PROPOSAL FOR U. S. HELP ON SOVIET-FIAT AUTO FACTORY SHOULD BE REJECTED

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• Collection: General CIA Records
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• Release Decision: RIPPUB
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• Sequence Number: 34
• Publication Date: May 4, 1967
• Content Type: OPEN

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May 4, 1`'#67 CONGRESSIONAL RECORD - HOUSE
H 5105
gentleman can inform the House as to forces, ammunition, weapons, and other factorily answer the questions posed. The
why we are considering H.R. 9240 on war goods in southeast Asia.
Tuesday next and House Joint Resolu- To our soldiers these vehicles are en- woman from New tYo ks [Mrs. KELLY]
tion 263 on Thursday next under rules emy equipment. In 2 years, according to said at the time:
waiving all points of order? testimony presented in the Defense Ap- if
you
Mr. ALBERT. The gentleman asks propriations hearings, we have destroyed gave, lake all the the reasons ddat yto emen, why we are considering them under the or damaged over 9,000 trucks in North a satisfactory answer to still our don't to
rule, waiving points or order? I would Vietnam.' Thousands more remain. The q
say to the gentleman that those are mat- threat posed by Soviet- and Eastern LastSubcom mittee on r four International members Trade the
ters within the jurisdiction of the House, European-built vehicles and other equip- the House Co o nda and
and the Committee on Rules and the leg- ment must be measured in terms of the House Committee toe Italy Banking and
islative committees handling the bills. American lives lost as well as the mil- Eastern traveled o Itaand several
We put these bills down. on the days lions upon millions of dollars expended. December European countries. In Iton
requested by the chairman of the legis- While there had been earlier press re- members 7, 1966, the subcommittee
dilative committees, ports about the deal, the official an- members who are dealing with various vies
Mr. HALL. Mr. Speaker, I thank the nouncement of the role proposed for in the s who are Fiat automotive the ansac-
gentleman
gentleman for responding. I am not ques- America in building the Soviet automo- in proposed er 17, they conferred transac-
in
tioning the appropriateness. I am fully tive factory came on October 7, 1966. tion.
Soviet ecember with hey covie Coin
aware that we can find out when we dis- The President on that date made a sud- the SoveUnion wtthe Soviet Come
cuss . the. rules, but I just wondered if in den trip to New York where, in a major munist officials who expect to be the
advance the distinguished majority policy address, he announced that "the beneficiaries of the proposed transaction.
leader could tell us why in these two Export-Import Bank is prepared to fl- Subcommittee A subcommittee print International issued Trade the
instances-which are most unusual in- nance American exports for the Soviet- tde on March stances, by the way-we apparently have Italian Fiat auto plant."2 tee report 1, 19n contains the-
stances,
Sovie -Fiat
a rule waiving points of order. The proposal that export licenses auto tee plant. on the proposed Sos ofFhe
Mr.-ALBERT. I must say to the gen- should be granted to authorize the ship- report plant. The apparent purpose a the
tleman that I do not know what the pro- ment of American machine tools for the d quotes is tor tar in support assembled of f various the he administra-
d q
visions visions of the bills are that caused the Soviet-Fiat plant and that the Export- an
committees to request such a rule. Import Bank should finance the export tion's proposal.
Mr. HALL. Mr. Speaker, I thank the of this equipment to the Soviet Union in The report tells us, for example, that
gentleman, and I yield back the balance my view was unsound last fall and it is the following remark was made by Secle-
nf tnv tin.
SOVIET-FIAT AUTO 'FACTORY
SHOULD BE REJECTED
The SPEAKER pro tempore. Under
previous order of the House, the gentle-
man from California [Mr. LIPSCOMB] is
recognized for 60 minutes.
Mr. LIPSCOMB. Mr. Speaker, citizens
across the Nation are genuinely con-
cerned about the proposal for the United
States to help equip and finance the
Soviet-Fiat automobile factory.
