.# >*•' %iA ■^hN •; -^ J i 1 ^^ A '^ V # THE GEORGE AND HELEN LADD LIBRARY BATES COLLEGE LEWISTON, MAINE (•) VT c-h-r C' 0- a |^3!|| ' i I,.-- 1; -^f '-s ¥ fc. J BiffES COLLEGE LlBMif f*>^ »** BATES COllEGI:, LE PUBLIC PAPERS OF THE PRESIDENTS OF THE UNITED STATES / '^'^ ^ -^ PUBLIC PAPERS OF THE PRESIDENTS OF THE UNITED STATES Dwight D. Eisenhower ,;^****% 1955 Containing the Public Messages^ Speeches^ and Statements of the President JANUARY I TO DECEMBER 3 1, 1 955 PUBLISHED BY THE OFFICE OF THE FEDERAL REGISTER NATIONAL ARCHIVES AND RECORDS SERVICE GENERAL SERVICES ADMINISTRATION /934 U.S. GOVERNMENT PRINTING OFFICE: 1959 For sale by the Superintendent of Documents, U.S. Government Printing Office Washington 25, D.G. - Price $6.75 FOREWORD THERE HAS BEEN a long-felt need for an orderly series of the Public Papers of the Presidents. A reference work of this type can be most helpful to scholars and officials of government, to reporters of current affairs and the events of history. The general availability of the official text of Presidential docu- ments and messages will serve a broader purpose. As part of the expression of democracy, this series can be a vital factor in the maintenance of our individual freedoms and our institutions of self-government. I wish success to the editors of this project, and I am sure their work through the years will add strength to the ever-growing traditions of the Republic. /) CXJ^ 4L^'tiC/ C^ PREFACE IN THIS VOLUME are gathered most of the public messages and statements of the President of the United States that were released by the White House during the year 1955. A similar volume, covering the year 1957, was published early in 1958 as the first of a series. The President's foreword is reprinted from that volume. Immediate plans for this series call for the publication of annual volumes soon after the close of each new calendar year, and at the same time undertaking the periodic compilation of volumes covering previous years. Volumes covering the years 1955 through 1958 are now available. This series was begun in response to a recommendation of the National Historical Publications Commission (44 U.S.C. 393). The Commission's recommendation was incorporated in regula- tions of the Administrative Committee of the Federal Register issued under section 6 of the Federal Register Act (44 U.S.C. 306). The Committee's regulations, establishing the series, are reprinted at page 886 as "Appendix D." The first extensive compilation of the messages and papers of the Presidents was assembled by James D. Richardson and pub- lished under Congressional authority between 1896 and 1899. It included Presidential materials from 1789 to 1897. Since then, there have been various private compilations, but no uniform, systematic publication comparable to the Congressional Record or the United States Supreme Court Reports. For many years Presidential Proclamations have been published in the United States Statutes at Large. The Federal Register Act in 1935 required that Proclamations, Executive Orders, and some other official Executive documents be published in the daily Federal Register; but the greater part of Presidential writings and utterances still lacked an official medium for either current vn Preface publication or periodic compilation. Some of them were inter- spersed through the issues of the Congressional Record while others were reported only in the press or were generally available only in mimeographed White House releases. Under these cir- cumstances it was difficult to remember, after a lapse of time, where and in what form even a major pronouncement had been made. CONTENT AND ARRANGEMENT The text of this book is based on Presidential materials issued during the calendar year 1955 as White House releases and on transcripts of news conferences. Where available, original source materials have been used to protect against substantive errors in transcription. A list of the White House releases from which final selections were made is published at page 863 as "Appendix A." During this year the White House began the practice of filming the news conferences and of allowing direct quotation of the President's answers (see editorial note to Item 18, page 185). Proclamations, Executive Orders, and similar documents re- quired by law to be pubHshed in the Federal Register and Code of Federal Regulations are not repeated. Instead, they are listed by number and subject under the heading "Appendix B" at page 877. The President is required by statute to transmit numerous reports to Congress. Those transmitted during 1958 are listed at page 884 as "Appendix C." The items published in this volume are presented in chronolog- ical order, rather than being grouped in classes. Most needs for a classified arrangement are met by the subject index. For exam- ple, a reader interested in veto messages sent to Congress during 1955 will find them listed in the index under "veto messages." The dates shown at the end of item headings are White House release dates. In instances where the date of the document differs from the release date that fact is shown in brackets immediately vm Preface following the heading. Other editorial devices, such as text notes, footnotes, and cross references, have been held to a minimum. Remarks or addresses were delivered in Washington, D.G., unless otherwise indicated. Similarly, statements, messages, and letters were issued from the White House in Washington unless otherwise indicated. The planning and editorial work for this volume were under the direction of David C. Eberhart of the Office of the Federal Register, assisted by Warren R. Reid and Mildred B. Berry. The index was prepared by Dorothy M. Jacobson. Frank H. Mortimer of the Government Printing Office developed the typography and design. Wayne C. Grover Archivist of the United States Franklin Floete Administrator of General Services October 15, 1959 40308—59 2 j^ CONTENTS FRONTISPIECE — Picturc of the President taken in his office at the White House, July 25, 1955. Page FOREWORD V PREFACE Vn LIST OF ITEMS Xm PUBLIC PAPERS OF DWIGHT D. EISENHOWER . . I Appendix A — White House Press Releases, 1955 . . 863 Appendix B — Presidential Documents Published in the Federal Register, 1955 877 Appendix C — Presidential Reports to the Congress, 1955 . 884 Appendix D — Rules Governing This Publication . . 886 INDEX 889 XI LIST OF ITEMS Page 1 Memorandum Concerning the Government Em- ployees Incentive Awards Program. January i, 1955 i 2 Statement by the President on the Death of President Remon of Panama. January 3, 1955 2 3 Letter to the Secretary of Defense on National Secu- rity Requirements. January 5, 1955 2 4 Annual Message to the Congress on the State of the Union. January 6, 1955 7 5 Special Message to the Senate Transmitting Mutual Defense Treaty Between the United States and the RepubHc of China. January 6, 1955 30 6 Special Message to the Congress on the Foreign Eco- nomic Policy of the United States. January 10, 1955 32 7 Message to the Congress Transmitting the President's First Semiannual Report on Activities Under the Agricultural Trade Development and Assistance Act. January 10, 1955 4^ 8 Special Message to the Congress on Federal Person- nel Management. January 11, 1955 41 9 Special Message to the Congress on Postal Pay and Rates. January 11,1955 4^ 10 The President's News Conference of January 12, 1955 54 1 1 Remarks at Luncheon Meeting of the Association of American Colleges. January 13, 1955 69 xm List of Items Page 1 2 Special Message to the Congress on National Security Requirements. January 13, 1955 72 13 Special Message to the Congress on Career Incentives for Military Personnel. January 13, 1955 78 14 Letter to the President of the Senate and to the Speaker of the House of Representatives Approving Certain Virgin Islands Corporation Activities. Janu- ary 13, 1955 84 15 Cablegram to Dr. Albert Schweitzer on the Occasion of His 80th Birthday. January 13, 1955 85 16 Statement by the President on United Nations Nego- tiations With Communist China for Release of American Airmen and Other Personnel. January 14. 