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• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP66B00403R000200130026-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 16, 2016
• Document Release Date: January 24, 2005
• Sequence Number: 26
• Publication Date: January 1, 1964
• Content Type: OPEN

Approved For. Release 2005/02/10 : CIA-RDP66B00403R009Z00130026-6 -
1964 CONGRESSIONAL RECORD - SENATE 4619
only truly universal international money ante with U.S. monetary laws. Today, some food from us on a time payment plan. No
today. The U.S. dollar is legal tender only foreign nations buy gold from, the U.S. private lending institution in the United
to U.S. citizens. Gold is the legal tender to Treasury at $35 an ounce, some with dollars States would be likely to loan money to
the foreigners who hold U.S. dollars. So the our Government may have given them in such an unworthy customer. Some of the
importance of gold should never be under- foreign aid, they then mint the gold into dollars we gave foreigners were used to buy
estimated. Any nation that possesses gold, their own national gold coins, not for cir- things from us and this has helped to con-
can get in and stay in the game of interna- culation as money but for sale as a com- tribute to our immediate prosperity. But,
tional trade. Any country that has ample modity. They receive anywhere from $50 billions of these dollars have been turned
gold reserves has the buying power to ac- to $70 an ounce for such gold transactions. into take away our gold reserves and $26
quire needed items from other nations. A good bargain for them. I know of one billion more are still stacked up against us,
Thus, in peacetime or in wartime, 'gold foreign gold mine that sells most of Its gold and our gold resources.
Is essential. Gold is a vital defense fuel production to gold hoarders in the Orient at The drain on our official gold stocks since
in wartime. Recent events have clearly $70 an ounce. 1957 has been very heavy. Our gold re-
indicated how important gold is to Russia. Now let us turn our attention to the real serves still amounted to $23 billion in 1957.
She has failed in her agricultural program, issue about our gold and our U.S. dollars. Then, all the free world countries, other than
as she has in so many of her other plans. The issue is, Why are we losing so much of the United States, had almost $15 billion in
So Russia has been selling gold in the hun- our gold? gold. Today we are down to about $15'/2
dreds of millions in recent months in order When Franklin D. Roosevelt became Pres- billion while our free world., foreign aid
to buy food to refill her bare cupboards. ident, the United States had: $4 billion on friends have increased their own gold re-
In the United States today, our Federal gold reserves; $2 billion in gold was required serves to $26 billion. Of their gains in gold,
Government still possesses a large amount as reserves in gold for our Federal Reserve $8 billion of it came from the U.S. Federal
of gold. About $151/2 billion worth. But, currency notes and deposits; $500 million in Government vaults,
we have been losing our gold reserves rapidly gold was owed foreigners because of their We lost our gold to foreign nations simply
since 1957. It has been a consistent one- U.S. dollar holdings, because we gave them too many of our U.S.
way flow of gold-out. We were in a deep depression but we were dollars free. In no year since we have been
Before explaining the causes of our flow of in no trouble over gold. We had $11/2 bil- losing our gold have we exported less goods
gold out of this country, I'd like to mention lions in gold above all our gold requirements. and produce than we have imported. Our
a few other items about gold: But, when the price of gold was raised to actual balance of trade has always been in
London, England, has for many centuries $35 an ounce in 1934, several things hap- our favor. The entire deficit in what is
been the gold marketing center of the world. pened to increase our gold supply. First commonly called our balance of payments,
Back in the year 1250 gold was selling on the our gold reserves went up by the 70 percent has been very simply because of all the free
London market at $4 an ounce, adjusted to dollars we have sent abroad. These free
U.S. dollars. For 450 the gold price raise, the amount increase from
years price of gold $20.67 to $35 an ounce, Second, because dollars have given rise the huge dollar
was free to fluctuate and to bring whatever gold mining became more profitable, gold pro- claims by foreigners against our U.S. gold.