Of all the unpromising, unlikely places
in the world for the United States to
provide technological and financial as-
sistance, the most improbable should be
the Soviet Union. And of all the indus-
tries in the Soviet Union, among the last
candidates for assistance should be their
machine tool and related industries, for
this is the heart of the Soviet industrial
defense strength.
Nevertheless, the administration last
October announced that the United
States is prepared to finance through the
Export-Import Bank the export of a
large amount of modern, precision
American machine tools which would be
used to equip an automotive factory the
Fiat Co. of Italy has contracted to con-
struct in the Soviet Union. Upward of
$50 million of U.S.-built machine tools
may be involved.
It seems inconceivable that it could be
seriously proposed that the United States
at this time should assist in any way in
building up the automotive industry in
the Soviet Union.
The. products of existing Soviet auto-
motive factories can be found in trouble
spots throughout the world and notably
in the war zone of southeast Asia.
Trucks and other automotive products
are among the significant war goods sup-
plied to Hanoi by the Soviets and the
Eastern Europeans. Such vehicles help
to convey and transport Communist
of Representatives on October 17, 1966,
the President received incredibly poor
advice in making that proposal.
In the intervening time, an effort has
been mounted to put across the idea to
the Congress and to the public that the
proposed Flat deal is in the best interest
of the United States.
This effort has been characterized by
an assortment of claims, statements,
conjectures, inferences, and so forth,
many of which it appears have been de-
liberately designed to becloud the true
issues involved. The basic-purpose of the
effort is clear: however: The intent is to
smooth the way for the Fiat deal to go
through without going into any more
detail than absolutely necessary.
Shortly after the President's October
7, 1966, announcement, the House For-
eign Affairs Subcommittee on Europe
held a special hearing to discuss with
representatives of the executive depart-
ments, U.S. policy on East-West relations
as reflected in the President's speech.
Among other things, the subcommittee
at that hearing on October 18 attempted
to learn details of the Soviet-Fiat ar-
rangements, as to why the United States
should finance any part of it, who made
recommendations to the President on
such policies, and so forth. But their at-
tempts appeared to be in vain as wit-
nesses from the Departments of State
and Commerce apparently did not satis-
1 Hearings on Supplemental Defense Ap-
propriations for 1967, page 90. General Earl
G. Wheeler, Chairman, Joint Chiefs of Staff,
testimony on February 21, 1967.
2 Made before the National Conference of
Editorial Writers at New York, N.Y. The
Washington Post of October 8, 1966 said
that President Johnson so suddenly accepted
the invitation to make the "major policy
speech" that "the impromptu arrangements
nearly produced a comedy of errors ... the
first word t__at Mr. Johnson was even con-
sidering attending came at 2:30 p.m. [Octo-
ber 61 . ,
it is the judgment of the Defense Depart-
ment, shared by General Wheeler of the Joint
Chiefs of Staff, that a loan that would in-
duce the Soviet Union to devote greater re-
sources to the production of consumer goods
at the expense of applying these resources to
military purposes is in our national interest .4
The report indicates that this state-
ment by Secretary Rusk is included to
make it "clear to Members of Congress
that the Department of Defense is on
record as favoring the loan by the Exim-
bank for Fiat."
In view of the claim attributed to Sec-
retary Rusk, I made inquiry of General
Wheeler on March 3, 1967, asking the
general to furnish me with any infor-
mation now available to him which gives
evidence that the Export-Import Bank
loan would induce the Soviet Union to
devote greater resources to the produc-
tion of consumer goods at the expense of
applying these resources to military pur-
poses.
Just as suspected, General Wheeler's
reply of March 24, 1967, did not furnish
information which to me gives any such
evidence. General Wheeler did state his
belief as follows:
I do not believe that the Soviets would
divert resources from a military program
which they regard as vital to any program
to benefit the Soviet consumer .6
Meanwhile, the platitude-filled state-
ments continue to be bandied around by
administration spokesmen such as this
statement made March 2, 1967, by An-
thony M. Solomon, Assistant Secretary
of State for Economic Affairs:
3 Hearings before the Subcommittee on
Europe of the Committee on Foreign Affairs,
October 18, 1966, page 66, Recent Develop-
ments in East-West Relations.
