clusive government administration of these programs. As the concept of assistance changes, so must the approach. One significant change reflected in the bill is pinpointing a more important role for private enterprise in development programs. Other assistance programs should be scrutinized to see which ones can be shifted from exclusively government administration to private sector participation.

A restatement of and commitment to long-range development becomes necessary as public pessimism over "foreign aid" increases. Several reviews are being undertaken to develop a restatement of foreign assistance objectives. President Nixon has created a task force to develop recommendations on new approaches. The Pearson Commission, working through the World Bank, has a similar mandate. A United Nations study known as the Tinbergen Report will also contain recommendations on developing a worldwide constituency for development as

sistance programs.

One approach stemming from the Tinbergen Report is a restatement of the need for industrialized countries to contribute one percent of their gross national product to the development effort. Interestingly, the United States initially proposed the one percent figure as a target for the Development Decade although no official commitment was made. It is thought that the Pearson Report might also make a similar recommendation. If a consensus develops, the United States could be asked to contribute approximately $7 to $8 billion. Given such possibilities, our national interest would be well served by continuing to place major emphasis on multilateral assistance and to exert a leadership role in establishing guidelines for long-range development.

Title II of S. 2347 properly points out an important role for private enterprise by recommending the establishment of an Overseas Private Investment Corporation. The National Chamber was instrumental in promoting this concept because our membership believes that private capital and know-how are the key to successful development projects.

Previous witnesses have detailed for you the proposed Corporation's structure and operation. Businessmen find the concept appealing for two main reasons. First, the Corporation would confine its support to private enterprise projects and enlist private sector representation in its direction and management. Secondly, as local and foreign private investment increases in less developed countries, there exists a real possibility of reducing overall Government foreign assistance expenditures.

Qualifications for Corporation President need to be strengthened in Section 323 (c) of the bill. This Section provides that the President of the United States should "take into account private business experience of the appointee." The appointee's credentials must include active and direct involvement in the conduct of business. Expertise in the position of operating executive is essential. Creditibility for a private enterprise-oriented agency would be lost if other than a businessman managed its operations.

New functions of the Corporation, compared with current AID private enterprise-related operations, would be direct private sector participation and sale of investments in the Corporation portfolio to private investors. The prospect of running the Corporation on a self-financing basis holds promise for a successful, new approach to one aspect of foreign aid. Management principles applied to portfolio participations and to revenue accrued above required reserves would give impetus to the corporation form of operation and eventually allow the divestiture of Government equity participation to the private sector.

An appropriated reserve of $75 million for investment guarantees plus $20 million initial capitalization (of a $100 million, 5-year request financed primarily from reflows of prior loans) for dollar loans seems reasonable provided: (1) the funds are earmarked as reserves and operating capital and (2) related savings are made in other assistance programs.

Investment guarantees are the incentives which form the proposed Corporation's backbone. The National Chamber strongly supports investment guarantees as encouragement for new investment and as a means of involving small and medium sized business.

Another basic and particularly attractive element of the Corporation concept is provision in Section 324 for support of intermediate financial and investment institutions. This is the area in which small business activities come into play. These operations are the keystone for increasing the rate of local saving and investment, and thus reducing reliance on foreign government sources of capital for economic development. Restructuring of local capital markets to meet the needs of individual economies must evolve before a proper investment climate

can be established. As President Nixon said so aptly in his foreign aid message, "Venture capital seeks profit, not adventure."

I mentioned earlier that the proposed Corporation dealt with one aspect of foreign aid. The Corporation should eventually become self-financing, thus reducing the need for Government resources in this area and enabling concentration on coordination of bilateral and multilateral programs to assure accomplishment of United States foreign policy objectives. As businessmen we have addressed ourselves to that part of the bill with which we are most familiar. We are acutely aware that foreign assistance is a many faceted operation. In previous discussions about a Corporation we acknowledged that its operation would complement rather than replace other assistance activities being conducted in the national interest. For example, technical assistance needs to be given more attention. It is only by learning through experience that workers, government officials, and employers from developing countries will be able to apply new technologies that serve to raise living standards and reduce the gap between population and productivity. Consideration should be given to whether technical assistance should be an AID Bureau or an entity of its own. Programs dealing with the same kind of technical assistance are scattered throughout several Government Departments. Better coordination might be achieved through a central body which could, like the proposed Corporation, be a quasi-governmental organization. Technical assistance experience gained by universities should be most helpful in this respect.