1955 85 1 7 Annual Budget Message to the Congress : Fiscal Year 1956. January 17, 1955 86 18 The President's News Conference of January 19, 1955 185 19 Annual Message Presenting the Economic Report to the Congress. January 20, 1955 200 20 Letter to Representative Auchincloss on the Second Anniversary of the President's Inauguration. Janu- ary 20, 1955 205 21 Special Message to the Congress Regarding United States Policy for the Defense of Formosa. January 24. 1955 207 22 Remarks on Receiving Statue Presented by Ambassa- dor Krekeler on Behalf of the German People. Janu- ary 25, 1955 212 XIV List of Items Page 23 Toasts of the President and President Magloire of Haiti. January 26, 1955 214 24 Statement by the President Upon Signing the Joint Resolution on the Defense of Formosa. January 29, 1955 215 25 Special Message to the Congress Recommending a Health Program. January 31,1 955 2 1 6 26 The President's News Conference of February 2, 1955 223 27 Message Recorded for the New York USO Defense Fund Dinner. February 3, 1955 237 28 Message to the Boy Scouts of America. February 6, 1955 238 29 Letter to the Governors Concerning Uniform State Legislation on Absentee Voting Rights of Members of the Armed Services. February 7, 1955 239 30 Letter to Chan Gurney, Acting Chairman, Civil Aeronautics Board, on the West Coast-Hawaii Case. February 7, 1955 242 31 Special Message to the Congress Concerning Federal Assistance in School Construction. February 8, 1955 243 32 Message to Nationwide Meetings in Support of the Campaign for Radio Free Europe. February 8, 1955 250 33 The President's News Conference of February 9, 1955 251 34 Message to Meetings of the Nationwide Clinical Conference on Heart Ailments. February 9, 1955 264 XV List of Items 41 The President's News Conference of February 23, 1955 Page 35 Remarks at Luncheon Meeting of the Republican National Committee and the Republican National Finance Committee. February 17, 1955 265 36 Exchange of Messages Between the President and President Chiang Kai-shek of the Republic of China. February 18, 1955 271 37 Letter to Emil Sandstrom, League of Red Cross Societies, on Completion of the Flood Relief Program in Europe. February 19, 1955 272 38 Remarks Recorded for the "Back-to-God" Program of the American Legion. February 20, 1955 273 39 Special Message to the Congress Regarding a Na- tional Highway Program. February 22, 1955 275 40 Letter Extending Greetings to the Brotherhood Din- ner of the National Conference of Christians and Jews. February 22, 1955 281 282 42 Exchange of Messages Between the President and His Imperial Majesty the Shah of Iran. February 23. 1955 295 43 Remarks at the Annual Breakfast of Masonic Leaders. February 24, 1955 296 44 Message to the Inter-American Investment Con- ference Held in New Orleans. February 28, 1955 299 45 Remarks Recorded for the Opening of the Red Cross Campaign. February 28, 1955 300 XVI List of Items Page 46 Message to the Pope on the Occasion of His 79th Birthday. March 2, 1955 301 47 The President's News Conference of March 2, 1955 302 48 Letter to His Majesty Bao Dai, Chief of State of Viet-Nam. March 3, 1955 315 49 Statement by the President Concerning Offer of Food Supphes to Albania. March 4, 1955 316 50 Special Message to the Congress on the Extension of the Renegotiation Act of 1951. March 4, 1955 3^^ 51 Letter to General Omar N. Bradley, Chairman, President's Commission on Veterans' Pensions, Con- cerning a Study of Veterans' Benefits. March 5, 1955 320 52 Remarks to Distinguished Service Cross Recipients and Commanders Who Participated in the Seizure of the Remagen Bridge. March 7, 1955 323 53 Remarks to Students Attending the International School of Nuclear Science and Engineering, Argonne National Laboratory. March 10, 1955 324 54 Message to the Prime Ministers of the Seven Nations Signatory to the Protocols Establishing the Western European Union. March 10, 1955 3^5 55 Letter to George A. Garrett, President, Federal City Council, Concerning the Redevelopment of South- west Washington. March 10, 1955 328 56 The President's News Conference of March 16, 1955 329 57 Statement by the President Announcing the Appoint- ment of Harold Stassen as Special Assistant to the President for Disarmament Studies. March 19, 1955 343 xvn List of Items Page 58 Remarks at nth Annual Washington Conference of the Advertising Council. March 22, 1955 345 59 The President's News Conference of March 23, 1955 35^ 60 Remarks to Representatives of the American Volun- tary Societies Cooperating in the United States Escapee Program. March 25, 1955 366 61 Joint Statement Following Discussions With Prime Minister Scelba of Italy. March 28, 1955 367 62 The President's News Conference of March 30, 1955 368 63 Statement by the President on the Death of Joseph Pulitzer and Robert R. McCormick. April i, 1955 381 64 Letter to the President of the Senate and to the Speaker of the House of Representatives Concern- ing the Inter- American Highway. April i, 1955 382 65 Statement by the President on the Retirement of Sir Winston Churchill, Prime Minister of the United Kingdom. April 5, 1955 384 66 Statement by the President on the Appointment of Anthony Eden as Prime Minister of the United King- dom. April 6, 1955 385 67 Memorandum to the Director of the Office of De- fense Mobilization Relating to the Buy American Act. April 7, 1955 385 68 Remarks to the Easter Egg Rollers on the South Grounds of the White House. April 11, 1955 386 69 Statement by the President on the Mutual Security Program. April ii, 1955 386 xvm List of Items Page 70 Remarks at The Citadel, Charleston, South Carolina. April 12, 1955 388 71 Letter to the Chairman of the Joint Committee on Atomic Energy on the Proposed Agreement for Cooperation With NATO on Atomic Information. April 13, 1955 391 72 Special Message to the Congress on United States Membership in the Proposed Organization for Trade Cooperation. April 14, 1955 393 73 Telegram to Senator Thurmond Saluting James F. Byrnes as a Great American. April 16, 1955 399 74 Letter to Secretary Dulles Regarding Transfer of the Affairs of the Foreign Operations Administration to the Department of State. April 17, 1955 399 75 Statement by the President on the Death of Albert Einstein. April 18, 1955 403 76 Special Message to the Congress on the Mutual Security Program. April 20, 1955 404 77 Citation Presented to Dr. Jonas E. Salk and Accom- panying Remarks. April 22, 1955 414 78 Citation Presented to the National Foundation for Infantile Paralysis and Accompanying Remarks. April 22, 1955 415 79 Address at the Annual Luncheon of the Associated Press, New York City. April 25, 1955 416 80 Letter to Harvey S. Firestone, Jr., Upon Accepting Honorary Chairmanship of the United Service Or- ganizations. April 