4 A Report for the Subcommittee on In-
ternational Trade, Committee on Banking
and Currency, House of Representatives,
March 1, 1967, The Fiat-Soviet Auto Plant
and Communist Economic Reforms, page 41.
5 Letter, March 24, 1967, General Earl G.
Wheeler to Rep. Glenard P. Lipscomb.
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CON(RESS1ONAL RECORD .4 HOUSE -- if TMft 4, 19
H5106
if history is
[construction of the Soviet Fiat factory] . announced plans are not so grandiose any any teacher, I see sac
in itself represents a sizable allocation of as to require a significant alteration in tradl- particular reason to view t his ar sent question Of
resources for peaceful uses, but more will tional Soviet economic priorities, and would tion as a detente. .
follow to provide the roads, service stations, leave military and space program unimpaired. pr this c i n protecting the security interests
repair facilities, and the like to keep the [Emphasis added.]
BASIC SOVIET PLILNS REMAIN UNCHANGED
cars running.... This growing attention to There is little doubt that if the Soviets
consumer needs is a heartening development were required to design and build ma- The leaders of the organization whit,
and should support countries, throuone gh we empire
and shoulgh trade! pproxitools and equipment which closely controls the Soviet mate those they seek from abroad . traditionally have planned forlthe pro
welcome c h
Those thoughts echo similar com- in the Fiat deal then they would prob- duction of a relatively small number of
ments offered by Acting Secretary of ably have to use engineers, technicians passenger automobiles. That is still true
Commerce Trowbridge, who on Novem- and capital goods which otherwise could today of the current Soviet leaders.
ber 2, 1966, as Assistant Secretary of be employed in programs related to So- The current Soviet Communist Party
Commerce for Domestic and Interna- vest military and space endeavors. I asked leaders approved of the plans of the
tional Business, said: the Director of the Defense Intelligence State Planning Commission (GOSPLAN)
The President's decision to provide for Agency, Gen. John F. Carroll, about this which calls for the production of a :a
Export-Import bank financing of American and by letter of April 25, 1967, he re- estimated 230,000 passenger automobiles
machine tools and other products for the sponded: in 1967. The Central intelligence Agency
Fiat blle plant we the U.S.S.R. is&
good example of how we will offer our co- It is true that, if engineering and produc- estimates that over 12 percent of D.e
14
operation on projects designed to Improve tion resources were allocated to the design willlbe a p -ape vehicle, the GAZ 91t
the well-being of their people. We support and fabrication of such inachine tools and The CIA also Soviet so estima s tat 23 23 p e
s ce'Ot
their allocaton of resources to expand con- equipment, the resources would have to be of
sumer-oriented industries? taken from other programs, either military or duced in 1967, a total of 54,000, will Ile
Civilian. In the past the Soviet Union has ed. 967, total , according t0 the
The International Trade Subcommit- given priority to military programs over civil exportCIA eed. Furmathat testhermore figure will g toe,the
tee report contains additional enlighten- programs, and it is believed that-barring a autom ing information about the campaign un- majo chinue In Soviet policy-this practice to S 250 Roby 1t74 obiles e p torted ry,
derway to gain acceptance for the Fiat Note that General Carroll confirms the year when the proposed Fiat plant is
dealal. . It recites, for example, that by the
scheduled to be in full production.
last October, administration spokesmen that the Soviets would have to divertre- The ordinabe Soviet pitozens are today
sought to convince individual Members sources from their other programs if deThe of ari oviet citie not a today autom of the House, unidentified in the report, they were required to undertake the de any actfoa which they, or you, or I
that "the Flat deal would support the automotive project with their own have acts They are de, or o soreI taken. increased emphasis which the U.S.S.R. is resources. mobile because Soviet leaders have de-
putting on using its resources to produce In other words, to whatever extent creed that they not be permitted one.
consumer good.."' the United States or any other nation Everyone who gives serious thought to
Such wishful thinking actually runs provides capital goods to the Soviets,the the workings of the Soviet Union unde~r-
t al Int to findings ccy repar Cehe Soviet leadership would be permitted to stands full well that the Soviet industrial
sutelligence Agency report whi ch the continue its traditional practice of al- empire could right now, today, increitse
subnbcommittee itself included in its March locating their own resources to military its output of commercial-type vehicles.
