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programs, except that before extending the provisions of section 109(a) of the Economic Cooperation Act of 1948, as amended, to countries in which programs authorized under the Act for International Development are being carried out, the Director will secure the approval of the Secretary of State.


SEC. 548. (a) The several amounts otherwise authorized by this Act to be appropriated are authorized to be increased by amounts which shall not, in the aggregate, exceed $98,396,000.

(b) Amounts appropriated pursuant to any authorization contained in this Act are authorized to be made available for purchase of foreign currencies (including foreign currencies or credits owed to or owned by the United States). Provided, That such currencies or credits are authorized to be made available for use without reimbursement to the Treasury, for liquidation of obligations legally incurred against such currencies prior to July 1, 1953.

SEC. 549. (a) In order to contribute to the peace and stability of the Near East in particular and of the world in general, the Director for Mutual Security shall, in consultation with the Secretary of State, make a survey of the refugee situation in the Near East and report the results of the survey to the Congress within ninety days after the Mutual Security Act of 1953 is enacted, together with recommendations for seeking a solution. In the making of such report and recommendations, especial consideration shall be given to a program which would utilize the services and talents of these refugees to develop and expand the resources of the area, including its water resources.

(b) In carrying out his duties under this section, the Director for Mutual Security shall consult with the Committee on Foreign Relations of the Senate and the Committee on Foreign Affairs of the House of Representatives, and shall keep these committees constantly and fully informed of the action which he takes to carry out the provisions of this section.


AN ACT To promote the foreign policy and provide for the defense and general welfare of the United States by furnishing military assistance to foreign nations

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Mutual Defense Assistance Act of 1949".

SEC. 403. (a)


(d) Not to exceed $450,000,000 worth of excess equipment and materials may be furnished under this Act or may hereafter be furnished under the Act of May 22, 1947, as amended: Provided, That after June 30, 1950, such limitation shall be increased by $250,000,000 and after June 30, 1951, by an additional $300,000,000, and after June 30, 1952, by an additional $200,000,000, and after June 30, 1953, by an additional $200,000,000. For the purposes of this subsection, the worth of any excess equipment or materials means either the actual gross cost to the United States of that particular equipment or materials or the estimated gross cost to the United States of that particular equipment or materials obtained by multiplying the number of units of such particular equipment or materials by the average gross cost of each unit of that equipment or materials owned by the furnishing agency.

SEC. 408. (a)

(e) (1) The President may, from time to time, in the interest of achieving standardization of military equipment and in order to provide procurement

assistance without cost to the United States, transfer, or enter into contracts for the procurement for transfer of, equipment, materials, or services to: (A) nations eligible for assistance under title I, II, III, or IV of the Mutual Security Act of 1951; (B) a nation which has joined with the United States in a collective defense and regional arrangement; (C) any international military organization or headquarters if, in the opinion of the President, such assistance will further the purposes of this Act; or (D) any other nation not eligible to join a collective defense and regional arrangement referred to in clause (B) above, but whose ability to defend itself or to participate in the defense of the area of which it is a part, is important to the security of the United States: Provided, That, prior to the transfer of any equipment, materials, or services to a nation under this clause (D), it shall provide the United States with assurance that such equipment, materials, or services are required for and will be used solely to maintain its internal security, its legitimate self-defense, or to permit it to participate in the defense of the area of which it is a part, or in the United Nations collective security arrangements and measures, and that it will not undertake any act of aggression against any other state: Provided further, That in the case of any such transfer, the President shall forthwith notify the Committee on Foreign Relations of the Senate, the Committees on Armed Services of the Senate and of the House of Representatives, and the Committee on Foreign Affairs of the House of Representatives.