26, 1955 424 XIX List of Items Page 8 1 The President's News Conference of April 27, 1955 425 82 Special Message to the Congress Concerning a Pro- gram for Low Income Farmers. April 27, 1955 440 83 Remarks to the Committee for a National Trade Policy Following Congressional Action on the Pro- posed Trade Agreements Extension Act. April 28, 1955 442 84 Remarks at the Cornerstone-Laying Ceremony for the American Federation of Labor Building. April 30, 1955 443 85 Remarks at the Annual Meeting of the United States Chamber of Commerce. May 2, 1955 446 86 Special Message to the Congress on United States Participation in the International Finance Corpora- tion. May 2, 1955 449 87 Citation and Remarks at Presentation to Field Mar- shal Pibulsonggram of Thailand of the Legion of Merit, Degree of Chief Commander. May 2, 1955 453 88 Remarks at the Governors' Conference Dinner. May 2, 1955 454 89 Statement by the President on Approving a Proposed Agreement With Turkey for Cooperation in the Peaceful Uses of Atomic Energy. May 3, 1955 457 90 The President's News Conference of May 4, 1955 459 91 Letter to the President of the Senate and to the Speaker of the House of Representatives on Revision of the Philippine Trade Agreement. May 5, 1955 475 XX List of Items Page 92 Remarks at the Dedication of the Washington He- brew Congregation Temple. May 6, 1955 476 93 Remarks to Delegates to the General Assembly of the Organization of World Touring and Automobile Clubs. May 10, 1955 479 94 Remarks at the Republican Women's National Conference. May lo, 1955 4^^ 95 The President's News Conference of May 11, 1955 486 96 Statement by the President Concerning Community and State Conferences on Education. May 11, 1955 500 97 Message Recorded for Use in Conjunction With Observance of Armed Forces Day. May 12, 1955 501 98 Message to President Koerner of Austria on the Signing of the Treaty Restoring Austrian Inde- pendence. May 15, 1955 502 99 Remarks of the President During Secretary Dulles' Television Report on His European Visit. May 17. 1955 503 100 The President's News Conference of May 18, 1955 505 1 01 Memorandum to Federal Agencies Directing Par- ticipation in a National Civil Defense Exercise. May 18, 1955 519 102 Veto of Postal Field Service Compensation Bill. May 19, 1955 520 103 Remarks to the President's Committee on the Em- ployment of the Physically Handicapped. May 23. 1955 522 XXI List of Items Page 104 Remarks at a Dinner Sponsored by the District of Columbia Republican Women's Finance Com- mittee. May 23, 1955 524 105 Remarks to the National Association of Radio and Television Broadcasters. May 24, 1955 527 106 Letter to Ross Rizley, Chairman, Civil Aeronautics Board, Regarding the States-Alaska Case. May 25. 1955 531 107 Special Message to the Congress Transmitting Con- ventions and Recommendations Adopted at Geneva by the International Labor Conference. May 26, 1955 532 108 Remarks at Dedication of the Armed Forces Insti- tute of Pathology, Walter Reed Medical Center. May 26, 1955 535 109 Special Message to the Congress Recommending Amendments to the Refugee Relief Act. May 27, 1955 538 no Citation and Remarks at Presentation of the Na- tional Security Medal to J. Edgar Hoover. May 27. 1955 542 1 1 1 Statement by the President on Safe Driving. May 27, 1955 544 112 The President's News Conference of May 31, 1955 544 113 Statement by the President on the Polio Vaccine Situation. May 31, 1955 559 114 Message to the Senate Transmitting the Austrian State Treaty. Jime i, 1955 563 xxn List of Items Page 115 Remarks on Acceptance of a Palestinian "Lamp of Freedom" From the United Jewish Appeal. June 3. 1955 565 116 Veto of Bill for Relief of Kurt Glaser. June 3, 1955 566 117 Remarks at the United States Military Academy Alumni Luncheon, West Point, New York. June 6, 1955 569 118 Address at the Graduation Ceremonies, United States Military Academy, West Point, New York. June 7, 1955 572 119 The President's News Conference of June 8, 1955 578 1 20 Statement by the President Upon Signing the Postal Field Service Compensation Act. June 10, 1955 592 121 Address at the Centennial Commencement of Penn- sylvania State University. June 11, 1955 593 122 Joint Statement Following Discussions With Chan- cellor Adenauer of Germany. June 14, 1955 600 1 23 Statement by the President on Proposed Agreements With Belgium, Canada, and the United Kingdom for Cooperation on the Civil Uses of Atomic Energy. June 15, 1955 601 1 24 Letter to William Randolph Hearst, Jr., Regarding His Appointment to the President's Committee for Traffic Safety and Its Advisory Council. June 18, 1955 603 125 Letter to T. S. Petersen Requesting Him To Serve on the President's Committee for Traffic Safety. June 18, 1955 604 xxm List of Items Page 126 Address at the Tenth Anniversary Meeting of the United Nations, San Francisco, California. June 20, 1955 605 127 Remarks to the National Association of Television and Radio Farm Directors. June 21, 1955 611 128 Remarks to the National 4--H Conference. June 21, 1955 613 1 29 Statement by the President Upon Signing the Trade Agreements Extension Act. June 21, 1955 615 1 30 Memorandum to Federal Agencies on the Commun- ity Chest Campaign. June 22, 1955 615 131 Remarks at the Vermont State Dairy Festival, Rut- land, Vermont. June 22, 1955 616 1 3 2 Remarks at a Breakfast for Vermont Women Repre- sentatives of Dairy and Agricultural Organizations, Chittenden, Vermont. June 23, 1955 620 1 33 Remarks at the State Capitol, Concord, New Hamp- shire. June 23, 1955 621 134 Remarks at the Belknap Lodge Picnic Grounds, Laconia, New Hampshire. June 23, 1955 623 135 Remarks at the Lincoln High School, Lincoln, New Hampshire. June 24, 1955 624 136 Remarks at Ceremonies Commemorating the Dis- covery of the Old Man of the Mountain, Franconia Notch, New Hampshire. June 24, 1955 626 137 Remarks at Lancaster, New Hampshire. June 25, 1955 630 xxrv List of Items Page 138 Remarks at Jefferson, New Hampshire. June 25, 1955 631 139 Remarks at the Hansen Ski Jump Area, Berlin, New Hampshire. June 25, 1955 632 140 Letter to Helen Keller on the Occasion of Her 75th Birthday. June 26, 1955 634 141 Remarks at the Fawn Presentation Ceremonies, Rangeley, Maine. June 27, 1955 634 142 Remarks at the Skowhegan Fairgrounds, Skow- hegan, Maine. June 27, 1955 635 1 43 Remarks at the Dow Air Force Base, Bangor, Maine. June 27, 1955 638 144 Remarks on Presentation of the Distinguished Serv- ice Medal to General Ridgway, and Accompanying Citation. June 28, 1955 639 145 Message to the Congress Transmitting Final Report of the Commission on Intergovernmental Relations. June 28, 1955 641 146 The President's News Conference of June 29, 1955 643 147 Veto of Bill To Prohibit Publication by the Govern- ment of the United States of Predictions as to Apple Prices. July i, 1955 662 148 Joint Statement Following Discussions With Prime Minister U Nu of Burma. July 3, 1955 663 149 The President's News Conference of July 6, 1955 ^^5 150 Message to the Congress Transmitting the Second Semiannual Report Under the Agricultural Trade Development and Assistance Act. July 12, 1955 681 XXV List of Items Page 1 5 1 Remarks to American Field Service Students. July 12, 1955 682 152 Letter Accepting the Resignation of Mrs. Oveta Gulp Hobby, Secretary of Health, Education, and Welfare. July 13, 1955 684 153 Remarks Following the Acceptance of the Resigna- tion of Secretary Hobby. July 13, 1955 685 154 Letter to Secretary Wilson Marking the Third An- niversary of Operation Skywatch. July 13, 1955 687 155 Special Message to the Congress Upon Signing the Department of Defense Appropriation Act. July 13. 