITY CONFERENCE REPORT

At this time I would like to submit to the Senate a report on the deliberations of the Senate and House conferees on the Mutual Security Act of 1953. The conferees worked diligently for a period of 4 days. I am confident that the results will not win the approval of every Member of the Senate in every respect. That is too much to expect. But the conferees did, in my opinion, hammer out satisfactory compromises for a number of very difficult problems. The net result is a workable bill which merits the

support of the Senate.

The conference report contains a total dollar authorization of not to exceed $5,157,232,500. That is $161,500,000 less than was in the Senate bill and $158,500,000 more than was in the House bill.

The conferees split the major items of difference 50-50. On the smaller items, the Senate agreed to the House figure of $9 million for international children's welfare (as against $13 million in the Senate bill), and the House agreed to the Senate figure of $1,825,000 for payment of ocean freight charges on relief shipments (as against $825,000 in the House bill). In both cases, the conference agreement conforms to the administration requests.

The other major points of difference were settled as follows:

European Defense Community: The House bill provided that 50 percent of the funds authorized for military assistance to Europe could be made available only to the European Defense Community. The Senate bill authorized the President, in his discretion, to withhold up to $1 billion until the treaty establishing EDC comes into effect.

The conferees agreed on a provision allocating 50 percent of the funds to the EDC, or to countries which become members of it, "unless the Congress, upon the recommendation of the President, shall hereafter

otherwise provide." The conference provision does not require the President to wait until EDC is created, but will allow him to go ahead and use the money for the procurement of military supplies and equipment, be delivered although the goods cannot

unless the EDC has come into being in the meantime. Because of the timelag between the authorization of funds and the delivery of goods paid for with those funds, the conference provision will have little practical effect until late 1954 or early 1955. In the meantime, the Congress and the President can review the situation in the light of thenexisting circumstances.

Surplus agricultural commodities: House bill expressed the intent of Congress that surplus commodities be substituted for other economic assistance wherever feasible. The Senate bill contained an amendment offered on the floor by the senior Senator from Arkansas [Mr. MCCLELLAN] providing for the use of military assistance funds to finance the export of surplus commodities for local currency which, in turn, would be used for military procurement.

The conferees agreed on an amendment which provides that between $100 million and $250 million of the funds authorized in the bill shall be used to finance the purchase of surplus agricultural commodities. The amendment authorizes the President to negotiate agreements with friendly countries for the sale of these commodities for local currencies which he may then use to carry out the purposes of the Mutual Security Act.

Transfers of funds: The House bill allowed up to 10 percent of the funds authorized in the bill (excluding unexpended balances) to be transferred between specified The Senate bill alareas and purposes. lowed a general transferability up to 15 percent, including unexpended balances.

The conferees agreed on a provision allowing a 10 percent transferability between specified areas and purposes and including unexpended balances. The effect is to make the transfer authority somewhat broader than in the House bill and somewhat narrower than in the Senate bill.

Guaranties: The House bill amended existing law relating to guaranties of private American investments abroad in three respects: (1) The operation of the guaranty program, which is limited by existing law to countries for which United States assistance is authorized, was extended to any country with which the United States has agreed to institute the program. (2) The term of the guaranties, which under existing law is 14 years from the date of passage of the Economic Cooperation Act of 1948, was extended to 20 years from the date of issuance of the guaranty. (3) Coverage of the guaranties, which under existing law is limited to convertibility of currency, expropriation, and confiscation, was extended to include losses from war, revolution, or civil disorder.

The Senate bill contained no provisions about guaranties.

The conferees agreed to the House provisions for operation of the guaranty program in any country with which an agreement is reached and for extension of the term to 20 years. The section extending coverage to losses from war, revolution, and civil disorder was dropped from the bill at the insistence of the Senate conferees.

Termination of program: Under existing law, the Mutual Security Act expires June 30, 1954, and must be liquidated by June 30, 1955. The House bill extended the liquidation period to June 30, 1956. The Senate bill extended the act to June 30, 1955, and extended the liquidation period for economic assistance to June 30, 1956, and for military assistance to June 30, 1957.