people thought gold was worth. It went up duction also increased substantially. Third, There are items in the balance of payment,
or aid,
continually. In the days of Columbus gold a large flow of gold came in from other na- other than stme is abroad, vacation There vel
brought $10 an ounce. By the year 1700 tions when the price was raised. This was foreign investments abroad, vacation travel
gold was up to $25 an ounce. Then the price because the price was good and also because gold abrdact, we e are re., but in the final analysis the
was pegged at $22 an ounce through the Europe began, during that period, is because of the -
adoption of a gold standard. That price was ood from us in ' to buy tion of the total $108 billion we have given
kept firm until World War I set in and the g preparation for War II and in foreign aid, that has not been spent back
price of gold began to rise. After World War during War II. A great deal of U.S. exports in the United States. This has left a huge
England had too much money and credit were paid for in gold. Our U.S. gold re- balance of dollars stacked up in the hands
Issued against its gold m r h money and the redit serves increased every year for 15 years and ? of the foreign central banks and governments
lash pound failed. The price of finally peaked out in 1949 at almost $25 bil-
gold was and which are now claims , against our ,
raised, the English pound was devalued. lion. From 1949 on we began to lose our raining gold. France, Germany, Spain,
Then the United States was going into the gold. Not because we lost any of our trade England, Italy, and other nations are among
1930's and the days of the great depression. or any of our strength, but because we com- the beneficiaries of our dollar handout pro-
Franklin D. Roosevelt was elected President. menced giving away too many of our U.S. grams. Because of this situation we are
Someone sold him on the idea that if the dollars to foreigners. Billions of our dollars continuing to lose our gold and even so, we
price of gold was raised, the prices of goods were given away on ill conceived and ill are continuing to give away more dollars.
would raise, salaries would raise, sales would planned methods of trying to buy the defeat This also has a great influence on our do-
increase, unemployment would be substan- of communism. We simply began trying to mestic interest rate structure. At this time
tially reduced and prosperity would come buy with our U.S. dollars the support of we are required to keep interest rates high
back to the United States. any nation our Government thought would so that the foreign owned dollars will be
In 1934 the price of gold was raised from be our ally against Russia. Some of the na- left with institutions paying interest rather
$20.67 an ounce to $35 an ounce. The tions we supported with our U.S. dollar gifts than to be turned into gold which draws no
U.S. dollar was devalued in terms of gold. were themselves Communist countries. At interest.
But the depression didn't go away. Unem- first we did a great deal of good in helping Today we have left in our U.S. gold re-
ployment remained high. Prices did not Europe back on its feet in a war reconstruc- serves- about $151/2 billion in gold; $12 bil-
rise, We were still in a depression when, tion job. Then, after they did get back on lion are needed as a 25-percent gold reserve
World War II came along and produced their feet, we continued to give them our for our Federal Reserve currency and deposit
enough jobs and industrial activity to propel dollars when they no longer needed them. system; and $31/2 billion of gold are left.
us forward in a war economy-a momentum And we are still giving away our dollars to Obviously, $31/2 billion are far short of
that continued after World War II ended. them, far too many. When we began this the $26 billion of potential claims against
The price of gold has continued on that dollar give-away program we were the great- our remaining gold. We are now in the po-
$35 peg since 1934 with' the exception of a eat industrial power on earth. We still are sition of a houseman in a high-stake poker
flurry on the London gold market during the strongest nation on earth. We had to game, who is so far behind that he doesn't
the Cuban crisis in 1960, when for a short have great strength to be able to give away dare let the game end. He couldn't pay off.
time gold went up to $41 an ounce. $108 billion in foreign aid and to spend an- So why are we losing our gold?
In 1934, concurrent with the increase in other $884 billion on defense items in the Why does a man's bank balance decline?
the price of gold, legislation was enacted past 18 years, and still be able to keep going. A bank balance goes down and into over-
making it illegal for a U.S. citizen to own (George Washington warned our infant drafts because more checks are written than
gold. Citizens were required by law to turn Republic against making foreign alliances.) deposits made. The truth is that our Fed-
in their gold coins and their gold certificate But with all this spending, our foreign eral Government has overdrawn our gold re-
currency for new paper money. Since that aid friends are not impressed, and our for- sources by a wide margin. And that is
date the U.S. dollar could not be redeemed eign enemies are not afraid of us. We are at- where our gold losses begin and end. The
for gold by a U.S. citizen. Coin collectors tacked in the Panama Canal Zone by Com- problems are created by the excessive spend-
may now hold gold coins if they are dated munists who then charge us with aggression. ing habits of our Federal Government. The
prior to 1933. Today a U.S. double eagle Even little Cuba is able to shut off our water matter of overdrafts against our gold has
tms $20 golds piece) sells for about $50. In with impunity. We have more chaos, more gotten out of hand. Meantime our Federal
(
$20 gold coin of U.S. mintage, a anarchy, more aggression, and more confu- Government goes merrily on its way spend-
present $20 U.S. currency bill is worth about sion in the world today than ever before. ing still more and inflating our currency
40 percent of its former value in terms of And this, after all the billions we have spent system. Whenever we have a deficit in Fed-
gold, or about $8. to bring peace to the world. Our massive eral Government spending at home, and that
The new gold standard set up in 1934 and our reckless spending in this area has has been happening every year, we inflate
allows foreign dollar holders to exchange been a costly flop. We even gave Russia $11 our currency and bank deposit system.
their U.S. dollars for U.S. Treasury gold at billion worth of lend-lease aid and only a These have gone up by $86 billion since 1957.
