FUNDS OF FARMERS HOME ADMINISTRATION

Senator SYMINGTON. You mentioned that it was difficult to explain to the people of Alaska how we could heavily increase the amount of money we are putting into foreign aid and, at the same time, justify a reduction in domestic programs that are so badly needed.

Senator GRUENING. Needed and voted, approved by the Congress, ready to go.

Senator SYMINGTON. Last year, we voted $350 million for the Farmers Home Administration, of which only $275 million was released until the first of last week, then another $25 million was released. I noticed the Chairman of this committee, the Senator from Arkansas, referred to this in a colloquy on the floor.

Many Missouri farmers, especially in the cotton country of southeast Missouri are going bankrupt. They go to the Farmers Home Administration, where they are told "We have complete sympathy with your problem. We think you should get the loan, but the money has run out."

Would it not be difficult to justify to those farmers the logic of this resolution, with a billion and a half dollar figure in the background, when the money actually appropriated by the Congress to save those farmers from bankruptcy has not yet been released entirely by the Bureau of the Budget.

Senator GRUENING. Well, I think all my colleagues will have the same problem, if I may venture to forecast, that when you return home your constitutents will ask you that, "How come that this project that we eagerly anticipated, which you told us in your newsletter six months ago, had been passed by the Congress and signed by the President has now vanished?"

I think all of the Members of the Senate and House will have similar questions.

In the case of Alaska it is a little more acute because we were a stepchild for 92 years before statehood and we have much more catching up to do, so what is taken away it is a little more noticeable.

WHAT IS THE DEGREE OF THE COMMITMENT?

Senator SYMINGTON. The second question I would ask has to do with the degree of the commitment.

In an open hearing held recently I asked the Secretary of State: "If I vote for this resolution would I be committing myself to approving additional appropriations the Administration may wish to present to the Congress in support of the program?"

Secretary Rusk replied:

"I think it creates a strong presumption, Senator, if a sensible program is presented, if there are more and reasonable steps taken by the Latin American countries to go into a common market, that that would create a strong presumption that you would support it if you voted for this resolution."

That seems to be rather clear, wouldn't
Senator GRUENING. Yes.

you say?

EFFECT OF PROPOSAL ON U.S. BALANCE OF PAYMENTS

Senator SYMINGTON. I also asked a question of the Secretary with respect to what the influence would be on our balance of payments. He referred the question to Mr. Solomon of the State Department. Mr. Solomon did not explain it clearly to me, so I asked him:

"Would you say then that under this proposal we will improve our balance of payments situation?"

To which he answered:

"I could not say that. I could not say that it would worsen it, either." Another witness who it is planned to have before this committee has a prepared statement with respect to the balance of payments aspect. In my opinion, he is as knowledgeable on this particular subject, as anybody in town. He says:

Finally, the implications of the proposed policy of the United States balance of payments in the long run can only be negative. You are being asked to approve balance of payments loans to other countries during the transitional period for Latin American integration, to give preferential tariff treatment without reciprocity, to approve commodity agreements which cannot but increase the cost of United States imports, to assist Latin American export financing, and to provide funds for compensatory financing to stabilize their foreign exchange. All these will adversely affect the United States balance of payments for many years to come.

It would seem there is a difference of opinion between the experts in the State Department and Dr. Danielian on this statement. Would you agree?

Senator GRUENING. I certainly would. I think any increase in our appropriations for Latin America is certainly going to affect adversely our balance of payments situation.

U.S. GOLD PROBLEM AND GOLD MINING INDUSTRY

Senator SYMINGTON. I happen to know the Senator is one of our foremost authorities on the question of gold.

We are the only country in the world that agrees to buy gold at $35 an ounce, and sell it at $35.

We are also the only country which prohibits a citizen to own gold in his safe deposit box as a hedge against inflation.

When in Laos this year, one of the two countries that merchandises gold commercially as a government operation, they told me gold was selling for as high as $80 an ounce, in quiet trading on the side, you might say.

Do you think we can continue indefinitely to maintain our position, the position we do today, continue to lose the gold we have, continue to lose our total reserves along with the gold, at the same time all the other developed countries in the world are increasing their gold and their total reserves?