The conferees agreed to the House date for expiration of the act and the Senate

dates for liquidation of the program. As the report of the House managers points out, the 1954 date was agreed to, not because the conferees believed that all forms of assistance to other countries would be brought to an end next year, but rather because they felt that a basic overhauling of legislation dealing with foreign aid is necessary before

that date.

Use of local currency: The House bill authorized an additional appropriation of $98,396,000, which is the amount of local currency our Government plans to use abroad in connection with the administration of the program. The Senate bill did not contain this provision. The House conferees insisted, and the Senate conferees receded, in view of the fact that the local currency authorization does not represent a dollar charge on the United States Treasury.

In regard to other sections of the bill, the House conferees agreed to deletion of the section of the House bill calling for negotia

tion of a Pacific Pact and to acceptance of the section of the Senate bill encouraging free private enterprise and free trade unions. The Senate conferees agreed to deletion of the section of the Senate bill limiting the use of funds for housing and to acceptance of the section of the House bill calling for a survey of the Near East refugee situation. The Senate agreed to the House provision for a 10-percent cut in mutual-security personnel, and the House agreed to the Senate provision exempting civilian, as well as military, personnel in new military-assistance programs from the personnel ceilings.

The other differences between the two Houses were of a more minor nature. I

wish to emphasize that the conference report is signed by all the conferees of both the House and the Senate.

This bill represents an extremely important step forward in our determined effort to convince both our friends and our enemies that the forces of freedom must prevail in the world. The House has already given its approval. I hope we can send it to the President for his signature without further delay.

Mr. MCCLELLAN. Mr. President, before we leave the subject of the conference report, I should like to ask the dis

tinguished Senator from Wisconsin for an explanation of the provision which was substituted for the amendment, which the Senate agreed to, with respect to the disposal of some of our surplus agricultural commodities by the conversion of dollars into the currencies of for

eign countries.

Mr. WILEY. Mr. President, the conferees battled for about 3 days. Half the time was taken up in discussing the amendment referred to by the Senator

from Arkansas. In the statement which I have submitted on the conference report the following language appears:

Surplus agricultural commodities: The House bill expressed the intent of Congress that surplus commodities be substituted for other economic assistance wherever feasible. The Senate bill contained an amendment offered on the floor by the senior Senator from Arkansas (Mr. MCCLELLAN) providing for the use of military-assistance funds to finance the export of surplus commodities for local currency which, in turn, would be used for military procurement.

The

The conferees agreed on an amendment which provides that between $100 million and $250 million of the funds authorized in the bill shall be used to finance the purchase of surplus agricultural commodities. amendment authorizes the President to negotiate agreements with friendly countries for the sale of these commodities for local currencies which he may then use to carry out the purposes of the Mutual Security Act.

Mr. MCCLELLAN. As I understand the effect of that amendment is that the surplus commodities, under the amendment adopted by the conferees, will come out of the stock of surplus commodities now owned by the Commodity Credit Corporation, and not out of the channels of private trade. Is that correct?

Mr. WILEY. I am informed that they might come either directly or indirectly from that source.

Mr. MCCLELLAN. It would be in the discretion of the President in working out these arrangements.

Mr. WILEY. That is correct.

Mr. MCCLELLAN. Then it will be possible to carry out the original purpose of the amendment which I offered, and which the Senate adopted, if the President will exercise the authority which is granted him by the amendment which the conferees agreed to.

Mr. KNOWLAND. Mr. President, will the Senator yield?

Mr. WILEY. I yield.

Mr. KNOWLAND. Is it not substantially a fact that it makes very little difference which way it is done, because if these commodities come out of stocks held by the Commodity Credit Corporation, for example, the Commodity Credit Corporation will then be in a position to take on more agricultural products. So there is very little difference in the overall agricultural picture.