$35 an ounce. This is because our inter- token was ever paid back, Now Russia Is The gold back of each U.S. dollar in cur-
national monetary system is different from working on a scheme to get the U.S. Gov- rency and bank deposits is now down to less
our domestic monetary system, in accord- ernment to guarantee her the credit to buy than. 5 cents. If we subtract foreign dollar
. Approved For Release 2005/02/10 : CIA-RDP66B00403R000200130026-6
 Approved For Release 2005/02/10 : CIA-RDP66B00403R000200130026-6
CONGRESSIONAL RECORD - SENATE March 10
claims now against our remaining gold then
we have no gold left to back our monetary
system. Whenever we have a deficit in our
foreign financial transactions, the balance
of payments, then the claims against our
gold goes still higher. last year, in 1963, this
deficit was $3 billion. Taking both of these
deficits together, the foreign and our domes-
tic deficits, our Federal Government Is put-
ting too great a squeeze on our gold and that
is why we are losing our gold.
Who in Government is responsible for this
state of affairs? It isn't simply the Demo-
crats or the Republicans. It is the entire
system of bureaucracy that may have prop-
erly started back In 1932 but has never
stopped growing. We do have in Govern-
ment today, many sound-thinking Democrats
and Republicans who are trying hard to
correct excessive spending in Government.
These people do not wear high-buttoned
shoe.:. And you do not need to put on high-
buttoned shoes to support them. In gen-
eral. however, our administrations and our
Congress since World War II have been guilty
of failure to stop excessive spending.
WASTE IN FOREIGN AID PROJECTS
Mr, MORSE. Mr. President, I ask
unanimous consent to have printed in
the RECORD an article which appeared in
Sunday's Washington Post, headlined
"$8.5 Million Aid Wasted, GAO Says."
There being no objection, the article
was ordered to be printed in the RECORD,
as follows:
[From the Washington Post, Mar. 8, 19G41
58.5 MILLION Am WASTED, GAO SAYS
U.S. aid administrators were accused yes-
terday of wasting 98.5 million on projects
in Turkey and Iran and misleading Congress
about their progress.
The charge was made by the General Ac-
counting Office, which checks on Federal
spending for Congress, in a report to the
House and Senate.
It said the funds were used to build high-
ways and railways that were not needed and
wound up going nowhere. In seeking the
money from Congress, the report added, the
administration presented incomplete and
inaccurate information and withheld other
facts that should have been presented.
T`ne Agency for International Development
(AID) disagreed with the findings and
blamed them on "a fundamental difference"
between it and the GAO over the nature of
the projects.
The report covers four rail and highway
protects carried out under the economic de-
velopment program for Central Treaty Or-
ganization nations between 1957 and 1962.
Such projects are supposed to aid two or
more CENTO countries and advance regional
economic development, not aid individual
nations.
The economic need for the projects said
the GAO. was so dubious they were consider-
abiv cut back. Only one---a. Turkey-Iran
highway-has the regional characteristics re-
quired for such projects, it added.
Mr. MORSE. Mr. President, the ar-
ticle bears out charges of the Continua-
tion of the shocking waste of the whole
aid program. The article reads in part:
United States aid administrators were ac-
cused yesterday of wasting 98.5 million on
projects in Turkey and Iran and misleading
Congress about their progress
The article reads further:
'-,.'he funds were used to build highways
and railways that were not needed and
wound up going nowhere, In seeking the
money from Congress, the report added, the
Administration presented incomplete and
inaccurate information and withheld other
facts that should have been presented.
I plead with my colleagues in the
Senate that, before the new debate on
the foreign aid program starts in this
session of Congress, they read the reports
of the Comptroller General's Office, for
one report after another repeats and
proves this shocking waste of the tax-
payers' dollars. The taxpayers are en-
titled to better protection from the Con-
gress than they have been getting in the
SECRETARY OF DEFENSE McNA-
MARA AND SOUTH VIETNAM
Mr. MORSE. Next. Mr.' President, I
ask unanimous consent to ha'e inserted
in the RtcoRD a series of newspaper arti-
cles setting forth statements by the Sec-
retary of Defense in regard to promises
vis-a-vis South Vietnam.