1955 688 156 Message to the Congress Transmitting the Ninth Annual Report on United States Participation in the United Nations. July 15, 1955 690 157 Statement by the President Upon Signing the Public Works Appropriation Act. July 15, 1955 696 158 Statement by the President Upon Signing the Act Providing for a Highway Bridge Across Lake Texoma. July 15, 1955 698 159 Statement by the President Upon Signing Bill for the Relief of the Highway Construction Company. July 15, 1955 699 160 Letter to the Chairman, House Committee on Ways and Means, Concerning United States Member- ship in the Organization for Trade Cooperation. July 15, 1955 700 161 Radio and Television Address to the American People Prior to Departure for the Big Four Con- ference at Geneva. July 15, 1955 701 XXVI List of Items Page 162 Remarks at the Keflavik Airport, Iceland. July 16, 1955 706 163 Remarks Upon Arrival at the Airport in Geneva. July 16, 1955 707 164 Opening Statement at the Geneva Conference. July 18, 1955 707 165 Remarks at the Research Reactor Building, Palais des Nations, Geneva. July 20, 1955 712 1 66 Statement on Disarmament Presented at the Geneva Conference. July 21, 1955 713 167 Statement on East- West Contacts Delivered at the Geneva Conference. July 22, 1955 716 168 Memorandum to Federal Agencies on the United Fund and Community Chest Campaigns. July 22, 1955 719 1 69 Letter to Prime Minister Maung Nu Concerning the Gift of the Burmese People. July 22, 1955 720 170 Closing Statement at the Final Meeting of the Heads of Government Conference at Geneva. July 23. 1955 721 171 Remarks on Leaving Geneva. July 23, 1955 723 172 Statement by the President Upon Signing Bill Con- cerning Mineral Claims Filed on Public Lands. July 23, 1955 724 173 Remarks at Washington National Airport on Re- turning From Geneva. July 24, 1955 724 1 74 White House Statement Following Bipartisan Meet- ing on the Geneva Conference. July 25, 1955 725 xxvn List of Items Page 175 Radio and Television Address to the American People on the Geneva Conference. July 25, 1955 726 176 The President's News Conference of July 27, 1955 731 177 Remarks at the Ceremony Marking the Issuance of the Atoms for Peace Stamp. July 28, 1955 744 1 78 Statement by the President on Congressional Action Regarding a Nationwide System of Highways. July 28, 1955 746 179 Statement by the President Regarding Release of United States Airmen by Communist China. August I, 1955 746 180 Special Message to the Congress Recommending Changes in Act Relating to Construction of Irriga- tion Systems on Federal Projects by Local Agencies. August I, 1955 747 181 Remarks to Members of the Bull Elephants Club. August 2, 1955 748 182 Statement by the President Upon Signing the Mutual Security Appropriation Act. August 2, 1 955 753 183 Citation and Remarks at Presentation of the Medal of Freedom to Robert B. Anderson. August 3, 1955 754 1 84 Statement by the President Upon Signing Bill Relat- ing to the Red River Flood Control Project. August 3, 1955 755 185 The President's News Conference of August 4, 1955 757 186 Letter to the Treasurer of the United States Ap- pointing Her Chairman of the Interdepartmental Savings Bond Committee. August 4, 1955 767 xxvm List of Items Page 187 Memorandum to Federal Agencies Concerning the Voluntary Payroll Savings Plan for the Purchase of U.S. Savings Bonds. August 4, 1955 768 188 Citation Accompanying the Distinguished Service Medal Presented to Admiral Robert B. Carney. August 4, 1955 769 189 Memorandum of Disapproval of Bill Concerning Term of Office of Subversive Activities Control Board Members. August 6, 1955 770 190 Exchange of Letters Between the President and Chancellor Adenauer of Germany on the Geneva Conference. August 6, 1955 771 191 Message to the United Nations Conference on the Peaceful Uses of Atomic Energy at Geneva. August 8, 1955 772 192 Statement by the President Upon Signing the Re- serve Forces Act of 1955. August 9, 1955 775 193 Statement by the President Upon Signing H.R. 7684 Authorizing Salary Payment to an Interim Ap- pointee to the Atomic Energy Commission. August 10, 1955 777 194 Statement by the President Upon Signing the Hous- ing Amendments of 1955. August ii, 1955 777 1 95 Statement by the President on the Death of Ambas- sador John E. Peurifoy and His Son. August 12, 1955 780 196 Memorandum of Disapproval of Bill for the Relief of the E. J. Albrecht Company. August 12, 1955 780 XXIX List of Items Page 197 Memorandum of Disapproval of Bill To Change the Military Record of Stephen Swan Ogletree. August 12, 1955 782 198 Memorandum of Disapproval of Bill Amending the Internal Revenue Code of 1954. August 12, 1955 785 199 Memorandum of Disapproval of Bill To Reconvey to Former Owners Certain Lands Acquired for Reservoir Projects in Texas. August 12, 1955 787 200 Memorandum of Disapproval of Bill for the Relief of Fred P. Hines. August 12, 1955 789 201 Memorandum of Disapproval of Bill To Amend the Civil Service Retirement Act. August 12, 1955 7^9 202 Statement by the President Upon Signing Bill Amending the Agricultural Trade Development and Assistance Act. August 12, 1955 791 203 Letter to Maj. Gen. John S. Bragdon Appointing Him as Special Assistant to the President To Co- ordinate Public Works Planning. August 12, 1955 792 204 Exchange of Messages Between the President and Chancellor Adenauer on the Air Force Disaster in Germany. August 13, 1955 794 205 Memorandum of Disapproval of Bill Extending the Domestic Minerals Purchase Programs. August 14. 1955 795 206 Statement by the President Upon Signing Bill Con- cerning Public Transit Services in the District of Columbia. August 14, 1955 797 XXX List of Items Page 207 Presidential Statement Upon Signing Order Pre- scribing a Code of Conduct for Members of the Armed Forces While in Combat or Captivity. August 17, 1955 798 208 Remarks on the Hurricane-Flood Disaster in the Northeastern States. August 22, 1955 798 209 Remarks Following a Meeting With the Governors of Flood-Stricken States at Bradley Field, Hartford, Connecticut. August 23, 1955 800 210 Address at the Annual Convention of the American Bar Association, Philadelphia. August 24, 1955 802 211 Statement by the President Concerning New York Meeting of the United Nations Subcommittee on Disarmament. August 29, 1955 810 212 Statement by the President: Labor Day. Septem- ber 5, 1955 810 213 Remarks at the Breakfast Meeting of Republican State Chairmen, Denver, Colorado. September 10, 1955 811 214 Telegram to the President of the United States Chamber of Commerce on Assistance Given Flood Disaster Areas. September 12, 1955 819 215 Statement by the President on the Occasion of the Jewish New Year. September 16, 1955 820 216 Message to President Ruiz Cortines on the Anniver- sary of the Independence of Mexico. September 16, 1955 820 217 Message Prepared for the Conference on Fitness of American Youth. September 18, 1955 821 XXXI List of Items Page Editor's Note Regarding the President's Illness 822 218 Message Opening the United Community Cam- paigns of America. October 2, 1955 822 2 1 9 Letter to the Columbus Citizens' Committee in New York City. October ii, 1955 823 220 Letter to Nikolai Bulganin, Chairman, Council of Ministers, U.S.S.R. October 12, 1955 824 221 