I would like the Governors to have just this sense of the work in which we are engaged, because it is an interpretation and an emphasis that we cannot very well spell out in quite these concrete terms in public addresses, and yet the fundamentals of it are so important to our country. The whole operation, as you will note from this map, is engaged around the world. The colors indicate the four areas in which we are organized parallel to the area organization of the Department of State, with the Assistant Secretaries of State having the same areas as my Regional Directors for operation. In the entire world we are engaged in a diversity of programs that affect in a fundamental way the security, the economic outlook, and the whole humanitarian sense of the people of the United States.

Now in this approach we keep certain fundamentals in mind. Uppermost, of course, is the future security of the United States in its relation to peace. And in this respect no one should ever underestimate the importance of the air bases around the world to the United States. With these modern weapons and with their tremendous capacity, as you are aware, one squadron of modern bombers with modern weapons in one flight can deliver a destructive impact greater than all of the bombs dropped by all of the airplanes in all of their flights on both sides in World War II. So when we think of these modern weapons in relationship to the air, we are thinking of a tremendous power, and the United States is not alone in the knowledge of these weapons. So when you think of mutual deterrents, you think of the total security posture of the United States, you think of the opposing center in the Soviet Union and their calculation as to whether or not they can prevent the United States from defense and retaliation. These air bases, which are indicated in summary, that are all around the world, are a tremendously important part of the security posture of the United States. So in this inter-related program of military means, economic support, technical cooperation, the relationship of what we do to the receptivity, the congeniality, if you please, of the posture of the United States around the world in the air is of tremendous importance.

Another fundamental thing that we keep in mind is the fact that our economy for its future requires a relationship to the economy of the rest of the world. One aspect of that relationship is the future requirements for basic and strategic materials. This simple chart indicates some of the well-known raw materials that we must obtain from beyond our borders in major percent. And the percents indicate the percent of imports we must take into our country in order to obtain these materials. And so in our relationship to the economy of the free world as a whole, we have in mind that in the future, not only for defense but also for the success of our own economy, we need increasing quantities for our expanding economy of basic materials that must come from all around the world. When we are building railroads, opening ports, working with other countries, we never lose sight of this. And with it, of course, the level of economic activity the world flow of trade, has a direct relationship to the United States economy.

The Council of Economic Advisors, in their last report, pointed out that one of the reasons that our economy came through the post-Korean war readjustment in a better way than most economists had expected was that the strength of the economy of Europe and the rest of the world gave us a favorable circumstance in which to make our own readjustment. On the other hand in 1929 and '30, as we began to contract a bit we were hit from overseas by contraction there, by a slide-down of all raw material prices which affected raw material inventory prices in the United States, and there was a further pull-down by a drop in the export markets in the United States that was very sharp, and then by financial panics in Vienna and Paris, and events overseas that threw adverse psychology into the U. S. economic picture in the 30's. This time, as we came through this readjustment, partially because of the economic strength established overseas through these sustained programs, we met it by strength and expansion of the economics overseas, the sustaining of raw material prices, the sustaining of export markets so they actually went up four percent at the very time we were making our readjustment here, and that was an economic dividend to the United States. So our security in the air and the future of our economy are ever in mind in this world-wide program.

This chart indicates in a dramatic way what has resulted in no small part because of the Marshall Plan. You see the high water mark of the Marshall Plan aid, the 1949 fifteen-month period of $5.7 billion. You see the declining level of our aid as Europe got on its feet, and on the right you see their own economic production coming up so that they today have a gross national product higher than they have ever had before. There is real strength and stability in Western Europe and from that, not only is there economic strength, but we are now getting in Western Europe through the European NATO nations plus Germany that is just on her way in, this sharply increased defense effort. In other words, with U. S. aid, starting here with the economic and the military at $4.6 billion and $6.3 billion, then going down with the economic less and the military continuing, but both declining, the defense effort by Europe on its own resources was coming up so that today Europe is spending about $13 billion a year of its own resources on defense. This defense fits into NATO in the total security posture of the United States and the free world. So I believe that impartial observers can say at this time that the Marshall Plan has been a solid success.

So this then is a further background from which we appraise some of the internal problems in Europe that remain-some in which significant advance has been accomplished. Communist influence is receding, but you still have two key problems of the Communist influence in Italy and in France. You see the declines in the Communist Party membership, in their newspaper circulation; you see from the green to the red in most countries the decline in Communist percentage of votes in national elections. But you see also the intensity of the continuing problem in Italy and France, and many of our special programs-the family food packages to the families most in need, the exchange programs with women leadership in welfare and health

and other activities in these two countries of France and Italy, the exchanges with the young labor leaders who are not Communists, with the cooperation of our AFL and CIO-some of these specialized programs, which sometimes can be ridiculed from an unthinking basis, have as their pin-pointed objective the weakening of the Communist Party in Italy and France and the strengthening of the forces of freedom. They are beginning to yield some dividends. But the elections of the next eighteen months or two years in Italy and France will give a better indication of whether we have finally gotten that Communist strength on the down-turn.

The fact that the Communists lost the election in the big Fiat plant in Italy was an encouraging sign. They were casting about 67 percent of the votes for Communist unions. We have got them cut down to a 36 percent Communist vote in the big Fiat plant now-and other similar results are reported in Italy. So there are some encouraging signs that we may be finally getting results in Italy and in France on this problem.

