WEEKLY SUMMARY NUMBER 26
Document Type:
Collection:
Document Number (FOIA) /ESDN (CREST):
CIA-RDP78-01617A002100050001-2
Release Decision:
RIFPUB
Original Classification:
S
Document Page Count:
21
Document Creation Date:
December 23, 2016
Document Release Date:
July 23, 2013
Sequence Number:
1
Case Number:
Publication Date:
November 12, 1948
Content Type:
REPORT
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Copy No. 79
I WEEKLY SUMMARY
Li
I.
cec
Document. No.
NO CHANGE in Class. El
br; DEC;ASSIFIED
class. CHANGED TO: TS S C
DDA Memo, 4 Apr 77
Auth: DPA EG. 77 1763
Date:
Number 26
12 NOV 1948
eget 1
By: 0/(
CENTRAL INTELLIGENCE AGENCY
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1. This publication contains current intelligence exclusively
and therefore has not been coordinated with the intelli-
gence organizations of the departments of State, Army,
Navy, and Air Force.
2. This copy may be either retained, or destroyed by burning
in accordance_ with applicable -security regulations, or
returned to the Central Intelligence Agency.
1-241e
c T-10,
57-14
elCd/
WARNING
This document contains information affecting the na-
tional defense of the United States within the meaning
of the Espionage Act, 50 U.S.C., 31 and 32, as amended.
Its transmission or the revelation of its contents in any
manner to an unauthorized person is prohibited by law.
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CONTENTS
HIGHLIGHTS
Page
1
WESTERN EUROPE 2
EASTERN EUROPE 5
NEAR EAST AFRICA 9
FAR EAST 11
WESTERN HEMISPHERE 14
ANNE X: Soviet-Satellite Support of Clandestine
Air Activity to Palestine 15
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HIGHLIGHTS
Events in China during the past week took rapid
strides toward the final disintegration of the National
Government. The decisive battle for Central China,
which has already begun, will probably be marked by
the collapse of the dispirited Nationalist forces in the
Hsuchou-Nanking region (see page 11). Such a collapse
will probably mean the end of all organized resistance
by the Nationalist military forces. In the face of this
imminent military disaster. Chiang Kai-shek has dog-
gedly refused to accept suggestions from within his
Government for abandoning the struggle (see page 11).
The initial Soviet reaction to the US presidential
election suggests that the Kremlin has, in its surprise
at the outcome, undertaken a hasty review of its tactics
In foreign affairs (see page 5). Premier Stalin's vindic-
tive interview before the elections indicated that the
USSR may have planned to intensify political pressures
during the expected period of indecision between the
election and the inauguration of a new administration.
Molotov's mild speech 9n 6 November, grudgingly com-
plimentary to President Truman's administration, may
therefore reveal a Kremlin desire to temporize while
weighing the significance of this unexpected development.
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WESTERN EUROPE
FRANCE
A Q ueuille Government victory in the Communist-
! instigated coal strike appears imminent, but there has been
no improvement in the prospect for solution of the wage-price
disparity which continues as a basis for legitimate grievances
of non-Communist labor. The leading non-Communist labor
organizations have branded the recent price levels established
by the Government as grossly Inadequate. in countering these
charges, the Government must reckon with the probability
that: (I) business interests will continue their opposition to
the Government's plan to reduce prices by narrowing profit
margins, and (2) expected demands for additional wage hi-
ll creases if granted, will further weaken the budget position
of the Government. Unless the Government can achieve a
reasonably satisfactory accommodation between economic
capability and non-Communist labor demands, the back-to-
work movement now undermining the Communist strike cam-
paign can have no permanence and the General Confederation
of Labor will be encouraged to drag out the coal strike as long
as possible while continuing its appeal for sympathy walk-outs
In other industries.
