Senator DOUGLAS. There is always an advantage in keeping the blank check limited in the total amount.

Senator BRICKER. Mr. Chairman, may I ask how much of this money-possibly it may be a judgment estimate figure-how much of it would be useful for strategic materials? And we know the importance of strategic materials.

Mr. GASTON. I could just make a wild guess, Senator. I would say $500,000,000.

Senator BRICKER. We know the condition of our stockpile and we know the need for the strategic and critical minerals and metals. Mr. GASTON. That is right; yes, sir.

Senator BRICKER. $500,000,000 would be just the best guess you could make?

Mr. GASTON. Yes, sir.

Senator MAYBANK. You said you had known needs.

Mr. GASTON. The United States has officially promised to lend some money to the Philippines.

Senator MAYBANK. That is right.

Mr. GASTON. I don't know how much we are going to lend. It will depend upon what we consider to be the capacity, what our own men consider to be the capacity and the extent of the needs and what they ought to have that will have to be in the form of loans. Then we have Japan. I don't know what the extent of the known needs or what the extent of the capacity to repay may be there, but it will not be small; it will be substantial.

I think the Middle East situation will probably develop into a demand for some good lending.

Senator MAYBANK. Let me get this straight for the record. Known needs that you are aware of now are stockpiling, Japan, the Middle East, the Philippines, and would that be all?

Mr. GASTON. Raw materials.

Senator MAYBANK. That will be strategic mostly, will it not? Mr. GASTON. No. I am talking about raw materials for export. I am talking about cotton loans and possibly wheat loans.

Senator MAYBANK. Wheat and cotton. Where would that be shipped?

Mr. GASTON. Oh, it would be shipped to Western Germany and, if we go ahead, as it is indicated is probable, with the further commitment to Spain, they will be on our necks for a substantial additional amount of cotton.

Senator MAYBANK. Spain will?

Mr. GASTON. Spain will. West Germany is crying for cotton right now, and through a half a dozen different channels they are trying to get at us for cotton for West Germany. We are investigating that situation now. The United States now has a surplus of cotton, of course, as you know, Senator, and I have an idea that it will be necessary to use the lending power of the United States to reinstate our world cotton trade.

Senator MAYBANK. Three years ago you would not lend a nickel. Now, Mr. Gaston, you know that 4 years ago or 3 years ago you would not lend Spain any money.

Mr. GASTON. That is right.

Senator MAYBANK. Of course, it is. I know who stopped that. If you had done then what the committee wanted done, Spain would have been rehabilitated.

Mr. GASTON. I don't think that Spain at that time was good for a loan. I just don't think they were good for it.

Senator MAYBANK. They had many assets to put up. I was over there with Senator McCarran.

Senator SCHOEPPEL. I would like to ask you, Mr. Gaston: You mentioned wheat. The matter that you have in mind of anticipated needs, is that outside and beyond the International Wheat Agreement arrangements?

Mr. GASTON. Yes.

Senator DOUGLAS. We are having a little colloquy here on cotton. Senator MAYBANK. That was wheat, too, with Spain.

Senator DOUGLAS. Mr. Gaston, let me ask you this question, and if I ask questions which tread on undue disclosures, you simply refuse to answer, but how much of a margin do you think you should have between your ceiling and the amount committed for safety?

Mr. GASTON. Oh, about $500,000,000.

Senator DOUGLAS. So that if you loaned a billion, you should have a billion added authorization. That is, you want to keep, roughly, at least $500,000,000?

Mr. GASTON. I think this bill will provide us a billion that we can safely lend out; yes, sir.

Senator DOUGLAS. Not much more than a billion?

Mr. GASTON. Not much more than that, except for the emergency for which we are holding it.

Senator DOUGLAS. Of that you would spend approximately half, $500,000,000 for raw materials, and $500,000,000 for the Middle and the Far East?

Mr. GASTON. For strategic materials, Senator, that would be imported into the United States.

Senator DOUGLAS. The remainder for the Middle and Far East? Mr. GASTON. Yes, sir..

Senator DOUGLAS. In other words, the point 4 program for the Middle and Far East is too slow. What you want is large scale development?

Mr. GASTON. That isn't exactly the way I would put it. The so-called point 4 program is a technical advice program.

Senator DOUGLAS. That is right; designed for a long pull.

Mr. GASTON. It isn't a capital investment program.
Senator DOUGLAS. That is correct.

Mr. GASTON. If the situation shapes up so that something can be done for the condition of serfdom that exists over a large part of the Middle East through some pilot programs, such as that which is being done in Afghanistan now, in which we have a very substantial loanit is being very well done with the enthusiastic cooperation of the Afghans-if that situation should shape up, there would be an opportunity for a large amount of capital investment to bring about a higher standard of living and to create these 25 percent sharecroppers into people who actually live.

Senator DOUGLAS. Can you make the loans conditional upon the institution by the government of the reforms?

Mr. GASTON. We can make our loans conditional upon the administration of the loans in such a way that they will in themselves constitute a considerable degree of domestic reform. I wouldn't say that we could take extraneous matters and bring them in. I don't

think we can trade like that, but I think we can make contracts for land cultivation

Senator DOUGLAS. In other words, if it were for irrigation, you would require wide land ownership?

Mr. GASTON. That is right, which would permit a breaking up of these large estates and break up this system, this ancient system of landlordism and serfdom which they have all over the Middle East and which I think is a serious menace to the United States.

Senator DOUGLAS. I want to congratulate you for your foresight. I only wish there were more people in the United States Government who had the same view as you have on this matter. I want to congratulate you, Mr. Gaston.

Mr. GASTON. Thank you, sir.

Senator DOUGLAS. I have no more questions.

Senator MAYBANK. You have the asset in the material itself in the importation of all these strategic materials.

Mr. GASTON. Most of this stuff we can work on contracts entered into with General Services, whereby the General Services will pay us direct and the only gamble we take is that the people to whom we lend the money will actually produce. Well, the reason for believing that they will produce is that they have a strong incentive to produce. They won't make money themselves unless they produce. Senator DOUGLAS. I have no more questions.

Senator BRICKER. No more.

Senator SCHOEPPEL. I have no more.

Senator DOUGLAS. Senator Maybank?

Senator MAYBANK. No.

Senator BRICKER. I think you have made a very clear and forthright presentation.

Senator DOUGLAS. Thank you, Mr. Gaston.

Mr. GASTON. Thank you, Mr. Chairman.

Senator DOUGLAS. You were a very excellent witness.

very pleased to have had you.

We are

(Whereupon, at 11:50 a. m., Tuesday, August 28, 1951, the subcommittee recessed.)

(The material inserted in the record by Senator Douglas follows:)