Mr. MCCLELLAN. That is probably true; but what we should do, insofar as we can, is to encourage the resumption of normal trade through normal channels. I am not saying that it should come out of surplus stocks that we may have on hand, but if it leaves the way open for the President to negotiate an arrangement whereby it can still come out of private trade in regular trade channels, I am glad to know it.

Mr. WILEY. If the Senator will look at section 550 he will find it provides that the President shall take special precaution to safeguard against the substitution or displacement of usual marketings of the United States or friendly countries, and to assure to the maximum extent practicable that sales prices of such commodities are consistent with maximum world market prices of like commodities of similar quality, and so forth. The section also provides that private trade channels shall be used to the maximum extent practicable.

I believe that answers the question of the Senator from Arkansas.

Mr. MCCLELLAN. I wanted to be sure that that principle is preserved so far as is practicable.

I note that a number of different uses may be made of the currencies we acquire in exchange, whereas the amendment which was sponsored by me provided only that they should be used for procuring offshore purchases of military supplies in the country issuing the currency. Is that correct?

Mr. WILEY. Yes. If the Senator will refer to the same section he will find that it specifies 4 or 5 activities.

Mr. MCCLELLAN. I believe there are six.

Mr. WILEY. Six different activities for which the money can be used.

Mr. MCCLELLAN. It is to some extent lowing the words "surplus agricultural all foreign-policy issues during the past watered down. 8 years.

Mr. WILEY. Or watered up.

is

Mr. MCCLELLAN. I believe it it is watered down. For instance, the currencies can be loaned back to the issuing country, and we know from experience that most loans are nothing but gifts. Unless sound discretion is used with respect to the various provisions as to how the funds may be used, and our interest is given paramount consideration, those currencies can be used and disposed of so they will actually not return any benefit to our country, other than the giving away of mutual aid.

Mr. KNOWLAND. Mr. President, will the Senator yield?

Mr. MCCLELLAN. I yield.

Mr. KNOWLAND. I believe the distinguished Senator from Arkansas is not quite correct in that regard. I should not like to have his statement to stand in the RECORD without my saying, to the contrary, that the language worked out by the conferees had very much in mind that we wanted to make certain there was an opportunity for the Government at least to get in exchange material which would be helpful and of value to the American people:

(1) for providing military assistance to countries or mutual defense organizations eligible to receive assistance under this act; (2) for purchase of goods or services in friendly countries;

(3) for loans, under applicable provisions of this act, to increase production or goods or services, including strategic materials, needed in any country with which an agreement was negotiated, or in other friendly countries, with the authority to use currencies received in repayment for the purposes stated in this section or for deposit to the general account of the Treasury of the United States;

(4) for developing new markets on a mutually beneficial basis;

(5) for grants-in-aid to increase production for domestic needs in friendly countries; (6) for purchasing materials for United States stockpiles..

Mr. MCCLELLAN. I understand. It seems to be that No. 5 is another giveaway proposition.

Mr. KNOWLAND. Except I am sure the Senator understands it is surrounded with certain limitations, so the minimum amount that can be used is $100 million and the maximum amount is $250 million. It is circumscribed within those limitations.

Mr. MCCLELLAN. That is correct. I am not critical of the conferees. I realize they had a difficult task, probably, in working out an agreement. I hope that it means we have in the bill a start and a tangible effort toward stopping complete giveaways and an effort to try to reestablish trade and commerce between us and other countries, so we will provide aid to our friends by trade, not aid by gifts.

Mr. CASE. Mr. President, I desire to ask a question of the chairman of the Committee on Foreign Relations.

Mr. WILEY. I shall be glad to answer the Senator's question, if I can. Mr. CASE. During the consideration of the McClellan amendment, or when it was being discussed before it was formally presented, the junior Senator from South Dakota suggested that fol

commodities" there be inserted the words "livestock, meat, and meat products." The Senator from Arkansas incorporated that language in his amendment, and the McClellan amendment ment, and the McClellan amendment was adopted in that form. I note on page 9 of the conference report, in section 550 the words "surplus agricultural commodities, or products thereof." Apcommodities, or products thereof." Apparently the conferees substituted the words "or products thereof" following the words "surplus agricultural commodities" for the words which were included in the McClellan amendment, namely, "livestock, meat, and meat and meat products."