De Gaulle's triumph in the Council of the Republic
elections of 7 November will enable him to exert direct
pressure upon the French assembly to bring about its own
dissolution and call for a general election. Although returns
from French overseas possessions will not be known for
several weeks, the already proved numerical strength of the
Gaullist representation and other Rightist parties indicates
that De Gaulle can soon form a working majority in the Council.
De Gaulle thus has two means of increasing pressure on the
French Assembly. First, he can indtruct his supporters to
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FRANCE
obstruct legislation by amending or disapproving the
Assembly's bills so that a majority of the Assembly will
be necessary to override the amendments or objections.
Second, De Gaulle can see that a consistent demand for
Assembly dissolution and general elections emanates from
the Council. Such tactics employed over a period of
several weeks could effectively impair the functioning of
the Queuille Government and will add to the pressure for
the general elections by which De Gaulle hopes to regain
leadership of France.
GERMANY
The inflationary wage-price spiral in western
Germany now threatens to interfere seriously with the
deliveries of foodstuffs and the production and distribu-
tion of industrial goods. De-controlled prices continue
to rise, and, despite wage increases granted in key indus-
tries, workers' wages are inadequate to purchase the
necessities of life. The situation is being aggravated by
the reaction of farmers and manufacturers who, in increas-
ing numbers, are withholding delivery of their products In
the expectation of sharp price increases. Recent deraonstra -
tions in Stuttgart resulted in the first violent opposition
to US troops since the occupation was begun, and a 24-hour
general protest strike has been called for 12 November.
Moreover, as part of the continuing Communist attack
against European recovery, Communist agitators will
exploit to the maximum continued dissatisfaction among
German workers.
Increased Communist agitation in western Germany
may be indicated by plans to reorganize Communist-
dominated German youth organizations. Under these plans,
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GERMANY
the Free German Youth (FDI) wit,' be broken down into
cells of 30 to 40 members, to be placed in factories and
schools and linked to larger local groups to assure close
relationships between the workers and the students.
Simultaneously, following the pattern developing in Soviet
Zone Germany, activist youth groups also are being estab-
lished in factories. These "activists" will probably be
trained to foment dissatisfaction within the plants and to
capitalize upon public disturbances during strikes and
demonstrations. The work of the FDI and the activists,
however, will be carefully integrated by instructions re-
ceived from the Central Committee of the Fin in Berlin.
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EASTERN EUROPE
SOVIET UNION
Initial Soviet reaction to the US elections suggests
that the Kremlin, which had expected a Republican Party
victory, is hastily reviewing its plans and may be preparing
for a tactical shift in its foreign policy. The vindictiveness
of Stalin's pre-election PRAVDA interview indicated that
the USSR was planning to intensify its political pressure
against the US during the period of expected indecisiveness
between the elections and the inauguration of the new ad-
ministration. In contrast, Molotov's speech at the 6 Nov-
ember celebration of the 31st anniversary of the October
revolution was mild, grudgingly complimenting the Truman
administration. Moreover, -iv stating that US voters had
rejected the clearly reactionary and aggressive program of
the Republican Party, Molotov reversed the former Kremlin
propaganda line which had been asserting that the Democratic
and Republican parties were identical. Molotov's speech,
therefore, was probably designed as a temporizir.g move
while the Kremlin re-examines its foreign policy in the
light of continued western unity and the demonstrated solid-
arity of US bi-partisan foreign policy. Although no funda-
mental change in Soviet policy is expected, Molotov's speech
may be a prelude to limited "peace overtures calculated
to relax western vigilance and to sow the seeds of disunity
among the western allies.
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1
1 GREECE
No drastic changes in the present Liberal-Populist
coalition are likely to result from the resignation of Prime
Minister Sophoulis. Sophocles Venixelos, the insurgent
Liberal who has been chiefly responsible for the present
crisis, has won little support in his campaign for a govern-
ment which would be above party politics. He is probably
? too distasteful to the Populists to be brought into the Cabinet
and has also lost favor with the Liberal party leadership.