There being no objection, the articles
were ordered to be printed in the RECORD,
as follows:
[From the Washington Post. Mar. 10, 19841
VIETNAMESE LoOFCING FOR MCNAMARA MAGIC
SAIGON. March 9.-U.S. Defense Secretary
Robert S. McNamara. now on a tour of trou-
ble spats in this war-torn country, appears
to have inherited the late President Ken-
nedy's image as the guardian of the South
Vietnamese people.
Many Vietnamese look upon McNamara as
virtually the savior of the country and seem
to expect. him to produce a magic formula
for driving out the Communist Vietcong
guerrillas.
This was revealed today In an informal
survey of several parts of.Saigon. Including
the poorer areas.
Many peoples, apparently as the result of
Government propaganda. believe McNamara
is going to give the green light for South
Vietnamese forces to march across the bor-
der and invade Communist North Vietnam.
A Vietnamese-speaking newsman found
many people, particularly refugees from the
Communist North, strongly in favor of this
idea.
The Government has publicly promoted
the Idea of "marching north" and students
who greeted McNamara yesterday carried
Government-printed banners advocating this
policy.
But a large student demonstration sched-
uled for this morning. reportedly to ask
McNamara for support In marching north.
was called of. There was no Immediate ex-
planation.
During last year's Buddhist crisis, the
people looked to Mr. Kennedy to bring down
the regime of President Ngo Dinh Diem.
When Diem was finally toppled In November
the credit was given largely to Mr. Kennedy.
One man Interviewed today said: "Ken-
nedy helped us last year. Now the United
States will help us again, won't It? What Is
McNamara going to say?"
Some American officials are concerned
about this popular expectation that Mc-
Namara is going to make a dramatic an-
nouncement producing a solution to the war
situation.
They point out that final decisions must
come from Washington after McNamara
returns with his recommendations.
American aid to South Vietnam "will from
now on he total, unlimited, and without con-
ditions," a South Vietnamese spokesman
asserted today.
The spokesman said this curie out of Mc-
Namara's Initial talks with Scuth Vietnamese
leaders yesterday and that It meant no set
limit would be placed on U.S. aid to South
Vietnam.
Assistant Defense Secretary Arthur Sylves-
ter, McNamara's spokesman. said later that
he did not hear the Defense Secretary use
the expression attributed to him, but it was
considered by informed observers that the
statements were not contrary to what Mc-
Namara said yesterday.
The Vietnamese spokesmar, Col. Tran Ngoc
Huyen, also said American leaders would not
make "soothing statements, such as predict-
ing the end of the war at a definite date."
McNamara and the Preraler, Maj. Gen.
Nguyen Khanh, visited three villages in the
wartorn Mekong River Delta today and were
cheered by thousands of South Vietnamese.
Other members of his party included Gen.
Maxwell Taylor, Chairman cf the U.S. Joint
Chiefs of Staff.
At least 10,000 persons swarmed in the
main street of one village, lioa Hao, as Mc-
Namara and Khanh walked down it, shaking
hands with persons in the c'owd.
At the city of Can, McNamara and Khanh
gave donations of 500,000 plasters (about
$7,000) each toward the rebuilding of sev-
eral hundred houses burned down last week.
The enthusiasm of Hoa Hao's welcome
swept security arrangements aside. Anyone
could have slipped a hand itrenade into Mc-
Namara's pocket with ease.
However, McNamara's tour was marred
when two of the four crewmen aboard a US.
helicopter accompanying hie helicopter flight
through the Mekong Delta were killed when
their helicopter crashed into a river.
The dead were two gurners. The pilot
and the copilot were rescued. The crash
was blamed on a mechanical failure.
At each of McNamara's three stops, he em-
phasized that U.S. support for the South
Vietnamese war against the Communist Viet-
cong guerrillas would cone: nue to whatever
degree was necessary.
He also repeatedly stressed U.S. support for
General Khanh and told crowds that Khanh
needed the support of the people.
[From the New York Times, Mar. 8, 19641
MCNAMARA NEWS CONFEF.ENCE EXCERPTS
I have two brief announcements to make.
First, I have Issued instructions today to
reduce the B-70 program from three aircraft
to two. This action is corcurred in by the
Secretary of the Air Force and by the Chief
of the Air Staff. It is a result of a very com-
prehensive review of the project we have
just completed and it reflects our concern
over the continued delays in the program.
These delays have been brought about by
severe technical difficulties
At the time the three-aircraft program
was formulated and approved, the first flight
was scheduled for December 1982. The pro-
gram is already some 18 months behind that
schedule and the first aircraft has not yet
been completely assembled.. To date, some
91.5 billion have been allocated to the proj-
ect, with the prospect thet more would be
required were we to attempt to compete it
with three airplanes.
