CONTENTS I. General purposes of the bill.. A. Proposed authorizations listed. III. Estimates of proposed authorizations.. B. Dollar requirements of the European recovery program_ C. Work of the Paris Conference... F. Adjusting the financial requirements from 15 to 12 months.. IV. Dollar requirements and availabilities. B. Mobilization of existing dollar resources. C. Range of variables in estimating requirements. V. Analysis of title I of the bill: European recovery program.. A. Basic obligations assumed as conditions of participation in C. Economic impact of the foreign-aid program on the United D. The use of plentiful commodities and private services... F. Financial considerations of the bill_ I. Private enterprise and investment.. J. Duration and liquidation__. K. Relation to international organizations. L. Assuring proper use of aid.. Q. Powers and responsibilities.. R. Relation to other agencies.. S. The location of export controls. 48 Page VI. Analysis of title II: The International Children's Emergency Fund. A. Purpose of this title. B. The Greek program to date.. C. The Turkish program to date. 49 50 50 50 51 D. Administration of Public Law 75. 52 E. Political and strategic considerations_ 52 F. Use of $275,000,000 additional appropriation. 53 G. The purpose of the new legislation on Greece and Turkey__ 54 54 VIII. Analysis of title IV.. A. The needs of China.. B. The interests of the United States C. Type of aid required for China D. How the program will be administered.. E. The amount authorized.. Appendix I. Hearings and witnesses. Appendix II. Selection of illustrative tables...- Appendix III. Maps showing spread of communism in Europe and China. 56 56 57 57 58 59 60 64 78 79 80TH CONGRESS HOUSE OF REPRESENTATIVES 2d Session { REPORT No. 1585 FOREIGN ASSISTANCE ACT OF 1948 MARCH 20.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Mr. EATON, from the Committee on Foreign Affairs, submitted the following REPORT [To accompany S. 2202] The Committee on Foreign Affairs, to whom was referred the bill (S. 2202) to promote the general welfare, national interest, and foreign policy of the United States through necessary economic and financial assistance to foreign countries which undertake to cooperate with each other in the establishment and maintenance of economic conditions essential to a peaceful and prosperous world, having considered the same, report favorably thereon with amendments and recommend that the bill as amended do pass. I. GENERAL PURPOSES OF THE BILL This bill provides for the conditioned participation of the United States in a program of foreign assistance that covers (1) European recovery, (2) a continuation of assistance to the International Children's Emergency Fund, (3) military-type aid to Greece, Turkey, and China, and (4) economic aid to China. The European recovery program is intended, if its provisions are met, to continue until June 30, 1952, with annual review, both for authorizations and appropriations, by the Congress. The bill recognizes that military security and domestic tranquillity are necessary prerequisites to economic recovery and the maintenance of peace and free institutions, to the degree that it makes provision for military-type aid to those areas which are most beset by the dangers of externally sponsored communism. The bill authorizes a total of $6,205,000,000 for all the purposes included in the proposed act. 1 A. PROPOSED AUTHORIZATIONS LISTED Title I authorizes $5,300,000,000 for European recovery, including the 16 nations which accepted the conditions of the Paris report of the Committee on European Economic Cooperation in September 1947, the occupied zones of Germany (by Russian choice only the western), and Trieste. Of this amount, $1,000,000,000 may be advanced by the Reconstruction Finance Corporation prior to the action of the Congress on 4.3 billion dollars which is authorized for appropriations either for grants or loans. One billion dollars of the total of $5,300,000,000 authorized is to be for guaranties up to $500,000,000 and for loans made through the Export-Import Bank financed by public-debt transactions. Title II has a conditioned authorization for the International Emergency Children's Fund for $60,000,000. Title III authorizes $275,000,000 for primarily military-type aid to Greece and Turkey, under amendments to the Foreign Aid Act of 1947, and $150,000,000 for primarily military-type aid to China, by adding China to this title. Title IV authorizes $420,000,000 for primarily economic aid to China. B. OBJECTIVES AND SAFEGUARDS The economic aspects of the program are intended to encourage the recovery of Europe and to assist China on the road to stabilization of its exhausted and still war-torn economy. To this end, a new agency, the Economic Cooperation Administration, is created, with the responsibility and control vested in a single Administrator, who is to be given a rank equivalent to that of the heads of executive departments. The Administrator is provided with the powers to establish a corporation as an instrument for accomplishing his policy objectives. Both the military and economic aid are to be coordinated into the broad foreign policy objectives of the United States by establishing proper channels of consultation for the Economic Cooperation Administration with the Secretary of State, both at home and abroad, and by vesting control of funds for all foreign aid in the hands of the President. A number of safeguards have been introduced to assure that the money appropriated to both ends will be administered properly and will be adequately accounted for. Other conditions have been attached to secure protection of the domestic economy of the United States from impairment. Still other conditions for fulfillment by the recipient countries have been attached to both the initiation of aid and its continuation. Primary emphasis is placed throughout the bill on encouraging the participating nations to help themselves and each other. The Administrator is charged with securing through the agreements negotiated by the Department of State the protection of the primary purposes of the bill, including also recognition of the drain of this program on the natural resources of the United States, the equitable access of private enterprise to the development and purchase of raw materials abroad, and repayment, insofar as practicable, through the development of new or increased production of strategic materials for stock-piling by the United States, or by other means. It is recognized, however, that the larger portion of foreign aid must be in terms of what amount to grants, for which payment is not made, since the local currencies received are to be used only for the benefit of the countries receiving the aid, and on terms to which both they and the United States agree. II. BACKGROUND Almost 3 years after VE-day, the peace and freedom for which the largest-scale war in history was fought are seriously endangered. Many of the nations which were freed from the yoke of Hitler in the west or of Japan in the east either have already fallen or are in danger of falling under the domination of communism controlled by Russia. The exhaustion into which Europe and China particularly have fallen has had added to it the additional burden of resisting aggression in new and subtle forms, through the use of fifth columns, aided by intimidation and in some cases by armed incursions from outside. These incursions have been most obvious in the case of Greece, but the same pattern is rapidly developing in China and Korea and may be expected wherever weakness and internal divisions give a prospect of its success. The United States, which has sacrificed more than $300,000,000,000 in achieving victory in the war and has already devoted sums approximating $20,000,000,000 in the postwar efforts to establish peace and prosperity, is now called upon to make an effort less extensive in scope and magnitude but of equally critical importance to the survival of a free world. A. THE NEED OF AID The pressing character of the time factor for action is illustrated in each succeeding day's headlines. The danger of the pervasion of all Europe by a sense of fear and hopelessness in the face of the by now completely obvious tactics of communism can only be met by a firm decision and a willingness to adopt at once the necessary measures to reverse this trend. Approaching elections in European countries will be of the most critical character yet confronted in the postwar period. The assurance of immediate and further aid by the United States, coupled with the unmistakable intention to assist those areas most in danger of military incorporation or civil war, inspired and sustained from outside, will be perhaps a determining factor in the outcome of these critical elections. It is unnecessary to paint the picture of the alternative with which this country would be faced, should the few great critical barriers to the march of communism disappear. Past and present sacrifices of an economic character would be small indeed compared to the burden which this Nation would have to assume in such a world. The very survival of the United States would be more seriously at stake than at any other time in its history. Faced with this prospect, there can be but one choice: to extend the aid necessary in both economic and military spheres. A calculated risk, is has been called. But such a risk is no risk, compared to the grim certainty of the alternative. The committee is convinced that aid of a military character to Greece, Turkey, and China is absolutely essential at this time to protect |