Statement by the President on Observance of Farm- City Week. October 17, 1955 825 222 Letter to Governor Roberts of Rhode Island on the Recommendations of the New England Governors' Conference. October 18, 1955 826 223 Letter to Governor Roberts of Rhode Island on the Establishment of Atomic Reactor Generating Plants in New England. October 18, 1955 829 224 Statement by the President on the 14th Anniversary of the Civil Air Patrol. October 19, 1955 830 225 Letter to the Vice President Concerning the Con- ference on Equal Job Opportunity. October 22, 1955 831 226 Letter to the Vice President and the Cabinet Re- garding the Task of Secretary Dulles at Geneva. October 23, 1955 832 227 Statement by the President on the Foreign Minis- ters Meeting at Geneva. October 26, 1955 833 228 Message to the National Industrial Conference Board on the Peaceful Uses of Atomic Energy. October 27, 1955 834 xxxn List of Items Page 229 Letter to President Ruiz Cortines of Mexico on the Hurricane-Flood Disaster in Tampico. October 28, 1955 835 230 Telegram Welcoming President Castillo-Armas of Guatemala Upon His Arrival in Washington. October 31, 1955 836 231 Message to His Majesty Haile Selassie I on the 25th Anniversary of His Reign. November 3, 1955 837 232 Telegram on the Dedication of the International Brotherhood of Teamsters New Building. Novem- ber 3, 1955 838 233 Message to K. Voroshilov, Chairman of the Presid- ium of the Supreme Soviet, U.S.S.R., on the Na- tional Anniversary of the Soviet Union. November 7. 1955 838 234 Statement by the President on the Hostilities Be- tween Egypt and Israel in Violation of the General Armistice Agreement. November 9, 1955 839 235 Remarks on Leaving Denver, Colorado. November II. 1955 840 236 Remarks Upon Arrival at the Washington National Airport. November ii, 1955 841 237 Remarks Upon Arrival in Lincoln Square, Gettys- burg, Pennsylvania. November 14, 1955 842 238 Letter to Mrs. Martin P. Durkin on the Death of Her Husband. November 14, 1955 843 239 Message to Rabbi Abba Hillel Silver on the Near East Situation. November 15, 1955 843 40308—59 3 XXXEEI List of Items Page 240 Message to the Sultan of Morocco on the Anniver- sary of His Accession to the Throne. November 18, 1955 844 24 1 Message to King Haakon VII of Norway on the 50th Anniversary of His Reign. November 24, 1955 845 242 Remarks for the White House Conference on Edu- cation. November 28, 1955 846 243 Statement by the President on Observance of Safe Driving Day. November 30, 1955 849 244 Letter Accompanying MedaUion for Presentation to Sir Winston Churchill on His 8ist Birthday. November 30, 1955 850 245 Telephone Broadcast to the AFL-CIO Merger Meeting in New York City. December 5, 1955 851 246 Statement by the President on Early Mailing of Christmas Gifts and Greetings. December lo, 1955 855 247 White House Statements Following Meetings With Republican Leaders of the Senate and the House of Representatives. December 12, 1955 855 248 White House Statement Following Bipartisan Con- ference on Foreign Affairs and National Defense. December 13, 1955 858 249 Statement by the President: Bill of Rights Day. December 14, 1955 859 250 Remarks Broadcast for the Pageant of Peace Cere- monies in Washington. December 18, 1955 860 xxxiv D wight D. Eisenhower 1955 I ^ Memorandum Concerning the Government Employees Incentive Awards Program. January i, 1955 [ Released January i, 1955. Dated December 28, 1954 ] To Heads of Executive Departments and Agencies: The vast complexity of modem govemment demands a con- stant search for ways of conducting the pubUc business with increased efficiency and economy. I am firmly convinced that employees of the Federal Government can, through their dili- gence and competence, make further significant contributions to the important task of improving Government operations. Wide participation by Federal employees in this task is essential if we are to derive full benefit from the ingenuity and inventiveness that exist in the Federal Service. This participation can be obtained only if all levels of management and supervision under- stand its importance, encourage it, and insure that it is promptly and properly recognized. A means for adequately recognizing those employees who con- tribute to improved government operations, was provided by the Government Employees Incentive Awards Act passed by the 83rd Congress. This Act was a part of the Administration's legislative program on personnel management. Under it the Civil Service Commission was given general responsibility for the administration of a government-wide incentive awards pro- gram. The Commission has authorized each of you to establish and operate an incentive awards program within broad principles and guide lines. I am relying upon you to provide personal leadership for the incentive awards program in your agency. I am looking forward to personal participation in the program through the provision in the Act for a Presidential award for employees rendering exceptionally meritorious service. The ^ I Public Papers of the Presidents necessary instructions for submitting recommendations for this award are now being prepared. DwiGHT D. Eisenhower NOTE : This memorandum was released at Augusta^ Ga. 2 ^ Statement by the President on the Death of President Remon of Panama. January 3, 1 955 I WAS GRIEVED to learn of the tragic assassination of Pres- ident Jose Antonio Remon of Panama. A firm friend, President Remon was held in great respect by the government of our nation. Only last year he and Senora Remon were visitors at the White House. To Senora Remon, to the new President Guizado and his asso- ciates in the Panamanian Government, and to the people of Panama, I extend my personal sympathies as well as the sincere condolences of the people of the United States. 3 ^ Letter to the Secretary of Defense on National Security Requirements. January 5, 1955 Dear Mr. Secretary: Responding to your request I shall, in this note, briefly sum- marize the views on our general needs in military strength, in- cluding personnel, that I expressed verbally to you and the Joint Chiefs of Staff in December. Needless to say, these convictions on how best to preserve the peace were formed after earnest consideration of the oral and written views of our military advisers. In approaching this problem, we should keep ever before us the realization that the security of the United States is inextrica- bly bound up with the security of the free world. For this reason. Dwight D. Eisenhower^ ig§5 ^ 3 one of our tasks is to do everything possible to promote unity of understanding and action among the free nations so that each may take its full and proper part in the cooperative process of establishing a lasting and effective security. Certain considerations, applying more specifically to our own country's military preparations, are these : First, the threat to our security is a continuing and many- sided one — there is, so far as we can determine, no single critical "danger date" and no single form of enemy action to which we could soundly gear all our defense preparations. We will never commit aggression, but we must always be ready to defeat it. Second, true security for our country must be founded on a strong and expanding economy, readily convertible to the tasks of war. Third, because scientific progress exerts a constantly increasing influence upon the character and conduct of war, and because America's most precious possession is the lives of her citizens, we should base our security upon military formations which make maximum use of science and technology in order to minimize numbers in men. Fourth, due to the destructiveness of modern weapons and the increasing efficiency of long-range bombing aircraft, the United States has reason, for the first time in its history, to be deeply concerned over the serious effects which a sudden attack could conceivably inflict upon our country. Our first objective must therefore be to maintain the capability to deter an enemy from attack and to blunt that attack if it comes — by a combination of effective retaliatory power and a continental defense system of steadily increasing effectiveness. These two tasks logically demand priority in all planning. Thus we will assure that our industrial capacity can continue through- out a war to produce the gigantic amounts of equipment and supplies required. We can never be defeated so long as our relative superiority in productive capacity is sustained. 