The Rightist bloc of Zervas and Gonalas could bring votes
Ito a new coalition but will probably remain unrepresented
because of Zervas' dubious international reputation. Thus,
the task of forming a new government will probably fall
again on the shoulders of Sophoulis and Populist leader
Tsaldaris, who are likely to seek additional support from
center elements in the National Assembly in order to in-
crease the bare majority the coalition now possesses.
Centrist leaders Papandreou and Canellopoulos command
enough votes to insure continuation of the coalition, are free
of unpleasant associations which would damage Greek
prestige abroad, and could probably be persuaded to support
present coalition policies.
The Greek Army's Inability to maintain the offensive
Is enabling the guerrillas to create a maximum of internal
disorder and to build up their reserves for the winter. About
half of the army's effective combat strength is now committed
to containing guerrilla border concentrations; the remainder,
scattered thinly throughout northern and central Greece, is
unable to protect adequately the communications, road recon-
struction projects, and villages which the guerrillas select
for sabotage raids and lightning attacks. The guerrillas have
also intensified their forced recruiting drive, particularly in
the Peloponnesus, with the objective of doubling their strength
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GREECE
by January. Now that the Greek question is before the UN,
the guerrillas are also increasing their attacks in areas
far from the northern borders so as to "prove" to the
world that Greece's troubles are purely internal. Mean-
while, the Greek Government's plans for improving the
military situation have bogged down. Although country-
wtde martial law was recently authorized, details for its
Implementation have yet to be worked out. The reorganiza-
tion of army units necessary for new offensive action has
scarcely begun. Discussions for the appointment of a
supreme Commander in Chief have been postponed until
after the current political crisis has been resolved.
ALBANIA
The political and economic situation in Albania has
deteriorated steadily since Albania's violent break with
Yugoslavia. Premier Hoxha is worried about the instability
of his regime and the recent reshuffihig of the Albanian
Cabinet reflects his fear of growing public dissatisfaction.
Yugoslavia, realizing the seriousness of this situation, may
attempt to exploit it by strengthening pro-Tito elements in
Albania. Nevertheless, Albania's economic position is likely
to improve because the USSR and its Satellites will replace
Yugoslavia as Albania's principal source of imports. Through
trade pacts either concluded or being negotiated with the USSR,
Bulgaria, and Poland, Albania will acquire grain, industrial
equipment, and construction materials. Although Albania may
soon be in a better position economically because of this
Soviet-sponsored assistance, the Holds regime will remain
politically weak because of continued internal opposition to
totalitarian control from Albania's strong tribal chiefs.
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CZECHOSLOVAKIA
If Czechoslovakia's foreign exchange position coa-
1 tinues to deteriorate at the present date, its imports from
the west will decrease and Czechoslovak recovery will suffer
a major setback during the first half of 1949. Czechoslovak
foreign exchange assets are now insufficient to finance normal
trade deficits, maturing short-term loans, and other inter-
national commitments. This deteriorating foreign exchange
position is the result primarily of a shift in export trade to
the USSR and of exclusion from the benefits of the European
recovery program. Although the Czechoslovak Government
has just received a $6 million loan from the International
? Monetary Fund, it is seeking further loans from the west to
bolster its foreign exchange position and to finance vital
Imports.
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NEAR EAST-AFRICA
IRAN
The vacancy left by the resignation of Prime Minister
Hap has been filled with unaccustomed promptness by the
Maple. This speedy action does not necessarily mean, how-
ever, that Mohammed Saed, the new prime minister, will coa-
1 thins to have the parliamentary support required to prevent
a recurrence of the semi-stagnation which drove Halir out
of office. Although Saed is an experienced politician who
appears to get along well with the Shah, he has only limited
executive ability and has not demonstrated the high degree
of political astuteness and forcefulness needed to wring
legislation out of the MOW; as currently constituted. Although
Saed may try to utilize his experience as Ambassador to the
Soviet Union in an attempt to better Soviet-Iranian relations,
he will probably continue Iran's policy of collaboration with
the US. When he was prime minister in 1944, Saed flatly re-
fused to grant the USSR an oil concession and in 1947, as a
member of the Majlis, argued strongly against the proposed
Irano -Soviet 011 Company.