1 report. programs. But even if American financial assist-
Cuilt ithat is the Se Sov eist i n vest Neither General Carroll nor any other ance were granted and machine -tools
is bult t will cause the Soviets to in- responsible official of a U.S. intelligence were exported to build the Soviet-?Fiat
extensively m tertiary automotive e agency has ever,. to my knowledge, plant, the CIA evaluation states:
vestments which means such items as claimed that there is evidence of a It seems certain that, within the r.ext
roads, slikece -s ree e r refefuutted b by ty trhe C CIA r r fIAe- e- major change in Soviet policy. In other decade at least, the Soviet leadership not
pod the like words, Soviet priorities in the Soviet in- nlyilhasn no pat o D ` theme Wproduce e ai a est, port which states: dustrial empire continue to go to mill- mtrenousty resist internal pressure to do
The USSR will almost certainty have no de- easy programs. so. Although the USSR may some day join
seeable sire and futur littlee the need hea tovy teryuetiary icaty in the fore- investments In spite of this we have witnessed a the circle cd naations that provide .auto-
that have been fostered by the automobile in band of administration spokesmen, ap- mobiles for the average citizen, that (lag is
Western Europe and the United States' parently ignoring evaluations of the in- not now in sight 1'
telligence agencies, touring the country In other words, the Communist leaders'
to
Tht CIA report ports e that the and giving the impression to the Amer-
Soviet program is to produce c cars for the scan public, to trade, and business groups, use plans them for automobiles for utomobiles rewarding are the Soviet basically Com.-
Communist leaders, not the people. It and to communications media that the munist Party elite and for exports and
states: Soviet-Fiat deal will mean less Soviet related purposes, not for the average
w omobi program a de- tanks and more emphasis on consumer citizen. 'r'lie Communists' plans are
Essentially, duc ca r
G ma geal elt for the bhe designed to make tile Communist Party
signed ti produce
average c Ci aget andtizenio managerial elite, not for the needs. SHIPMENT OS MACHINE TOOLS SHOULD BE more efficient in Its communications and
aver
DENIED travel needs and better equipmen'; to
Furthermore, is id the CIA evaluation I would like at this time to cite some achieve its political goals.
that ehe announced Soviet on ll 1ri reasons why in my opinion-the Export- IMPORTANCE OS MACHINE TooLS To DaFENSE
civersources f pr from thheir eiro deffen ense no or t r Import Bank credits and the machine INDUSTRIES
divert t reesources t tools should be denied the Soviets. The following are some of the ma-
space programs: DETENTE NONEXISTENT chine tools desired by the Soviets for use
' Address arch 2, 1967 by Anthony M. One rationale advanced by adminis- in the Fiat-constructed plant in the
Solomon, Assistant Secretary of State for tration spokesmen for shipping and U.S.S.R.: Numerically Conttrroul ed m ]-
Economic Affairs, made before the Chicago financing American machine tools t0 chines for diesinking;
Automobile Trade show luncheon, Chicago, the Soviets is their claim i.n seeing in the lathes; gear cutting machines; stamping
* Address November 1966 by or present situation`s detente. But that is a presses; machines for mechanical opera-
Illinois.
n boring B. Troowbri wbridge, then Ass sistant S se ecrretary etary f for claim with little basis in fact. The high- do dings ~ rc)~hixi~~ mafchineseSliiBh pro-
Domestic and International Business, U.S. est ranking member of this Nation's t
Department of Commerce, prepared for de- Armed Forces, General )Arheeler, told all
eet he. the Press," NBC televisioisicaa and
livery at the International Trade Session, Americans last February 26: is "radioMMeet, t of February 26, with
Norional Foreign Trade < invention New General Earl G:. Wheeler as guest.