3 ^ 3 Public Papers of the Presidents Other essential tasks during the initial period following a pos- sible future attack would require the Navy to clear the ocean lanes, and the Army to do its part in meeting critical land situa- tions. Our forces in NATO and elsewhere could be swiftly en- gaged. To maintain order and organization under the conditions that would prevail in attacked areas of our country would of itself constitute a major challenge. Improved Reserve programs would help greatly — in fact might prove the decisive margin — ^in these as in other major tasks. To provide for meeting lesser hostile action — such as local aggression not broadened by the intervention of a major aggres- sor's forces — growing reliance can be placed upon the forces now being built and strengthened in many areas of the free world. But because this reliance cannot be complete, and because our own vital interests, collective security and pledged faith might well be involved, there remain certain contingencies for which the United States should be ready with mobile forces to help indigenous troops deter local aggression, direct or indirect. In view of the practical considerations limiting the rapid deployment of large military forces from the continental United States immediately on outbreak of war, the numbers of active troops maintained for this purpose can be correspondingly tailored. For the remainder we may look primarily to our Re- serves and our mobilization base, including our stockpile of criti- cal materials. All these capabilities have a double value — they serve our aim in peacetime of preventing war through their deterrent effect; they form the foundation of effective defense if aggressors should strike. Both in composition and in strength our security arrange- ments must have long-term applicability. Lack of reasonable stability is the most wasteful and expensive practice in military activity. We cannot afford intermittent acceleration of prepara- tion and expenditure in response to emotional tension, inevitably followed by cutbacks inspired by wishful thinking. Develop- Dwight D. Eisenhower^ ^955 ^ 3 ment of sound, long-term security requires that we design our forces so as to assure a steadily increasing efficiency, in step with scientific advances, but characterized by a stability that is not materially disturbed by every propaganda effort of unfriendly nations. It is, of course, obvious that defensive forces in America are maintained to defend a way of life. They must be adequate for this purpose but must not become such an intolerable burden as to occasion loss of civilian morale or the individual initiative on which, in a free country, depends the dynamic industrial effort which is the continuing foundation of our nation's security. It is at this point that professional military competence and political statesmanship must join to form judgments as to the minimum defensive structure that should be supported by the nation. To do less than the minimum would expose the nation to the predatory purposes of potential enemies. On the other hand, to build excessively under the impulse of fear could, in the long run, defeat our purposes by damaging the growth of our economy and eventually forcing it into regimented controls. It is for the reasons so briefly touched upon above that I have decided to present to the Congress, on behalf of the Administra- tion, a program which has been under development during the past two years. That program contemplates an active personnel strength of the Armed Forces at June 30, 1955, of approximately 3,000,000, within which the Air Force will be increased to about 975,000. Experience will determine to what extent the personnel strengths set for June 1955 can be further reduced. It would not be wise at this time to fix rigid targets for 1956. As a goal, I suggest a strength of the order of 2,850,000 — ^with any further material reductions dependent upon an improved world situation. To reach such figures without injuring our combat strength will require continuing close scrutiny of all defense elements, with particular emphasis on administrative overhead. Essential to this entire program is economy in operation. If 40308—59 4 5 ^ 3 Public Papers of the Presidents we are to support active and effective forces of the order indi- cated over a period which may last for decades, we must practice a strict austerity in day-to-day operations. This is an insistent and constant mission of every responsible official, military and civilian, in the Defense Department. In this time of rapidly developing technology and frequent changes in the world situation, we should in our efforts for peace and security continuously re-shape our programs to changing con- ditions and avoid fixed or frozen ideas. The threat of modern war calls for constant modernization. Since your request to me and this reply both deal with matters on which our citizenry ought to be as fully informed as considera- tions of security permit, I am directing the public release of the two documents. Sincerely, DwiGHT D. Eisenhower note: Secretary Wilson's letter of January 3, 1955, follows: Dear Mr. President: For nearly two years we have dis- cussed the various problems relating to the armed services and in particu- lar the need for the conservation and proper utilization of our manpower, both military and civilian. Just be- fore Christmas you again discussed the question of personnel strengths with me and the Joint Chiefs of Staff. I have found so much value in the views underlying your decisions as to the personnel strengths of the armed services that I wonder if you would give me the gist of them in written form. I should like very much to have them available during the next year to guide me in my consideration of those matters and to be able to make them available to all of the interested people who are consider- ing this problem. With great respect, I am Faithfully yours, Charles E. Wilson For the President's message to the Congress on national security require- ments, see Item 12, below. Dwight D. Eisenhower, ig^^ ^ 4 4 ^ Annual Message to the Congress on the State of the Union. January 6, 1955 [ Delivered in person before a joint session ] Mr. President, Mr. Speaker, Members of the Congress: First, I extend cordial greetings to the 84th Congress. We shall have much to do together; I am sure that we shall get it done — and, that