If the Congress deems it appropriate to establish a new technical assistance bureau within AID, our suggestions are that (1) among others, industry representatives be drawn upon on either a contract or loan basis to see that effective and new techniques are applied; (2) experts be assigned to revisit projects within a reasonable period of time to evaluate developments and make adjustments where necessary; and (3) immediate provision be made for the type of coordination of worldwide technical assistance programs that shows type and number of projects within a country and within regions, and why projects were not completed or failed.

Development of agricultural techniques and increased productivity is an example of the type of technical assistance that can help meet the food and employment needs of developing countries. Breakthroughs in developing high yield grains underlie the continuingly important role the business and academic communities have to play in technical assistance. Government food aid is a stopgap measure that must be conditioned on the recipient's willingness to embark upon and expand programs that utilize agricultural techniques which will produce food needed by starving populations in developing countries.

This approach ties in to the systems concept which we believe holds most promise for moving the development process ahead on a regional basis. Incorporated in this concept is the rationale that a country and a region are an economic unit. As such, each aspect of development must relate to and be an integral part of the overall development concept. Business, the universities, churches, and voluntary agencies should be brought into the first stages of planning so that all available experitise can be utilized at the outset.

In this regard, Section 402 of the bill encourages the cooperation of lessdeveloped countries in regional programs. Although the needs of individual countries may vary, such sectors as communication, transportation, and power facilities lend themselves to cooperative efforts on a regional basis. In emphasizing the development aspect of foreign assistance, the systems approach to a region as an economic unit would benefit both the region concerned and the individual countries which are part of that region.

As the United States gains more experience in development assistance, it becomes obvious that trade and aid are inseparable. For example, the development of "miracle seeds" will create within the very near future opportunities and problems for developing countries in exporting grain surpluses which are already being realized. Agricultural trade policies of industralized countries including the United States must be re-examined if the success achieved to date is to help move forward the day when developing countries will be self-sufficient. We are pleased that the President has established a task force of private citizens to make a comprehensive review of our foreign assistance activities. Of particular importance to that review is formulation of recommendations on what posture our national policies should take toward the developing countries in the 1970's. In following this review, Congress must exert its leadership wherever possible by keeping before the task force a sense of priorities.

In these times of budgetary restraint, it is especially important to continue to evaluate the efficiency and results of defense programs. Development assistance

programs designed to improve less-industrialized countries' living standards through self-help strength the institutions which communism seeks to weaken and destroy. Perhaps priorities should be reordered to channel more funds into strengthening free world economies. This approach encourages building upon individual liberty and opportunity rather than maintaining the status quo in playing off East against West.

World peace can be furthered by drawing out man's ability to improve his own lot. Moving the development process forward through primary emphasis on economic rather than military means could achieve U.S. foreign policy objectives while contributing favorably to our balance of payments.

Experience shows that those countries which are developing most rapidly are those where free enterprise, public policy, and external assistance have worked together. We should build upon these successes. At the same time, we must understand and correct the failures which are inherent in an undertaking of such magnitude as foreign assistance.

We request that the attached National Chamber Statement on Mutual Security be made a part of the official records of your hearings.

MUTUAL SECURITY STATEMENt Approved by Board of Directors of the CHAMBER OF COMMERCE OF THE UNITED STATES, FEBRUARY 21, 1969

I. BASIC CHAMBER POSITION ON FOREIGN ASSISTANCE

A. Foreign aid is an arm of U.S. foreign policy. Its objectives and principles have long been endorsed by the Chamber. Program objectives must be delineated as they relate to U.S. foreign policy. The U.S. public demands a demonstrable return on the foreign aid investment.

B. Refinement of the program must provide an effective base for the exercise of private enterprise initiative in foreign economic and social development. C. Program objectives should be continually clarified as they relate to U.S. foreign policy and to U.S. and foreign private enterprise.