Now, secondly, Gen. Maxwell D. Taylor
and I. and other members of our party, will
leave tonight at midnight for South Viet-
nam. The purpose of our trip Is to discuss
with Ambassador Henry Cabot Lodge and
Gen. Paul D. Harkins and with Gen. Nguyen
Khanh and members of his Government the
effectiveness of U.S. training and logistical
support for the South Vietnamese In their
resistance to the Communist-dominated
Vietcong.
From the Washington Post, Mar. 10. 19641
MCNAMARA VOWED UNLIMITED U.S. Are, VIET
OTFICIAL SAYS
(By Nicholas Turner) -
SAIGON. March 9.-U.S. Defense Secretary
Robert S. McNamara has made it clear that
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 1964
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CONGRESSIONAL RECORD - SENATE 4621
Our trip is a further affirmation of the units, which had been guarding certain In- more sophisticated mines, particularly water
U.S. commitment to furnish whatever eco- stallations in South Vietnam. During the mines, more sophisticated sabotage devices,
nomic aid, and whatever military train- , period that they were assigned there, South with advanced timing mechanisms, obviously
ing and logistical support is needed by the Vietnamese troops were trained to take over of Chinese Communist manufacture.
South Vietnamese to suppress this incur- those functions. So the volume of support, the character
gency and to continue to furnish that sup- NO REASON FOR STAYING of support, the trend of support, from the
port for whatever period it is required. We saw no reason. and the Government North Vietnamese of the South Vietnamese
Question. Mr. Secretary, do you believe
there can be a military solution to the prob-
lem in South Vietnam within the present
rules?
Secretary McNAMARA. I think the problem
in South Vietnam is very clearly a political-
economic-military problem. It is a prob-
lem that requires the support of the people,
if it is to be solved. General Khanh, the
Premier of South Vietnam, has in his first
30 days in office done much to build the sup-
port of the people.
He is clearly sensitive to the need for in-
creasing their economic welfare, as well as
for providing physical security for them. So
I think he is aware as we are of the inter-
relationship among the political, economic
and military facets of the problem.
Question. Mr. Secretary, there has been
some controversy in the past over your ap-
praisal of how we were doing in South Viet-
nam? Would you like to try again? How
are we doing?
Answer. I have said that the situation was
serious there on a number of occasions.
OCCASIONS RECALLED
In October, upon our return from the
September trip, and in December, upon my
return from NATO via South Vietnam, and
in January. You probably recall those. In
October, I said, "the political situation in
South Vietnam remains deeply serious."
In December, I stated, "we observe the re-
sults of the very substantial increase in the
Vietcong activity, an increase that began
shortly after the new government was formed
on November 2, and it has extended over a
period of severe,l weeks."
And then in January, in my statement to
the Congress, I stated "the situation there
continues very grave" and I went on to dis-
cuss why. Then on the day after that I
.elaborated further on it and stated that the
situation was very grave, but that within
the previous 2 weeks there had been prog-
ress, and we were encouraged by that prog-
ress.
I wouldn't change my appraisal, I think,
of these past 4 months. During that
4-months period, the country has had three
governments, each of the new governments
has changed Cabinet members, each of the
new governments has changed provisional
governors and each of the new governments
has made changes in the senior military lead-
ership.
The Vietcong have sought to take advan-
tage of the resulting period of confusion.
They have substantially increased their rate
of incidents, their terror attacks, their har-
assments, and their military attacks upon
the Vietnamese.
That level of attack is higher today than
It was 6 months ago. It is lower today than
it was at sometimes within the past few
weeks and it is lower today than it was in
November and December. What the future
holds, I can't say.
Question. Mr. Secretary, a two-part ques-
tion on Vietnam, sir. First, can you tell us
military police units should remain in Mr. MORSE. Mr. President, I do not
South Vietnam to do a job that the South know when the Secretary of Defense was
Vietnamese had been trained to perform invested with authority to take over
and were entirely competent to perform and,
therefore, we withdrew them. foreign policy, but the state-
.
in determining when to withdraw U.S. mill- made in regard to South Vietnam have
tary personnel from South Vietnam. I think no justification, and he should be held
I made very clear in my introductory state- to an accounting, because millions of
ment that we shall furnish whatever mili- Americans are beginning to recognize
tary training and logistical support the that it is time for us to get out of South
South Vietnamese require to effectively Vietnam and stop the shocking waste of
counter the insurgency campaign, and we American blood and American money in
shall continue to furnish that support for that scan by.
as long as it is required. But I think that
you should expect us, I think the American I shall have more to say about this sub-
people should expect us, to conclude a train- ject before the week is over, because, I
ing mission after a reasonable length of repeat, the administration should be
time. brought to an accounting for the shock-
Question. In connection with Vietnam, ing waste of American blood and Amer
Mr. Secretary, would the withdrawal or re-
moval of American dependents in South 1ican money in South Vietnam.