(2) Whenever equipment or material is transferred from the stocks of, or services are rendered by any agency, to any nation or international organization as provided in paragraph (1) above, such nation or international organization shall first make available the fair value, as determined by the President, of such equipment, materials, or services before delivery or, when the President determines it to be in the best interests of the United States within sixty days thereafter. The fair value for the purpose of this paragraph shall not be less for the various categories of equipment or materials than the value as defined in subsection (c) of section 403: Provided, That with respect to excess equipment or materials the fair value may not be determined to be less than the value specified in paragraph (1) of that subsection plus (a) 10 per centum of the original gross cost of such equipment or materials; (b) the scrap value; or (c) the market value, if ascertainable, whichever is the greater. Before a contract is entered into, or rehabilitation work is undertaken, [such nation] such nation, or international military organization or headquarters, shall (A) provide the United States with a dependable undertaking to pay the full amount of such contract or the cost of such rehabilitation which will assure the United States against any loss on the contract, or rehabilitation work, and (B) shall make funds available in such amounts and at such times as may be necessary to meet the payments required by the contract or the rehabilitation work in advance of the time such payments are due, in addition to the estimated amount of any damages and costs that may accrue from the cancellation of such contract or rehabilitation work: Provided, That the total amount of outstanding contracts under this subsection, less the amounts which have been paid the United States by such nations, shall at no time exceed $700,000,000.

(3) The provisions of section 409 of this Act shall not apply to equipment, materials, and commodities made available under this subsection.

(4) The provisions of section 530(a) of the Mutual Security Act of 1951 (relating to expiration of program) shall not apply in the case of the transfer, or procurement for transfer, under this subsection, of parts, components, and equipment required for the maintenance or repair of military end items (as referred to in section 506(c) of the Mutual Security Act of 1951) previously supplied under this Act or the Mutual Security Act of 1951.

SEC. 411. For the purposes of this Act— (a)

(d) The term "services" shall include any service, repair, training of personnel, or technical or other assistance or information necessary to effectuate the purposes of this Act including loans of limited quantities of equipment for designated periods solely for test and study purposes.



SEC. 111. (a)

(b) In order to facilitate and maximize the use of private channels of trade, subject to adequate safeguards to assure that all expenditures in connection with such procurement are within approved programs in accordance with terms and conditions established by the Administrator, he may provide for the performance of any of the functions described in subsection (a) of this section

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(3) by making, under rules and regulations to be prescribed by the Adminis trator, guaranties to any person of investments in connection with projects, including expansion, modernization, or development of existing enterprises, approved by the Administrator and the participating country concerned as furthering the purposes of this title (including guaranties of investments in enterprises producing or distributing informational media consistent with the national interests of the United States: Provided, That the amount of such guaranties made in any fiscal year does not exceed $10,000,000), which guaranties shall [terminate not later than fourteen years from the date of enactment of this act] be limited to terms not exceeding twenty years from the date of issuance: Provided, That

(v) the guaranty to any person shall be limited to assuring one or both of the following: (1) The transfer into United States dollars of other currencies, or credits in such currencies received by such person, as earnings or profits from the approved project, as repayment or return of the investment therein, in whole or in part, or as compensation for the sale or disposition of all or any part thereof; and (2) the compensation in United States dollars for loss of all or any part of the investment in the approved project which shall be found by the Administrator to have been lost to such person by reason of expropriation or confiscation by action of the government of a participating country or by reason of war, revolution, or civil disorder. When any payment is made to any person pursuant to a guaranty as herein before described, the currency credits, asset, or investment on account of which such payment is made shall become the property of the United States Government, and the United States Government shall be subrogated to any right, title, claim, or cause of action existing in connection therewith.

SEC. 115. (a)


(b) In addition to continued mutual cooperation of the participating countries in such a program, each such country shall conclude an agreement with the United States in order for such country to be eligible to receive assistance under this title. Such agreement shall provide for the adherence of such country to the purposes of this title and shall, where applicable, make appropriate provision, among others, for

(6) placing in a special account a deposit in the currency of such country, in commensurate amounts and under such terms and conditions as may be agreed to between such country and the Government of the United States, when any commodity or service is made available through any means authorized under this title, and is furnished to the participating country on a grant basis: Provided, That the obligation to make such deposits may be waived, in the discretion of the Administrator, with respect to technical information or assistance furnished under section 111 (a)(3) of this title and with respect to ocean transportation furnished on United States flag vessels under section 111 of this title in an amount not exceeding the amount, as determined by the Administrator, by which the