York Clty. 11 Ibid HThe Flat-Soviet Auto Plant, page1').
a The Fia 26iet Auto Plant, page 42 "Letter, April 25, 1967, Lt. General Joseph Is Ibid, page 19.
~ Ibid; pagge 2 F. Carroll to Rep. Glenard P, Lipscomb. Is Ibid, page 11.
" Ibid; page 11 1.
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May 4, fg-67 CONGRESSIONAL RECORD - HOUSE
duction machines for ring bevel gear pro-
duction; boring and honing machines;
numerically controlled profile checking
equipment; automatic lathes; high pro-
duction machine tools for splined shaft
production, hub production and trans-
mission sliding sleeve production; trans-
fer lines for the machining of differential
gear carrier and gear housing; transfer
lines for pistons.
.A study prepared for the Joint Eco-
nomic Committee which was published
in the committee's report, "New Direc-
tions in the Soviet Economy, Part II-A,"
in July 1966 states that:
the Soviet industrial defense estab-
lishment has grown at the rate more than
twice that of the Soviet economy, that by
1963 it was in absolute terms about as large
or larger than that of the United States.... 7
If 4 years ago the Soviet industrial
defense establishment was as large or
larger than their own, then how big is it
today? And what kind of advice has been
provided which results in decisions that
could help the Soviet industrial defense
establishment grow even more?
The Soviets know what they want when
they ask for machine tools but I have the
distinct impression that there are many
others who are not completely aware of
the importance of machine tools to the
economy and military strength of a
nation.
A machine tool is the only machine
which is capable of reproducing itself.
It is a power-driven machine which is
used to shape or form metal by cutting,
by impact, by pressure, by electrical
techniques, or by a combination of those
procedures.
The Machine and Tool Blue Book for
January 1967 declares:
Every item used, worn, or eaten by the
military is directly or indirectly an end re-
sult of machine tools"
, That same reference tells us that more
than half of the total U.S. machine tool
shipments,in 1965 went to defense and
defense related industries."
? The Blue Book states that the U.S.
Departments of Defense and Commerce
have "just reviewed current and critical
military programs requiring stepped-up
production of machine tools, and the
types of machines that are so vital to
this military procurement." It contains
a listing of the specific machine tools
which are critical and vital to the U.S.
military for the procurement. of such
things as ordnance, helicopters, missiles,
and jet engines. Here is part of that list:
Ordnance: The machine tools needed [for.
ordnance production] are automatic chuck-
ing machines, automatic screw, machines,
numerically-controlled automatic milling
machines, special heavy-duty vertical multi-
spindle drilling machines with special fix-
tures, large hydraulic presses, and transfer
machines or transfer-type machines.
Helicopters: The critical items here are
transmission gears and air foil blades,
Thg machine tools needed are bevel gear
generating machines, smaller size horizontal
boring machines, numerically-controlled fig
boring machines, and routing-type milling
equipment.
Missiles: The machine tools needed for
missile production are "elephant-type" ver-
tical and horizontal boring and milling ma-
chines, and vertical turret lathes with or
without numerical controls.
Jet Engines: This program is calling for
the earliest possible delivery of additional
machine tools.
Machine tools are also being required in
increasing numbers by many industries
which indirectly support the defense estab-
lishment. It is estimated that over fifty per-
cent of present machine tool output is
flowing to defense and defense supporting
industries?a -
One could not say that all of the
machine tool items and equipment which
the Soviets are seeking from the United
States, or which are manufactured in
Europe by subsidiaries or licensees of
American manufacturers, are in all cases
identical to those which are today so
critical and vital to our own defense
needs. But there seems to be a remark-
able similarity.
This is not the first time over recent
years that the U.S.S.R. has attempted to
obtain advanced automotive building
equipment from the United States or that
the question of the military and economic
significance of such equipment has been
brought into sharp focus.
Early in 1961 export licenses that had
originally been granted authorizing the
shipment of machine tools to the U.S.S.R.
for the production of cars and trucks
were canceled following an expression
of opinion by the Department of Defense
that the receipt of the equipment would
contribute to the Soviet military and
economic warfare potential.