we shall do it in harmony and good will. At the outset, I believe it would be well to remind ourselves of this great fundamental in our national life: our common belief that every human being is divinely endowed with dignity and worth and inalienable rights. This faith, with its corollary — ^that to grow and flourish people must be free — shapes the interests and aspirations of every American. From this deep faith have evolved three main purposes of our Federal Government: First, to maintain justice and freedom among ourselves and to champion them for others so that we may work effectively for enduring peace; Second, to help keep our economy vigorous and expanding, thus sustaining our international strength and assuring better jobs, better living, better opportunities for every citizen; And third, to concern ourselves with the human problems of our people so that every American may have the opportunity to lead a healthy, productive and rewarding life. Foremost among these broad purposes of government is our support of freedom, justice and peace. It is of the utmost importance, that each of us understand the true nature of the struggle now taking place in the world. It is not a struggle merely of economic theories, or of forms of government, or of military power. At issue is the true nature of man. Either man is the creature whom the Psalmist described as "a little lower than the angels," crowned with glory and honor, holding "dominion over the works" of his Creator; or man is a ^ 4 Public Papers of the Presidents soulless, animated machine to be enslaved, used and consumed by the state for its own glorification. It is, therefore, a struggle which goes to the roots of the human spirit, and its shadow falls across the long sweep of man's destiny. This prize, so precious, so fraught with ultimate mean- ing, is the true object of the contending forces in the world. In the past year, there has been progress justifying hope, both for continuing peace and for the ultimate rule of freedom and justice in the world. Free nations are collectively stronger than at any time in recent years. Just as nations of this Hemisphere, in the historic Caracas and Rio conferences, have closed ranks against imperialistic Com- munism and strengthened their economic ties^, so free nations elsewhere have forged new bonds of unity. Recent agreements between Turkey and Pakistan have laid a foundation for increased strength in the Middle East. With our understanding support, Egypt and Britain, Yugoslavia and Italy, Britain and Iran have resolved dangerous differences. The security of the Mediterranean has been enhanced by an alliance among Greece, Turkey and Yugoslavia. Agreements in Western Europe have paved the way for unity to replace past divisions which have undermined Europe's economic and mili- tary vitality. The defense of the West appears likely at last to include a free, democratic Germany participating as an equal in the councils of NATO. In Asia and the Pacific, the pending Manila Pact supplements our treaties with Australia, New Zealand, the Philippines, Korea and Japan and our prospective treaty with the Republic of China. These pacts stand as solemn warning that future military aggres- sion and subversion against the free nations of Asia will meet united response. The Pacific Charter, also adopted at Manila, is a milestone in the development of human freedom and self- government in the Pacific area. Under the auspices of the United Nations, there is promise of 8 Dwight D. Eisenhower, ig^^ ^ 4 progress in our country's plan for the peaceful use of atomic energy. Finally, today the world is at peace. It is, to be sure, an in- secure peace. Yet all humanity finds hope in the simple fact that for an appreciable time there has been no active major bat- tlefield on earth. This same fact inspires us to work all the more effectively with other nations for the well-being, the freedom, the dignity, of every human on earth. These developments are heartening indeed, and we are hopeful of continuing progress. But sobering problems remain. The massive military machines and ambitions of the Soviet- Communist bloc still create uneasiness in the world. All of us are aware of the continuing reliance of the Soviet Communists on military force, of the power of their weapons, of their present resistance to realistic armament limitation, and of their continu- ing effort to dominate or intimidate free nations on their periph- ery. Their steadily growing power includes an increasing strength in nuclear weapons. This power, combined with the proclaimed intentions of the Communist leaders to communize the world, is the threat confronting us today. To protect our nations and our peoples from the catastrophe of a nuclear holocaust, free nations must maintain countervailing military power to persuade the Communists of the futility of seek- ing their ends through aggression. If Communist rulers under- stand that America's response to aggression will be swift and decisive — that never shall we buy peace at the expense of honor or faith — they will be powerfully deterred from launching a mili- tary venture engulfing their own peoples and many others in dis- aster. This, of course, is merely world stalemate. But in this stalemate each of us may and must exercise his high duty to strive in every honorable way for enduring peace. The military threat is but one menace to our freedom and security. We must not only deter aggression; we must also frus- trate the effort of Communists to gain their goals by subversion. ^ 4 Public Papers of the Presidents To this end, free nations must maintain and reinforce their cohesion, their internal security, their political and economic vitality, and their faith in freedom. In such a world, America's course is clear : We must tirelessly labor to make the peace more just and durable. We must strengthen the collective defense under the United Nations Charter and gird ourselves with sufficient military strength and productive capacity to discourage resort to war and protect our nation's vital interests. We must continue to support and strengthen the United Na- tions. At this very moment, by vote of the United Nations Gen- eral Assembly, its Secretary-General is in Communist China on a mission of deepest concem to all Americans : seeking the release of our never-to-be-forgotten American aviators and all other United Nations prisoners wrongfully detained by the Communist regime. We must also encourage the efforts being made in the United Nations to limit armaments and to hamess the atom to peaceful use. We must expand international trade and investment and assist friendly nations whose own best efforts are still insufficient to pro- vide the strength essential to the security of the free world. We must be willing to use the processes of negotiation when- ever they will advance the cause of just and secure peace to which the United States and other free nations are dedicated. In respect to all these matters, we must, through a vigorous information program, keep the peoples of the world truthfully advised of our actions and purposes. This problem has been attacked with new vigor during the past months. I urge that the Congress give its earnest consideration to the great advantages that can accrue to our country through the successful operations of this program. We must also carry forward our educational exchange pro- gram. This sharing of knowledge and