D. Capital formation and accumulation by developing countries is essential to their economic development. Every effort must be made by these countries to create and maintain a climate that will attract development capital.

II. CHAMBER PROGRAM PROPOSALS

A. Long-range economic planning and development must be emphasized. To accomplish this goal, multi-year authorizations are desirable.

Although long-term aid investment seldom has a dramatic impact, in general it can yield far higher returns than short-term projects. Economic planning need not mean a government "planned economy" in underdeveloped countries. Recent efforts at country development planning have shown the need for private foreign investment. Business should be consulted in the drafting of country programs so that a market concept designed to produce a profitable, interrelated economic system can be introduced. Private resources must be increasingly relied upon to expand private development efforts and to reduce government programs outside of infrastructure projects.

Private enterprise and government should cooperate in their efforts to locate opportunities for the development of free and viable economies that can improve local conditions and provide opportunities for mutually profitable trade in goods and services. In particular, more attention must be directed to ways in which U.S. companies respond to and meet nationalistic concerns.

The expertise and recommendations of the International Private Investment Advisory Council on Foreign Aid should be fully considered.

B. Government incentives to U.S. private foreign investment serve a useful purpose. But a more positive approach is imperative, centering around the need to build an economic and political framework in which private enterprise can operate at full potential. Priority must be given to removal of disincentives that discourage private investment. Implications and longer-term consequences of government restrictions on direct investment call for termination of these controls. Certain provisions in the Revenue Act of 1962 on taxation of foreign income are punitive and self-defeating. International antitrust standards and an international patent system should also be developed.

International principles relating to the rights and responsibilities of private foreign investment should be clarified. A multilateral system of investment guarantees could contribute to such clarification.

The United States should suspend foreign assistance to any nation that takes discriminatory or confiscatory action against U.S. private investment in such nations without taking appropriate steps to discharge its obligations under international law including prompt and full compensation or relief. Courts in the United States should determine and apply principles of international law in appropriate cases to encourage the development of an international legal system that will contribute to the improvement of the investment climate, and the protection of private property abroad.

C. Development loans should receive priority. The trend towards government lending to private institutions and organizations for the purpose of their development should be accelerated. Terms of development loans should take into consideration the overall debt management position of recipient countries. D. A limited program of military assistance to selected allies is essential to free world security. The cost to the United States of such assistance should remain accountable to the Department of Defense.

E. Multilateral development financing and technical assistance should be emphasized as an essential instrument of U.S. foreign policy. In many instances, this approach is more practical and effective than the bilateral approach. Congress and the Administration should continue to place major emphasis on U.S. participation in international institutions, including regional development banks, provided the United States has satisfactory voting rights. Such programs must assign a major role to the private sectors of both donor and recipient nations, and the administrative cost of such programs must be equitably shared by the respective national governments. The Chamber recognizes the need for selective United States bilateral programs that benefit the national interest, augmented by essential multilateral programs. Moreover, private enterprise consortia should be encouraged.

F. The Administration must apply great selectivity in choosing which nations and projects are to be aided from among ever-increasing requests for assistance. Emphasis must be placed on self-help and technical assistance programs that enable aid recipients to solve their own problems.

G. The Food for Freedom Program is a temporary relief measure that serves, in general, U.S. foreign policy provided agricultural techniques and productivity are improved. Private initiative must be encouraged to undertake fundamental agricultural development and food production that can lead to more capital intensive industrialization.

U.S.-owned local currencies should be used where available to finance investment surveys and vocational training facilities. Funds should be available to provide information about voluntary birth control programs when such funds are requested by less-developed countries.

H. The Alliance for Progress must be moved forward along the sound lines recommended by its Inter-American Committee (CIAP). A broader concept of the Alliance should be developed by encouraging other member countries to contribute appropriate financial and technical assistance for Latin American development.

The objectives of the Alliance must be realistically determined with emphasis on regional market integration and the availability of external resources. Alliance programs must create a stable atmosphere in which private investment and initiative, local and foreign, can operate beneficially.