AFGHANISTAN
A sharp appreciation of the danger of Soviet aggression
Its apparently displacing the outward unconcern with which
Afghanistan formerly viewed the USSR. Although the Afghan
Government has only partially resolved its differences with
Pakistan over the Pathan tribesmen, the two Governments are
now negotiating a reciprocal military agreement, directed
primarily against the USSR, which would permit Pakistan to
send troops into Afghanistan to help resist an invasion. Mean-
while, hitherto reserved Afghan military and gendarmerie
officials have displayed a new spirit of cooperation toward
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AFGHANISTAN
US officials in Afghanistan. Also, Afghan representatives
? In Washington have been seeking VS tecimicians for Afghanis-
tan's development projects despite the suspicion with which
the USSR regards US personnel already in the country.
kAIE STINE
The prospects for an effective armistice in Palestine
remain uncertain although the Security Council now appears
ready to turn from its efforts to force an Israeli military
withdrawal. Instead, in the hope that Israeli military suc-
cesses have convinced the Arabs that their only salvation
lies in an immediate settlement of the problem, the SC will
probably request the Arabs and Jews to negotiate a truce
leading to an armistice either directly or through the UN.
The Arab leaders, fearing public outcry, may not dare to
negotiate directly with the Jews but may possibly agree to
negotiate through the UN mediator.
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FAR EAST
CHINA
The decisive battle for Central China is beginning.
At least 16 Communist columns are sweeping down both sides
of Hsuchou in a pincer movement which can either destroy
that vital Nationalist base or, by isolating it, drive directly
against Nanking. The imminent collapse of the ill-trained
and dispirited Nationalist forces in the Ilsuchou-Nanking area
will probably mark the end of all organized Nationalist mili-
tary resistance. In North China, the present inactivity prob-
ably foreshadows a forthcoming Communist attack in the
extremely vulnerable Peiping-Tientsin-Kalgan area. The
eclipse of the Nationalists in Manchuria is comnlete, follow-
ing Nationalist evacuations of Yingkou and Huluta.o.
The imminent bankruptcy of the Chinese National
Government, presaged by the panicky refusal to accept
gold yuan in Shanghai and Nanking, may soon result in the
lifting of foreign exchange controls to permit free dealing
In US currency and bullion. In Shanghai, the price of rice
has reportedly increased 80 times over the ceiling price
prevailing last week, and the refusal of farmers to ship food
to these cities has heightened the critical food shortages.
The National Government, beset by unprecedented
military and economic debacles, continues to exert every
effort to avert political collapse on the home front. Regard-
less of the refusal of several Kuomintang officials to serve
on the Cabinet and the suggestions of some Cabinet members
that a peace be negotiated with the Communists, Chiang Kai-
shek appears determined, at the moment, to continue his fight
against the Communists to the bitter end. A satisfactory
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CHINA
solution of the Cabinet crisis is =likely, however, in view of
the hopelessness of the general situation and the unwillingneiis
of prominent Nationalist leaders to accept responsibility for
forming a new Cabinet.
1 A tremendously increased Soviet war potential in the
Far East may result eventually from Communist control of
,
Manchuria and north China. With the Communists controlling
these areas, including Shanghai, the USSR would have a "strong
voice" in the operation of both the extensive harbor facilities
and the transportation net in this vast area. This greatly in-
creased transportation potential, if developed by an aggressive
rehabilitation program, could permit the USSR to undertake
an ambitious industrial expansion in north China and Manchuria.