Now, taking the European background, we turn to the crucial areasand you do not need a briefing to know that the real struggle point is now on in Asia. Some hot wars have been waged. Great tensions exist. And a tremendous economic and subversive contest is going on. You see here the perimeter of the Soviet bloc. You see Southeast Asia, South Asia, the tremendous numbers of people, 480 million in South Asia, the Near East100 million, the Southeast Asia area, and the Japanese-Korean area, which are in relationship, in turn, to the Western European area I have been talking about. You see an indication of the resources- -62 percent of the world's known oil reserves right here in the Near East and 24 percent of the world's chrome; (indicating South and Southeast Asia) here, most of the jute; rice, manganese. You can see hemp, natural rubber, copra, chrome, and of course the European complexion that we know more about. But that spotlights for us the center of the new program.

As our security posture is improving, the Soviet is intensifying its economic warfare. This chart shows in the red symbols where the Soviet has entered a trade fair, either in the last year or projected for the coming year. The orange symbols show where they have made a trade agreement, and here we, with considerable success, restrict the trade to items that are not strategic; that is, not directly contributing to a war potential. You see in the factory symbols where the Soviet has made new offers of capital assistance to these countries in terms of long-term loans, 22 percent interest, taking their pay in commodities which the country being aided would like to ship to the Soviet Union—a steel mill in India, a sugar plant down in Indonesia, a cement plant they are offering up in Iceland, and some plants up in Finland. And then finally you see that, after having criticized our technical assistance for years and ridiculed it, they have now begun to copy it and they are making technical assistance offers. They will send in, for example, governmental accounting machinery, something like the IBM equipment, and they'll send in plenty of technicians to show how to install it in the center of government, and you know what that would mean in relationship

to penetration by the Communists. The symbols of the black silhouettes of men are where they have made offers of capital assistance. Not many of these offers have thus far been accepted, but this pinpoints the center of attention. You also know we're developing resources in a military, an economic, and a technical way in the arming of Free Asia. And in that group of countries from Afghanistan, down around and up to Korea and Japan, resides approximately one-third of the peoples of the world. Many of them have recently emerged from colonialism to new sovereignties. They have a low standard of living. There is great capital deficiency. There is a limitation of industry, except for Japan, which has a considerable industrial capacity.

So we are pinpointing, in the program the President sent to the Congress last week, an effort to bring together the resources of this area, facilitate the flow of trade, bring together the raw materials that are there with the industrial capacity of Japan, to avoid the Soviet tieing these economies into their economy and also to avoid the collapse of these economies.

And so the key in the discussions, in the consideration of Congress during these next months will be the way in which this country-with the success of the European program behind it substantially, with the Latin American program, as the Vice President indicated, carried largely by trade, by private investment, by the Export-Import Bank and the World Bank and private loans, with some special problems remaining in the Near East, and some beginnings of early programs in Africa-concentrates its major attention on the hot front of the world struggle, which is in this arming of Free Asia, and endeavors by ingenuity, by the enlistment of private industry, by fitting the means to the task, to win through in this area of the world.

These are many of the most complex problems involved, as you realize. You have read of Vietnam. You know that there were some years of a struggle there and that it is still on a very difficult and complex basis, but we have been building strength in that area of the world.

The Secretary of State has arrived, and I appreciate this opportunity of being with you and I will wait, if you have any questions after the total morning presentation.

Remarks of Henry Cabot Lodge, Jr.,

U. S. Representative to the United Nations

Mr. Chairman and gentlemen, I presume that the same privilege is extended to me as to Secretary Dulles, that everything I say is off the record, because I would like to make a very full and candid disclosure of things which obviously cannot be put into the newspapers.

I'd like to say also at the outset that I extend an invitation to all of you whenever you have the time and you are in New York to let me know so that I can have the chance to show you the United Nations. Some of you here have already come but I would like to see every Governor come.

Beginning in September, it will be particularly active but there is always something going on, and you are always welcome.

I'd like to also say that in the United States delegation to the United Nations we have complete bipartisanship. At the last session, Senator Fulbright of Arkansas and Senator Smith of New Jersey were members of the delegation. At the preceding session Congressman Richards of South Carolina and Congressman Bolton of Ohio-as well as Republicans and Democrats from private life, and there isn't any partisan line drawn.

Let me say at the beginning that the United Nations, which is celebrating its tenth anniversary this year with ceremonies in San Francisco in June, like most human institutions, has not developed in precisely the way that the founders thought. The founders thought that there would be big power unity, on which the coercive power of the Security Council to issue legallybinding action orders would be based. Of course, there has been no big power unity. The cleavage between the Soviet Union and the United States developed in the next year, with the result that the Soviet veto power has completely paralyzed the legally-binding power of the Security Council.

But in spite of that fact, the United Nations has developed into an immensely influential instrumentality. It is the only truly world forum. It is the most powerful single engine in the world for influencing world opinion. And only by the development of world opinion can you develop a world sense of justice, and only on the basis of a world sense of justice will you organize peace-dependably. Now, you may have peace for periods of time, the way we have had and the way we are having now-but you will only organize it dependably on the basis of justice.

It is a marvelous forum to proclaim the ideas and the ideals of the United States and to show up the errors and the misdeeds of communism. But,