The machine tools involved then were
a transfer-type machine to make V-8
cylinder blocks and a transfer-type ma-
chine to machine V-8 motor heads. The
authorization also covered six 8-spindle
gear, hobbing machines. Their total value
was $6.1 million.
In that case Deputy Assistant Secre-
tary of Defense for International Secu-
rity Affairs, Haydn Williams, said that
the technology contained in those trans-
fer machines produced in the United
States was the most advanced in the
world and that.
The products of these transfer type ma-
chine tools are clearly of military value 2'
The Department of Defense position
was that the products of the $6.1 million
in automotive building equipment would
clearly be of military value. Why should
there now be any difference as to the
military significance of automotive build-
ing equipment? In view of present Soviet
policy, including its heavy commitment
toward aiding Communist aggression in
Vietnam, our policy should be more strin-
gent, and not softer.
IMPORTANCE OF COMMERCIAL-TYPE VEHICLES
FOR MILITARY PURPOSES
Even assuming that only passenger or
commercial-type vehicles were to be pro-
duced by the Soviets in the Fiat-con-
structed plant, would these vehicles con-
'17 "Comparative Progress in Technology,
Productivity, and Economic Efficiency: USSR 20 Ibid, pages 131, 132.
versus U.S.A.," page 233. 21 Letter, February 23, 1961, Haydn Wil-
18 Machine and Tool Blue Book, January liams, Deputy Assistant Secretary of Defense
1967, page 122. (International Security Affairs) to Rep.
10 Ibid, page 130. Glenard P. Lipscomb.
H 5107
tribute to the military establishment of
the Soviet Union?
Perhaps the practices of our own De-
partment of Defense can best give us the
answer to that question. The Office of
the Assistant Secretary of Defense for
Installations and Logistics informed me
on March 24,.1967, in response to my in-
quiry that the U.S. Department of
Defense proposes to purchase 32,353 pas-
senger cars, station wagons, and other
commercial-type vehicles in the fiscal
year which begins July 1, 1967.
In a letter to me dated March 24, the
Department states that:
All of the vehicles shown are procured for
the purpose of providing transportation of
supplies, equipment or personnel which con-
tribute to the national security of the United
States.2
Obviously, vehicles of all kinds are of
great importance to the support and
operations of military forces. Secretary
of Defense McNamara showed his recog-
nition of this fact on February 21, 1967.
Regarding the case of enemy military
forces denied the use of wheeled vehicles
in South Vietnam the Secretary of De-
fense said:
This is a tremendous limitation upon their
warmaking capabilities.-
ADMINISTRATION OF THE EXPORT CONTROL ACT
The Export Control Act declares that
it is the policy of the United States "to
exercise the necessary vigilance over ex-
ports from the standpoint of their signifi-
cance to the national security of the
United States." The act is completely
clear, too, in emphasizing that both the
military and economic significance of ex-
ports must be considered in finding that
the "unrestricted export of materials
without regard to their potential military
and economic significance may adversely
affect the United States."
Who would deny that elementary
prudence dictates that the intelligence
agencies of the Department of Defense
must be consulted before determination
is made that a commodity has no "po-
tential military and economic signifi-
cance?"
On January 17, 1967, I made public
four letters which unequivocally state
that the Defense Intelligence Agency and
the intelligence organizations of the
Army, Navy, and the Air Force had not
been consulted when hundreds of items
were 'removed from the export control
list.-,
Yet the International Trade Subcom-
mittee report expresses confidence in the
procedures used by the Department of
Commerce and assures us "that Com-
merce would weigh a variety of factors
before taking action on machine tools
that can be used for strategic pur-
poses." 1 And to attest to this display
of confidence, the report, of all things,
22 Letter, March 24, 1967, Major General
Allen T. Stanwix-Hay, Deputy Assistant Sec-
retary of Defense (Materiel) to Rep. Glenard
P. Lipscomb.
w Hearings on Supplemental Defense Ap-
propriations for 1967, page 90. Secretary of
Defense Robert S. McNamara, testimony on
February 21, 1967.