Vietnam add to the effectiveness of our ef-
fort there and will you consider that on this
trip? HAWAII'S TRADE ROLE
Answer. This is one of the questions I - Mr. MORSE. Mr. President, I ask
will look into while I am out there. The unanimous consent that an article en-
number of military personnel with depend-
ents in South Vietnam is very small. I have
forgotten the exact number. The total num- Honolulu Advertiser, be printed in the
ber of military dependents is something on CONGRESSIONAL RECORD. I commend Dr.
the order of 700. Joseph E. McLean for bringing about the
Question. Mr. Secretary, what standards conference referred to in the article.
will you use in Vietnam to judge the success There being no objection, the article
or failure? was ordered to be printed in the RECORD,
Answer. Well, I think the level and growth as follows:
of the economy, for example, is one. And HAWAII'S TRADE ROLE
this, by the way, affords an interesting com-
parison with North Vietnam. I have said Earlier this month a small group of men
the situation in South Vietnam is serious. from Japan, the Philippines, Taiwan, India,
It Is. It is grave. But we should not fail Pakistan, Australia, Malaya, and the United
to overlook the accomplishments in that. States met in Honolulu for 5 days.
country of the past 10 years, and the rate of They were attending a conference "on eco-
growth. of the economy is one, and particu- nomic cooperation fordevelopment and trade
larly it is impressive when one compares that in the Pacific" sponsored by the State of
with the situation in North Vietnam, which Hawaii and the East-West Center.
is facing very serious economic problems. Their papers were technical, for these are
I will obviously be interested in the action technical men. But the significance of such
that General Khahn has taken to broaden a conference, and in Hawaii, was evident.
his Government. From what we hear here, Governor Burns, at a luncheon meeting- at
he has taken many steps indeed to making which Under Secretary of State Hilsman
it a more representative Government than spoke,.said, "This must go down as one of
was true in either of the two previous govern- the most important days in Hawaii's future
ments. as the crossroads of the Pacific."
Obviously, our major attention, particu- And President Hamilton of the University
larly General Taylor's and mine, will be de- of Hawaii said the conference drew upon "the
voted to the military plans. General Khahn resources of State, scholar, and scientist,"
has laid down some very ambitious plans. plus the experiences of practitioners.
He has Indicated he wishes to aggressively Many papers were presented, including
expand the military operations in the field, those of Indonesian and New Zealand rep-
particularly night operations, Increase the resentatives who at the last minute were
number of days per month that military unable to attend, and these were followed
units campaign in the field. by discussions.
ASSISTANCE-LEVEL STUDY Typical subjects were the prospects of
promoting an expansion of manufactured
Question. Mr. Secretary, you said one of and agricultural exports; regional coopera-
the purposes of your trip is to review the tion to stimulate industrialization in the
level of assistance by the North Vietnamese less developed countries; the problem of
to the Vietcong. Are you suggesting there stabilizing prices of primary commodities;
that your findings in that regard might the form which foreign aid and technical
significantly influence our policy in Vietnam? assistance should take; the effects of eco-
Answer
I don't wish to su
e
t
-
.
gg
s
any con
nomic growth upon a country's balance of
advisable, as you have said in the past, to clusion I'll draw. I simply want to get at payments.
withdraw most of our military aid mission the facts. There has been evidence that in These are not the kind of problems that
by the end of 1965; and, second, what criteria the last 6 months the North Vietnamese sup- are solved at one conference or a dozen.
will you be using in your trip to determine port of the Vietcong has increased. But a session such as that held here con-
just how we stand there? We have seen, for example, through the tributes to eventual solutions. As Dr. Joseph
Answer. Well, first, as to our training and capture of Vietcong weapons the introduc- E. McLean, the East-West Center's confer-
logistical support and the possibility of with- tion of larger bore weapons than had been ence director, puts it:
drawing personnel. As you know, we with- seen previously, .75 mm recoilless rifles for "Conferences may open the door to new
drew a thousand men in December of. last example, obviously of Communist dhinese techniques, to new knowledge, to new un-
year. These men included, for example, two manufacture; heavy-duty machineguns, ob- derstanding, or even to administrative or
military police units, U.S. Military Police viously of Chinese Communist manufacture; policy action.