charges for such transportation exceed the cost of such transportation at world market rates: Provided further, That such special account, together with the unencumbered portions of any deposits which may have been made by such country pursuant to section 6 of the joint resolution providing for relief assistance to the people of countries devastated by war (Public Law 84, Eightieth Congress) and section 5(b) of the Foreign Aid Act of 1947 (Public Law 389, Eightieth Congress) shall be used in furtherance of any central institution or other organization formed by two or more participating countries to further the purposes set forth in subsection (d) of section 111 or otherwise shall be held or used for purposes of internal monetary and financial stabilization, for the stimulation of productive activity and the exploration for and development of new sources of wealth, for the encouragement of emigration pursuant to subsection (e) of this section, or for such other expenditures as may be consistent with the declaration of policy contained in section 102 and the purposes of this title, including local currency administrative and operating expenditures of the United States incident to operations, under this title: Provided further, That the use of such special account shall be subject to agreement between such country and the Administrator, who shall act in this connection after consultation with the National Advisory Council on International Monetary and Financial Problems and the Public Advisory Board provided for in section 107(a): And provided further, That any unencumbered balance remaining in such account upon termination of assistance to such country under this Act shall be disposed of within such country for such purposes as may, subject to approval by Act or joint resolution by the Congress, be agreed to between such country and the Government of the United States; The Administrator shall exercise the power granted to him by this paragraph to make agreements with respect to the use of the funds deposited in the special accounts of "participating countries" (as defined in section 103(a) hereof) and any other countries receiving assistance under the Mutual Defense Assistance Act of 1949, as amended, in such a manner that the equivalent of not less than $500,000,000 of such funds shall be used exclusively for military production, construction, equipment, and materiel in such countries. The amount to be devoted from each such special account for such use shall be agreed upon by the Administrator and the country or countries concerned: And provided further, That whenever funds from such special account are used by a country to make loans all funds received in repayment of such loans [shall be redeposited in such special account] prior to termination of assistance to such country shall be reused only for such purposes as shall have been agreed to between the country and the Government of the United States.

(h) Not less than 10 per centum of each special local currency account established pursuant to paragraph (6) of subsection (b) of this section shall be allocated to the use of the United States Government for expenditure for materials which are required by the United States as a result of deficiencies or potential deficiencies in its own resources or for other local currency requirements of the United States, [including] and, without regard to section 1415 of the Supplemental Appropriations Act, 1953, for local currency requirements of appropriate committees of the Congress engaged in carrying out their duties under section 136 of the Legislative Reorganization Act of 1946;


[House Report 569, part 2, 83d Cong., 1st Sess.]


JUNE 17, 1953.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. SMITH of Wisconsin, from the Committee on Foreign Affairs,
submitted the following


[To accompany H. R. 5710]

This is a time of grave concern for all the people of the United States. Never before in our Nation's "peacetime" history have the objectives of peace and security occupied so much of the time, energy, financial resources, and hope of this country.

The undersigned members of the majority party share equally with the President, and all other members of the Foreign Affairs Committee, profound desire to achieve such peace and security. Strong convictions and the realization that the House is entitled to the full views of the entire committee compels us to present with unchallenged candor the reasons for our belief that H.R. 5710 fails as an adequate measure to meet these objectives.


The proposed Mutual Security Act of 1953, H.R. 5710, marks another attempt in a long series of major foreign policy measures to bring about peace and security in a troubled world. Areawise, on a large scale, we started off with an Economic Cooperation Act of 1948. When that proved inadequate, we tried a Mutual Defense Assistance Act of 1949. Then to demonstrate that we were concerned equally with directly raising living standards as well as defense standards, the Congress in 1950 put on the statute books an Act for International Development. In 1951, the phrase "mutual security" was coined to describe what was termed a "new" approach-lumping together in a package bill the above laws and tying them together not too neatly with almost every single piece of legislation that bore the trade-mark "foreign policy," its nebulous connection with "mutual security" notwithstanding.

Up to now, the United States has done the cooperating, the defending, the developing, and the securing. Meanwhile, the American people have done the paying and are becoming convinced that they are not getting their money's worth.

Thus, as a new administration in response to the people's mandate takes up the reins of leadership and responsibility, we feel impelled by virtue of that mandate to scrutinize carefully the program recommended in H.R. 5710. It is our responsibility to do this to insure

(1) That no vestiges of prior waste, inefficiency, and poor judgment remain ;

(2) That the American people get a better return for the investment they are making in men and in money than has hitherto been the case; and (358)

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