24 Congressional Record, January 17, 1967,
page H257.
The Fiat-Soviet Auto Plant, page 2.
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Soviet planners hope to import ma-
chine tools which incorporate advanced
technology. Soviet planners say they in-
tend to increase automobile production
by receiving outside financial assistance
and by importing machine tools of ad-
vanced design. If the Soviet planners
hopes are realized in this respect, then
their military and space programs will
remain unimpaired. In any event official
U.S. intelligence evaluations are that the
Soviet leaders do not plan to provide au-
tomobiles for the average Soviet citizen.
Soviet planners intend to increase the
production of passenger cars in order
to reward and provide incentives to the
Communist Party elite. They also intend
to increase the number of cars produced
for export. Moreover, passenger cars and
other commercial-type vehicles are im-
portant for military purposes; they do
contribute to the national security.
The Export Control Act is very explicit
on the point that both the economic and
military significance of materials must
quotes from an October 20, 1966, Depart-
ment of Commerce letter wherein the
Director of the Office of Export Control
enumerates some of the agencies of this
Government which participate in the
formulation of export control policies. I
call to your attention the fact that in
the Department of Commerce letter, as
quoted in the subcommittee report,8?
there is no specific reference to "intelli-
gence community" or "intelligence
agencies."
INCOMPLETE INFORMATION AVAILABLE
It appears that only a partial insight
is being permitted as to what machine
tools in total the Soviets actually hope to
acquire from the United States. A de-
tailed list of the machine tools including
"both the types of tools desired. and the
U.S. companies most likely to be in a
position to supply them" was not in-
cluded in the International Trade Sub-
committee report but was purposely ex-
cluded "for business reasons" because
"publication might upset normal com-
mercial relationships." m
To study the matter thoroughly, of
course, would require a detailed and
complete list of the machine tools which
the Soviets desire to get from us. In such
matters the national security and welfare
of the United States must be paramount
to all other considerations. It is not con-
ceivable to me how anyone could give
greater weight and importance to busi-
ness and commercial considerations
rather than to the national security and
welfare of the United States.
Also it is difficult to see how anyone
at this date could consider our involve-
ment in helping to equip a Soviet auto-
motive factory as a "normal. commercial
relationship."
S'UMMART
America should not at this time assist
in any way in the building of the auto-
motive industry of the Soviet Union.
History teaches that the present situa-
tion cannot be viewed as a detente.
There are those who have voiced plati-
tudes and claims in attempts to smooth
the way for the Flat deal to go through.
But wishful thinking must not be sub-
stituted 'for reasoned and reasonable
caution.
The Soviet Communist Party leader-
ship continues to control and to com-
mand all facets of the Soviet industrial
empire. The Soviet leaders Exercise their
control over Soviet industry by granting
their approval to plans worked out by
GOSPLAN. The announced current and
future plans of GOSPLAN do not signifi-
cantly differ frorri traditional plans
which heavily favor military programs at
the expense of consumer programs.
Soviet military programs are geared
to the output of the Soviet industrial de-
fense establishment and machine tools
are the heart of any industrial defense
establishment. The Soviet industrial de-
fense establishment is huge; it is possibly
as large or larger than that of the United
States. But the Soviet industrial defense
establishment does not have the quan-
tity of quality machine tools as does that
of the United States.
Ibid.
Ibid, page 5.
be weighed in determining whether they
may be exported.
it is difficult if not impossible to view
the Soviet-Fiat deal as a normal com-
mercial transaction, and complete infor-
mation on the deal has not yet been dis-
closed by the Soviets.
The International Trade Subcommit-
tee report tells us "that U.S. machine tool
technology may play a larger role in the
proposed auto plant than had been fore-
cast earlier." " It explains this by saying
that in addition to the direct purchases
from the United States the Soviets want
to lay hold of machine tools which are
manufactured in Europe under license
arrangements with American firms. Little
by little the full measure of Soviet deceit
iii this grandiose scheme unfolds. We are
told that a letter from the Italian
middlemen was received on February 1,
I967, which contains this information:
The final coat of said machine tools and
equipment items is contingent upon the, de-
cisions of the Soviet agencies handling the
actual purchase orders."