Such an expansion in these areas would provide the USSR with
an agrarian-industrial base capable of supporting a far more
formidable military force in active combat than it can presently
maintain there. The creation of a major industrial complex
in Manchuria would enable a large Soviet military force to live
almost entirely off local production and to depend upon the
limited capacity of the vulnerable trans -Siberian railroad
only for highly critical items. The self-sufficiency of any
Soviet military establishment in the Far East would be further
augmented by the utilization of the warm water ports along the
north China coast. Shanghai has extensive dry dock and repair
facilities which could be rapidly converted to the production
of both merchant and naval vessels.
INDONESIA
The contradictory nature of Dutch policy on Indonesia
has become more noticeable recently, and current discussions
between Netherlands Foreign Minister Stikker and Republican
Prime Minister Hatta may represent a last chance to reach a
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INDONESIA
negotiated settlement on Indonesia. Stikker does not have
the complete support of his colleagues in Batavia who con-
sider his attitude toward the Republic too generous. Mean-
while, although current negotiations are represented as an
example of Dutch good will toward the Republic, Dutch
propaganda on the subject of Republican truce violations
suggests that the Netherlands is preparing to initiate police
action in Indonesia.
BURMA
Burmese Communists have been instigating communal
warfare between Karens and Bur mans in an effort to create
conditions favoring a Communist rise to power. Paradoxically,
the Socialists have also capitalized on anti-Karen sentiment
in order to strengthen their control of the Government.
Although the Karen National Union blames the Communists
for recent provocations, it has become increasingly incensed
with the Government's failure to provide adequate protection.
Failure of the Burmese Government to settle the Karen prob-
lem in the near future may result in an armed uprising by the
Karens, wh are militarily strong, especially within the
Burmese Army. Such an uprising might lead to the forma-
tion of an independent Karen state but could hardly result in
Karen control of the Burmese Government.
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WESTERN HE
CHILE
President Gonzalez may be using the alleged military
conspiracy against the Government as a "scare" technique
to frighten the Chilean Congress into extending his special
executive powers. The Army has long been deeply discon-
tented with old equipment and insufficient pay, but has been
loyal to the Government in its intense anti-Communist
campaign. The danger exists, however, that Gonzalez may
alienate large sections of the armed forces if he is reckless
enough to continue arresting alleged conspirators against
the Government.
PARAGUAY
A successful coup against the weak government of
President Gonzalez is imminent, but it is doubtful if any
opposing faction in Paraguay is strong enough to replace
Gonzalez with a government which will last. Either the
police or the army may make the first move against Gon-
zalez. However, the police are not strong enough and the
army not united enough to maintain a candidate in office.
Moreover, a countePrevolt might then be staged by one of
the factions whose leaders and following are still exiled in
Argentina. Possible Argentine support for such a counter-
revolt would add international complications to what is at
present purely a domestic issue.
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SOVIET-SATELLITE SUPPORT OF
CLANDESTINE AM ACTIVITY TO PALESTINE
Allegations of direct Soviet support of the Israeli
military machine were contained in public charges recently
made by a former pilot of the Israeli Air Transport Com-
mand. The pilot's statement, much of which is supported
by evidence already available, gives a detailed account of
the organization of the Israeli Air Force and the Israeli
kir Transport Command and describes the methods used
in secretly flying considerable quantities of aircraft and
munitions from Europe into Palestine. The pilot's specific
charges of direct Soviet support, however, cannot be sub-
stantiated at this time. Ills testimony confirms reports
that Prague has been a major center for the procurement
of airplanes and munitions for shipment to Israel. Coordi-
nated government direction of these procurement and ship-
ment activities is clearly indicated by the number of Czecho-
agencies include: (1) Czechoslovak consuls who have been
slovak government agencies already implicated. These
Instructed to issue visas for Israelis and foreign volunteers
enroute to Czechoslovakia for training; (2) the Czechoslovak
Air Force which has conducted the pilot training program,
Issued Czechoslovak uniforms to the trainees, and placed
military airfields at the disposal of foreign aircraft operators
engaged in arms-running to Palestine; and (3) the Czecho-
slovak Communist security police who have protected these
various activities to insure secrecy and prevent local inter-
ference. Moreover, the Communist Party in Czechoslovakia
has organized a corporation, with Israelis holding a minority
Interest, for the express purpose of facilitating the sale and
delivery of Czechoslovak munitions to Israel.