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CONGRESSIONAL RECORD - SENATE March 10
,.All this has been especially true of our
Conference on Pacific Trade and Develop-
ment. It seems to me that the scholars par-
ticipating - - - have taken a long stop
forward In developing a freer exchange of
ideas.
"The discussions have been lively and un-
inhibited. To the extent that the scholars
succeed In their endeavors, we shall thereby
reduce the burdens upon future statesmen
and soldiers - - -.
"Building an economic community in the
Pacific is one way of reducing International
tensions in the years ahead. This, of course,
was one of the reasons why Governor Burns
and the Center were Interested In this con-
ference from the beginning."
Under Secretary Hilsman, whose responsi-
bility is the area of Far Eastern affairs, said
on his arrival from a visit to Australia, New
Zealand, and Fiji that he was struck by
Hawaii's role In the economics of the Pacific,
and that It was fitting that the conference
should be held here.
Hillman's observations came only 2 months
after Secretary of Commerce Hodges called
these islands "the gateway to the Pacific mar-
ketplace."
Hodges saw Hawaii as "the natural head-
quarters for many managerial functions of
firms exporting to the Pacific market. As a
forward base, as an advanced distribution
and sales center, you are without equal."
Governor Burns, who is dedicated to mov-
ing Hawaii ahead in the field of trade rela-
tions. was described by Dr. McLean as the
prime mover In bringing about the recent
conference.
The Governor, Mr. McLean, and Prof. P. T.
Ellsworth, visiting professor of economics at
the University of Hawaii, who was chairman
of the conference, are to be commended for
promoting this latest Interchange of Pacific
area knowledge and experience.
TELEGRAM FROM T. GABRIEL
DUQUE, OF PANAMA
Mr. MORSE. Mr. President, I ask
unanimous consent that a telegram I
have received from T. Gabriel Duque,
ex-President of Panama, be printed in
the CONGRESSIONAL RECORD. I appre-
ciate having the views of ex-President
Duque, who now is publisher of La
Estrella de Panama and the Star and
Herald.
There being no objection, the telegram
was ordered to be printed in the RECORD,
as follows :
Senator WAYNE MORSE,
Washington, D.C.:
It Is with the utmost sincerity that I ex-
press to you my heartfelt gratitude as a
Panamanian for the clear, precise, cour-
ageous statements you made in the Senate
of the United States when you referred to
the crisis which has arisen with my country.
Your intelligent and lofty position shows
there are North Americans capable of under-
standing reality, of denouncing unhesitat-
ingly the blunders and mistakes of the Gov-
ernment of the United States, and of sug-
gesting timely and effective measures for the
effective correction of the errors which have
beep committed. I pray that your ideas will
prevail, pointing the right way to your Gov-
ernment In order that justice may be done
to Panama, which has suffered from misun-
derstanding for over half a century, in order
that the United States may recover its pres-
tige so severely damaged by the events of
which my country has been the victim.
Cordially,
T. GABRIEL DUQUE.
Ex-President of Panama and Publisher
of La Estrella de Panama and the
Star and Herald.
THE PANAMA CRISIS
Mr. MORSE. Mr. President, I ask
unanimous consent that there be In-
serted in the CONGRESSIONAL RECORD a
column by Inez Robb on the Panama
crisis. It, too, shows the shortcomings
of the past U.S. foreign policy toward
Panama. I agree with Miss Robb's major
observations and congratulate her.
There being no objection, the article
was ordered to be printed in the RECORD,
as follows:
Uss THE STICK
(By Inez Robb)
If there Is a time and place In which the
United States is always advised to walk softly
and carry a big stick, It Is Panama.
In that small, sensitive country, we are the
builders, operators, and the owners of one
of the Seven Wonders of the modern world.
This country cannot give up the Panama
Canal or surrender control of such an Indis-
pensable link In our own defense and that
of our allies. So It Is little short of treason
for chauvinist Americans of any age need-
lessly to endanger the American position in
Panama and seriously embarrass the Govern-
ment in Its day-to-day operation of the
canal and Its day-to-day relationships with
the Panamanian Government and people.
So If I were wielding the big stick at the
moment, I would walk softly in the Canal
Zone and apply it vigorously to the American
teenagers and the adults who encouraged
them In sparking the riots In Panama in
which at least 24 persons. Including three
American soldiers, were killed. That alone
is a terrible price-24 lives-for an arrogant
prank that everyone Involved well knew
could bring trouble.
By defying the gentlemen's agreement be-
tween the United States and Panama that
the American and Panamanian flags shall fly
side by side in the Canal Zone, American
high school students, backed by adults, have
not only the deaths of 24 persons on their
conscience, but have also:
1. Made the U.S. position In Panama much
more difficult.