That one sentence alone should give all
of us cause to question what this Fiat
deal is all about. The American people
know full well what the final cost of
machine tools is in the hands of the Cam-
munists. And over 9,000 Americans have
thus far paid that final price in South-
the cost of the bonus coupons given to
food stamp participants.
That would saddle the States with $ i0
million a year in extra costs, besides the
cost of administering the program. My
own State of New York would have ,o
pay $4.4 million more-making a total
of $6 million a year if you include the
costs of administration.
Of the Nation's 15 largest cities, only
two have not participated in the food
stamp program up to now-my own ci.y
of New Yorrk., and Boston. Now, New
York City has asked to be included, and it
is considered likely that the Department
of Agriculture will approve the request
for the year starting June 30, if funds
are provided.
Let me cite the effect of the amend-
ment on New York City, as typical of
how it would cripple the program in many
large urban centers. For one thing, 70
percent of the people on welfare in the
State of New York live in New York City,
This is one aspect of the city's tri;V.i-
tional position as the gateway to the
East, and the Nation's greatest melting
pot.
Just as New York City, in the last hidf
of the 19th Century and the beginning
of the 20th, received its steady stream
of immigrants from other lands, so is
the city now the focal point of a new
kind of influx---the migration of la,wi;c;
numbers of American citizens from other
parts of the Nation.
The migrants of today live in our city
while they become reestablished and re-
oriented, like the immigrants of the past.
There is one difference: in those da,s,
there were still western lands to home-
stead, railroads to build, factories to con-
struct and man. Today, demands for
technological. skills and understanding of
language are greater. It often takes
newcomers longer to become completely
reoriented.
The Federal Government recognized
its responsibility to the immigrant masi?,es
in the earlier day, by offering homestead
land and other inducements to move the
newcomers out into other parts of the
country. Today, the Federal Govern-
ment has a similar responsibility to the
migrant arrivals before they can fend
for themselves.
The food stamp plan, with Federal
Government shouldering its full share,
east Asia, is an important part of the process of
~.------~ reorientation for the 200,000 citizens of
-------------------------
ATTEMPT TO KILL EFFECTIVENESS benefit lowest from income it who New can or York eC Cnity. :i to
OF THE FOOD STAMP PROGRAM Food d stamp bonuses averaging alix ut
The SPEAKER pro tempore. Under $66 a year for each of these participants
previous order of the House, the gentle- in New York City would bring from $ l0
man from New York [Mr. HALPERN) is million to $15 million in additional pur-
recognized for 20 minutes. chasing power into merchants' tills. The
Mr. HALPERN. Mr. Speaker, I am merchants' increased income taxes would
deeply troubled by what appears to be an provide a significant return to the Fed-
scent which would force many States to our newcomers of more and better food.
drop out of the program which has meant We would help reduce the specter of
so much to their needy citizens. malnutrition for the many children who
I refer to the amendment added by will one day be a closer and more effec-
the House Committee on Agriculture to tive part of our city and its governnn?nt
H.R. 1318, providing that beginning in than their parents can hope to be.
fiscal 1968, States must pay 20 percent of The food stamp program adds alx~ut
- Ibid, page S.
" Ibid.
50 percent to the amount of food avail-
able to families which depend upon l*,mb-
lie assistance. Its greatest effectiveness.
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Remarks :
Attached is a copy of Lipscomb's speech
on the Fiat deal on the floor of the House
yesterday. I have marked the references
to the Agency report. I have also asked
Bill Morell for his comments on whether
this is a distortion or is fair use.
o warner
FOLD HERE TO RETURN TO SENDER
FROM: NAME, ADDRESS AND PHONE NO.
DATE
Legislative Counsel 7 D 01 Hqs
5 May 67,
UNCLASSIFIED CONFIDENTIAL SECRET
34-2
Use previous editions
F OR M61 u. 237
STAT
25X
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