Senator GRUENING. We are the only gold-producing country that has adopted a wholly discriminatory and unjust policy toward our gold mining industry. We are the only nation that compels our gold miners to sell at a price that is no longer profitable, and to sell to the agency that imposes this restriction, the Federal Government, and this is on top of the war production order during World War II which put our gold mines out of business.

None of our allies in the gold-producing business took any similar steps. We have tried for years to get legislation that would remedy that situation.

This time, for the third time, the bill that I have introduced to make up for this difference by a subsidy has been reported unanimously by the Interior Committee, with the cosponsorship of 21 Senators, mostly from the West, but we have in the past run acrossrun afoul of the myth in the Treasury Department that any attempt to rectify the situation will cause an international panic and raid on the dollar.

No Member of the Senate that I have been able to find agrees with that view, and I am hopeful we can test this out by having this bill brought to the floor and having it fully discussed.

There is no reason why under our free enterprise system one industry alone should be made the victim of this kind of discrimination. Senator SYMINGTON. It is pretty close to true about the silver industry also, is it not?

Senator GRUENING. Yes. It is worse in the case of gold, and yet we have other examples of a subsidy. We subsidize agriculture, we subsidize our shipbuilding industry, we subsidize some other metals. I think gold is a very flagrant case, and I am hopeful that the Policy Committee will agree to having it brought out and discussed, whether it wins or loses.

Senator SYMINGTON. In any case, you would say, would you not, that there is no possibility of our continuing with these unilateral approaches to a particular part of the world as against our relationship with all other countries without further worsening our balance of payments position, and our loss of gold and total reserves?

Would the Senator agree?

Senator GRUENING. I do.

WORLDWIDE EFFECT OF PREFERENTIAL TARIFF TREATMENT FOR LATIN

AMERICA

Senator SYMINGTON. You inspire me to ask several more questions. If we give preferential tariff treatment without any reciprocity to Central and South American countries, isn't that liable to get us into further difficulties incident to the Kennedy Round, the European picture?

Senator GRUENING. It might. I am not prepared to say. I think we would get strong objection from other countries.

Senator SYMINGTON. Mr. Chairman, I have no further questions. I would join in saying I would like very much to see us improve economic conditions of Central and South America to the extent we can afford it, and would hope that, before this matter is concluded, we could pass the Chairman's resolution to show the people at Punta del Este, and everywhere else, that we are sympathetic with the problems. I would also hope we have further hearings on this matter as soon as possible.

The able senior Senator from New York has a statement he would like to make. I yield to him.

Senator GRUENING. May I be excused!

The CHAIRMAN. Let me say to the Senator, I know the Senator from Oregon wants to address some further question to the Senator from Alaska.

Senator MORSE. I want to cooperate with the hearing procedure. I want to cooperate with Senator Javits, but I do not want Senator Gruening to leave because I have become indirectly involved in the discussion of the resolution between the Senator from Idaho and the Senator from Alaska, and in fairness to the President I want to straighten out the record as far as the President's position is concerned regarding this resolution.

The CHAIRMAN. I do not want to cut off the Senator from Oregon. Let me inquire a moment. Do you mind if Senator Javits puts in a statement?

Senator GRUENING. I would like very much to be excused, if I may, because, not thinking that this testimony would last three hours and a half, I have people waiting for me in my office.

The CHAIRMAN. You should not have been so interesting. You inspired a very interesting discussion.

Well then, without objection, the statement of the Senator from New York will be put in the record.

STATEMENT OF HON. JACOB K. JAVITS, U.S. SENATOR FROM THE STATE OF NEW YORK

Senator JAVITS. It is very kind of you, Mr. Chairman. May I just insert my statement in the record, so as not to interrupt the flow of the testimony of Senator Gruening, with the understanding that it will follow his statement.

The CHAIRMAN. Yes.

Senator JAVITS. And may I dictate to the reporter a proposed amendment to S. J. Res. 53, which I am offering to the committee? The CHAIRMAN. Yes.

Senator JAVITS. Add at the end of, on page 4, at the end of line 16, strike the period and insert a comma and add "and calls on industrialized nations, especially those of Western Europe and Japan, to assist this effort by providing increased financial assistance to Latin American nations and greater access for the products of Latin American nations in their markets.”