2, Inexcusably and intolerably given the
Communists, particularly the Castrolte
brand. a club with which to beat us. especially
throughout Latin America where we are-
for our own salvation-doing our utmost to
combat Marxism.
3. Seriously embarrassed the Government
and the President, not only In our relations
with Panama but with all of South America.
4. Given the Panamanians an American-
made opportunity to demand a drastic revi-
alon of the 00-year-old treaty under which
this country holds the Canal Zone In per-
petuity.
Many Panamanians In the past decade have
been spoiling for trouble. for any excuse to
attack the American position. No one knows
the touchy position better than Americans
who live In the Canal Zone.
Since World War II we have lived in an
Increasingly angry and touchy -world In
which mounting national pride has been a
prime factor In International relations.
There is no defense of Panamanians looking
for any excuse for a fight; but there Is less
excuse for Americans gratuitously presenting
Panamanians with a readymade pretext.
By no stretch of Imagination can that
student flag raising In the zone be construed
as an act of patriotism when It was done in
defiance of U.S. Government regulations.
It was distressing to hear, via radio, some
of the students responsible for the deed
boasting of what they had done and of the
adult encouragement they had received.
when more than a score lay dead and Com-
munists around the world were turning the
tragedy Into a field day.
Surely, the U.S. Government will find it ex-
pedient quietly to weed out the troublemak-
era and the adults who encouraged them and
ship all back to the United States. At least,
they would no longer be in a position to cause
an International Incident -jy deliberately
tossing a match Into a tinderbox.
our jingoists will say that the United
States can crush Panama in 24 hours, and
that is doubtless a generous estimate of time.
But that Is not the way this Nation does
business, nor Is it the way of the 20th cen-
tury among civilized peoples.
The United States must continue to own,
operate" and protect the canal not as a dic-
tator or bully, but as a firm, friendly, and
decent neighbor.
Mr. MORSE. Mr. President, I ask
unanimous consent that a sound and
penetrating column by Eliot Janeway on
the Panamacrisis be printed in the CON-
GRESSIONAL RECORD.
The column is effective testimony in
support of the need for a thorough over-
hauling of our Panama foreign policy.
I congratulate Mr. Janeway.
There being no objection, the article
was ordered to be printed in the RECORD,
as follows:
So now we have a Suez of our own-right
in our own backyard.
it was 7 years ago that the Suez crisis
erupted over Nasser's demand to take over
the Anglo-French canal. This was certainly
a distant early warning to us In this hemi-
sphere, long before the rise of Castroism.
But it seems to have fallen on deaf ears.
Typically, the American reaction to Suez
was: "It can't happen here." When England
and France went to war against Egypt, Pres-
ident Eisenhower made his displeasure clear
and effective enough to back them off and
leave the canal in Egypt's hands.
Now we find ourselves hoist with our own
petard. Panamanians want to clip the
Eagle's wings just as Egyptians wanted to
pull the Lion's tail. They can cite not only
Eisenhower's stand against the European
canal owner. They can aim point to the
recommendation Harry Truman made at the
time to mediate the dispute by the device of
internationalization (though, of course, it is
nationalism. not internationalism, which is
powering Panama's demands).
Even though we find ourselves the heirs to
the embarrassing position Of the Suez Canal
owners, surprised and policyless despite 7
years of warning, we have a great deal more
strength to bring to the 'aargaining table
than did the British and the French. It is
economic strength, and not of the old-fash-
ioned Imperialist variety. In fact, it is par-
ticularly timely to bring It under scrutiny
now because it relates to the well-known
controversy over tax loopholes, which Is at
the top of the senatorial agenda this year.
For there's no tax loophole bigger than
the loophole known as the Panamanian Cor-
poration which, of course, enjoys exemption
from U.S. Federal taxes. There are at least
two ways in which this loophole becomes a
cornucopia for the economy of Panama for
those Panamanians who are on the receiving
end of the Yankee dollar.
The first relates to the acre subject of the
merchant marine. We have, in fact, sub-
sidized Panama into business at the expense
of our own oceangoing commerce, our own
port-serving industries, our own dying ship-
building Industry, and all the trades and jobs
which formerly served them. The Pana-
manian-flag ship is one of she main reasons
for the depression in U.S. shipping and ship-
building which has reached crisis propor-
tions. The demonstration of our inability
to compete in the grain-carrying trade has
just shown this to be the case.
The second endowment ,his tax loophole
of the Panamanian Corporation gives Pan-
ants, and Yankee dollar-owning Panamanians
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