Although there is no indication of the precise role
played by the USSR in the Czechoslovak arms traffic, these
activities could have been undertaken only with the approval
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of the Soviet Union. The sale of arms and munitions to the
Israelis certainly has served the Soviet desire to protract
the conflict in the Near East. (Czechoslovakia has contracted
to supply arms and munitions to Arab states as well as Israel.)
At the same time, Czechoslovakia has been provided with much-
needed hard currency. The same dual purpose probably
inspired Yugoslavia to provide an airfield in southern Yugo-
slavia for clandestine air operations to Israel.
There is some evidence that Soviet and Czechoslovak
enthusiasm for the support of Israel is diminishing. Israeli
representatives in Prague have reported to the US Embassy
that the Czechoslovak Government: (1) intends to discontinue
the training of Israeli pilots and the recruitment of volunteers
to serve in Israel; (2) is now exe:cising more rigid control
over the movement of Jewish refugees through the country;
and (3) is investigating the offices of the American joint
Distribution Committee which handles for Israel the distri-
bution of Jewish DP's. These Prague reports may have been
designed to deceive the US as a prelude to carrying on the
operations in greater secrecy. The USSR and Czechoslovakia
may simply believe that greater caution is needed in order
to forestall charges of violating UN truce obligations. On
the other hand, the USSR may be convinced that the Israelis
have won their fight and that Soviet purposes will be better
served by a closer balance of military power between Israel
and the Arab states.
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DISTRIBUTION
1.
2
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4. . ...
5
6
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8
9
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12,13,14
15,16,17
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21. . . . ? ? ?
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25,26,27,28,29,
30,31,32,33,
35,36,37,38,39,
40,41,42,43,4
45,46,47,48,49
50
51
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The President
Secretary of State
Chief of Staff to Commander in Chief
Secretary of Defense
Secretary of the Army
Secretary of the Navy
Secretary of the Air Force
Chairman, National Security Resources Board
Executive Secretary, National Security Council
Assistant Secretary of Navy for Air
Chief of Staff, U.S. Army
Chief of Naval Operations
Chief of Staff, U.S. Air Force
Director of Plans and Operations,General Staff,U.S.Army
Deputy Chief of Staff (Onerations) U.S.Air Force
Deputy Chief of Naval Operations (Operations)
Director of Plans and Operations, U.S. Air Force
Special Assistant to Secretary of State, Research &
Intelligence
Director of Intelligence, General Staff, U.S.Army
34.
Chief of Naval Intelligence
4.
Director of Intelligence, U.S. Air Force
Director of Security and hitelligence,Atomic Energy Comm.
Executive Secretary,Military Liaison Committee,Atomic
Energy Commission
Chief,Acquisftion & Distribution Division,0J1CD,Dept?State
Director, Federal Bureau of Investigation
Secretary, Joint Chiefs of Staff
Chief, Policy Planning Staff,Dept?State
Secretary of State (Attention: Chief,Policy Reports Staff)
Deputy Director, joint Intelligence Grot.p, Joint Staff
Secretary, Joint Intelligence Group, joint Staff
Director. joint Planning Group, Joint Chiefs Staff
US Air Force Representative on Joint Strategic
Survey Committee
Secretary, State-Army-Navy-Air Coordinating Committee
Administrator, Economic Cooperation Administration
52,53,54,55,56,
57
58
59
60
61
62,63
64
65
66,67
68
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U. S. GOVERNMENT PRINTING OFFICE '
2631-8-1948
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