Thank you very much.

(The prepared statement of Senator Javits follows:)

STATEMENT OF SENATOR JACOB K. JAVITS

I support this resolution because it makes Congress a partner to the President in an historic undertaking. The questions raised by the distinguished chairman of the Senate Foreign Relations Committee, the changes I and others may propose in the resolution, and those already made by the House Foreign Affairs Committee will give the President and the leaders of the Hemisphere an accurate gauge of sentiment in the Congress for the objectives sought by the President. In the absence of this resolution, expressions of Congressional position on this or that issue involved in the forthcoming summit would have had little meaning and certainly no force of law.

I too wish that the resolution had been presented to Congress earlier so that we would have had more time for reflection. But I do believe that if the Congress fully utilizes the time remaining before the Summit, this resolution can be

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an effective instrument to the achievement of what both the Congress and the President hope to accomplish at Punta del Este.

I prefer S. J. Res. 53, of which I am a co-sponsor, to that offered by the Senator from Arkansas because it is more specific and to the degree it puts Congress on record in favor of these specifics it shows that Congress is giving its support with open eyes.

I agree with Chairman Fulbright that this resolution, once approved by Congress, morally commits us to provide new financial support to Latin America. But let me add several caveats. First of all, the resolution clearly states, clause after clause, that new U.S. financial support to the Inter-American Bank and under the Alliance for Progress is contingent on effective steps taken by Latin American nations. Secondly, we are not dealing with an entirely new situation here. For six years now we have provided over a billion dollars a year on the basis of the Charter of Punta del Este of which we are a signatory. During these six years Congress had an opportunity each year to examine the Latin American situation and the role played by our economic assistance. We already have given a commitment to support significant social and economic reforms in Latin America and to assist its own efforts to accelerate Latin American economie development. The resolution before Congress simply represents one step of many required if social and economic change in Latin America is to be brought about fast enough to satisfy the needs of the people through democratic procedures. And thirdly, the President will be required to return to Congress with any agreement reached at Punta del Este and any new funds required will be screened by the regular authorization and appropriations process. As a member of the Senate Appropriations Committee I can assure you that I will submit the President's request to the most careful examination, as I am sure others of my colleagues will do also.

The Senator from Arkansas objects to being confronted with a far reaching commitment and to giving the President another "blank check." But this resolution can not really add or detract from the President's powers to commit this country, subject to Constitutional procedures. The President can operate without our prior consent. But what this resolution can do is to influence the President in what we will commit the U.S. to at the Summit, and it can assure the "presence" of the U.S. Congress at the conference table. It can also further encourage Latin American presidents to the line of policy supported by our President, backed by Congress. We cannot complain when we in the Congress are not consulted by the President before a major decision in foreign policy and then refuse to join the President when he actually consults us in advance of making a major commitment.

I support this resolution because it endorses the concept of a Latin American Common Market and multinational projects which I have long advocated and deem essential to a new strategy needed to make a realistic attack on the fundamental economic problems of Latin America.

Latin America today is in the midst of a vast "revolution" of expectations— the people are no longer content with a hopeless future and abject poverty. The steps taken by Latin American governments to date have been inadequate to satisfy this revolutionary spirit. The Alliance for Progress has accomplished a great deal in five years but the same basic problems still exist in Latin America because they are too stubborn and far reaching to be solved in five years by the Alliance for Progress alone: food shortages and unbalanced agriculture, inadequate housing, limited industrial productivity, limited regional trade. Therefore, unless the Presidents of the American States come to grips with these fundamental problems at their forthcoming conference and use the Alliance as the prelude to really major economic change, I see a grave danger of widespread violence and disruption in the hemisphere.

Thus, this resolution is very important. It shows that Congress is sensitive to these problems and is ready to support the efforts of our Government to do its share in helping Latin America solve its problems within a democratic framework, as is our entire national objective.

The CHAIRMAN. One other thing. Dr. Danielian has been sitting here very patiently. He has a statement which he has given to the press on the understanding that he would appear this afternoon, but we cannot possibly get to him. So without objection his statement will be made a part of the record, and he stands ready to come back.