Clearly the language used has eliminated the term "livestock." So, the Senator from South Dakota would like to ask the chairman of the conference committee whether it would be his intercommittee whether it would be his interpretation that the words "or products thereof" following the words "surplus thereof" following the words "surplus agricultural commodities" would include meat and meat products.

Mr. WILEY. My recollection of the discussion on that point is rather vague. So much was said in 3 days I am not So much was said in 3 days I am not clear in my recollection.

Mr. GEORGE. If the Senator will permit me, I should like to say that we were told that meat and meat products would be included. They said they were actually already furnishing lard and oil and certain meat products. Mr. CASE. Canned meats and gravies. Yes. That is my

Mr. GEORGE. understanding. Mr. KNOWLAND. Mr. President, as one of the conferees, I will say, for what it may be worth, that the language is sufficiently broad to cover meat and meat products as an agricultural commodity.

Mr. CASE. I appreciate the contribution which has been made by the remarks of the chairman of the conference committee, by the Senator from Georgia, committee, by the Senator from Georgia, the ranking minority member of the Committee on Foreign Relations, and by the acting majority leader. Their statements, made here in direct answer to my question, should provide the interpretation which will guide the administrators of the act. I thank the Senators for their contribution.

AGREEMENT ON GERMAN
EXTERNAL DEBTS

The Senate resumed the consideration of the 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.

Mr. MORSE. Mr. President, I wish briefly to make a few comments on some of the observations of the distinguished Senator from Georgia [Mr. GEORGE]. I always wait for his discussion of any foreign policy issue, because most of the time I find myself in complete agreement with him. The record is perfectly clear on that point. I believe I have given him my support, he being one of the giants of the Senate in the field of foreign policy. I believe I have given him my support and have followed his leadership in more than 90 percent of

I wish I could follow him in his argument tonight. With some of the statements he has made I find myself in agreement, but certain arguments he has made and certain premises he has laid down I cannot accept, and I intend to vote against the proposed agreement. I wish briefly to outline my reasons.

In the first place, it is important that we keep in mind the fact that we are dealing with a presidential matter. It was brought out in the debate this afternoon that the State Department was unable, through its witnesses, to cite a single precedent for the procedure of settling private claims via treaty. I am not in favor of establishing such a precedent. That fact leads me to comment on one principle the Senator from Georgia laid down with which I do not agree.

When it comes to the interests of the American taxpayers versus the foreign investments of American investors, who made their investment on their own initiative by their own decision, with no arrangement between them and the Government, I take the position that the American taxpayers' flag should not follow the investors. I take the position that the investors in what now are wallpaper securities, pre-Hitler securities, should not have the aid of the United States Government through its treatymaking functions to take that wallpaper off the wall and pay them for it. That is what this proposal amounts to. In the last analysis this payment is not at all to be made by Germany, but is to be made by the United States. I believe that is morally wrong. I see no reason why, in connection with these negotiations, any consideration should have been given, at the expense of the United States taxpayers, to the private, preHitler United States investors.

Let me point out that some of the pre-Hitler investments made by foreign countries in Germany were not very good for the United States,

So on that principle I do not follow the Senator from Georgia when he says that as between the United States taxpayers and these investors, the interest of the investors comes first. My point is that on the basis of those dealings, the interest of the United States taxpayers should come first.

Another assumption made by the Senator from Georgia, which I am not able to follow, is regarding the entire question of what consideration should be given, comparatively speaking, to the fiscal problems of a former enemy and the fiscal problems of an ally. I certainly agree with the Senator from Georgia that two tragic mistakes, among others, have been made by us in the field of foreign policy. One has been the assumption that Russia has been an ally. Mr. President, Russia never was our ally at any time, either before the war or during the war. I have consistently taken that position regarding United States relations with Russia.

I also agree with the Senator from Georgia that another of the tragic mistakes we made was when we went along with a program which materially weakened the economic productive power of

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