I. Efforts should continue on both a bilateral and multilateral basis to expand cooperation by industrialized countries in assisting less-developed countries. J. Effective foreign assistance programs can be implemented only by competent personnel. Private enterprise urges, and is willing to cooperate with AID in, the maintenance of such standards. The administrators of the program must have the legislative authority to improve the quality and reduce the number of AID personnel, both domestic and overseas.

STATEMENT BY MRS. BRUCE B. BENSON, PRESIDENT, LEAGUE OF WOMEN

VOTERS OF THE UNITED STATES

The League of Women Voters wishes to express its support of the provisions of the Foreign Assistance Act of 1969 (S 2347), which relate to the development assistance.

The League is a nonpartisan political study and action organization with 157,000 members in every state, the District of Columbia, Puerto Rico and the

Virgin Islands. Our organization has supported sound and adequately financed development assistance to the less developed countries ever since the program's inception 20 years ago.

We are pleased to find that the 1969 act has been skillfully revised in order to clarify the purposes and criteria of economic aid and to organize better the legislative provisions.

We take no stand on military assistance except to reiterate our desire to see development aid completely separated from military aid. We continue to hold that development programs should be judged on their own merits-primarily in terms of this country's contribution to the international development effort in general and to a recipient country's own development effort in particular. We welcome the act's major emphases on multilateral aid, technical assistance and private development assistance.

Multilateral Aid. We approve the move in the direction of increased funding through multilateral agencies. Greater reliance on international and regional mechanisms has become more and more feasible. Regional development institutions, as well as new coordinating devices and lending agencies, now supplement the increasingly effective work of the United Nations agencies. Also, expanded contributions from other nations have reduced the likelihood of lopsided U.S. contributions or charges of overdomination. We feel the effectiveness of development programs could be greatly enhanced if selective, but increased, use of international channels for the flow of funds is used.

More specifically, we support the:

Proposed U.S. contribution ($100 million) for the United Nations Development Program and the other U.N. agencies-an increase of $29 million over the 1968 level.

Proposal in section 401(a), which continues the availability of 10 per cent of development assistance funds for transfer to international or regional organizations.

Authorization of the full amount of funds requested for fiscal 1970 for the Indus Basin Fund-a project which contributed to the stability of India and Pakistan by developing the water resources of the basin.

We also like the emphasis given in the bill (under Multilateral Coordination) on the mutual advantages of integrating our programs, when appropriate, with other donor countries or multilateral programs, such as the Indian consortium. Technical Assistance. The League strongly supports the proposal for a two-year authorization for technical assistance in order to insure adequate planning and continuity in a field which especially requires it. We also welcome the increased funds proposed. The new technological developments and concerns of the last few years require expanded applications of technical aid. In agriculture, especially, the "green revolution" calls for more research to improve and adapt new varieties of seeds, for education in the use of techniques and materials, and for a new emphasis on the importance of transportation and storage facilities. Developments in other fields-family planning, education, nutrition, health, the search for protein sources-have also increased the need for technical aid.

But, of course, technical assistance must go hand in hand with capital assistance. The two are inseparable partners. Their relative proportions must be kept in proper balance.

Private Development Assistance. The League has long recognized the contribution which the U.S. private sector, especially voluntary organizations, can make to economic and social development in the less developed countries. The Overseas Development Fund, a nonprofit, educational affiliate of the League of Women Voters, is an effective example of how American organizations can share techniques for popular participation in the development process without any attempt to transplant wholesale U.S. institutions or procedures.

We also welcome attempts to increase private investment in the developing nations, providing there is adequate correlation with our other aid programs. We have for some time backed programs which facilitate private investment in less developed countries (e.g., pre-investment surveys and investment loans) and protect the U.S. investor against the special risks (e.g., investment guarantees.) At the same time, we are sensitive to charges of economic imperialism and equally concerned that the developing country be protected against exploitation or undue pressures. We urge that any legislation passed by this Congress encourage jointventure investments, as well as the employment and training of native workers. We do not take a position at this time on specific details of the proposed Overseas Private Investment Corporation. However, League members this year will