experience between our 10 Dwight D. Eisenhower^ ig^^ ^ 4 citizens and those of free countries is a powerful factor in the development and maintenance of true partnership among free peoples. To advance these many efforts, the Congress must act in this session on appropriations, legislation, and treaties. Today I shall mention especially our foreign economic and military programs. The recent economic progress in many free nations has been most heartening. The productivity of labor and the production of goods and services are increasing in ever-widening areas. There is a growing will to improve the living standards of all men. This progress is important to all our people. It promises us aUies who are strong and self-reliant; it promises a growing world market for the products of our mines, our factories, and our farms. But only through steady effort can we hope to continue this progress. Barriers still impede trade and the flow of capital needed to develop each nation's human and material resources. Wise reduction of these barriers is a long-term objective of our foreign economic policy — a policy of an evolutionary and selec- tive nature, assuring broad benefits to our own and other peoples. We must gradually reduce certain tariff obstacles to trade. These actions should, of course, be accompanied by a similar lowering of trade barriers by other nations, so that we may move steadily toward greater economic advantage for all. We must further simpUfy customs administration and procedures. We must facilitate the flow of capital and continue technical assist- ance, both directly and through the United Nations, to less devel- oped countries to strengthen their independence and raise their living standards. Many another step must be taken in and among the nations of the free world to release forces of private initiative. In our own nation, these forces have brought strength and pros- perity; once released, they will generate rising incomes in these other countries with which to buy the products of American in- dustry, labor and agriculture. On January 10, by special message, I shall submit specific rec- II ^ 4 Public Papers of the Presidents ommendations for carrying forward the legislative phases of our foreign economic policy. Our many efforts to build a better world include the mainte- nance of our military strength. This is a vast undertaking. Major national security programs consume two-thirds of the en- tire Federal budget. Over four million Americans — servicemen and civilians — are on the rolls of the defense establishment. Dur- ing the past two years, by eliminating duplication and over- staffing, by improved procurement and inventory controls, and by concentrating on the essentials, many billions of dollars have been saved in our defense activities. I should like to mention certain fundamentals underlying this vast program. First, a realistic limitation of armaments and an enduring, just peace remain our national goals; we maintain powerful mili- tary forces because there is no present alternative — forces de- signed for deterrent and defensive purposes alone but able in- stantly to strike back with destructive power in response to an attack. Second, we must stay alert to the fact that undue reliance on one weapon or preparation for only one kind of warfare simply invites an enemy to resort to another. We must, therefore, keep in our armed forces balance and flexibility adequate for our purposes and objectives. Third, to keep our armed forces abreast of the advances of science, our military planning must be flexible enough to utilize the new weapons and techniques which flow ever more speedily from our research and development programs. The forthcom- ing military budget therefore emphasizes modern airpower in the Air Force, Navy and Marine Corps and increases the emphasis on new weapons, especially those of rapid and destruc- tive striking power. It assures the maintenance of effective, retaliatory force as the principal deterrent to overt aggression. It accelerates the continental defense program and the build-up of ready military reserve forces. It continues a vigorous pro- gram of stockpiling strategic and critical materials and strength- 12 Dwight D. Eisenhower^ ig^^ ^ 4 ening our mobilization base. The budget also contemplates the strategic concentration of our strength through redeployment of certain forces. It provides for reduction of forces in certain categories and their expansion in others, to fit them to the mili- tary realities of our time. These emphases in our defense plan- ning have been made at my personal direction after long and thoughtful study. In my judgment, they will give our nation a defense accurately adjusted to the national need. Fourth, pending a world agreement on armament limitation, we must continue to improve and expand our supplies of nuclear weapons for our land, naval and air forces, while, at the same time, continuing our encouraging progress in the peaceful use of atomic power. And fifth, in the administration of these costly programs, we must demand the utmost in efficiency and ingenuity. We must assure our people not only of adequate protection but also of a defense that can be carried forward from year to year until the threat of aggression has disappeared. To help maintain this kind of armed strength and improve its efficiency, I must urge the enactment of several important meas- ures in this session. The first concerns the selective service act which expires next June 30th. For the foreseeable future, our standing forces must remain much larger than voluntary methods can sustain. We must, therefore, extend the statutory authority to induct men for two years of military service. The second kind of measure concerns the rapid turnover of our most experienced servicemen. This process seriously weakens the combat readiness of our armed forces and is exorbi- tantly expensive. To encourage more trained servicemen to re- main in uniform, I shall, on the thirteenth of this month, pro- pose a number of measures to increase the attractions of a military career. These measures will include more adequate medical care for dependents, survivors' benefits, more and better housing, and selective adjustments in military pay and other allowances. 13 ^ 4 Public Papers of the Presidents And third — also on January 13 — I shall present a program to rebuild and strengthen the civilian components of our armed forces. This is a comprehensive program, designed to make bet- ter use of our manpower of military age. Because it will go far in assuring fair and equitable participation in military training and service, it is of particular importance to our combat veterans. In keeping with the historic military policy of our Republic, this program is designed to build and maintain powerful civilian re- serves immediately capable of effective military service in an emergency in lieu of maintaining active duty forces in excess of the nation's immediate need. Maintenance of an effective defense requires continuance of our aggressive attack on subversion at home. In this effort we have, in the past two years, made excellent progress. FBI investi- gations have been powerfully reinforced by a new Internal Secu- rity Division in the Department of Justice; the security activities of the Immigration and Naturalization Service have been revital- ized; an improved and strengthened security system is in effect throughout the government; the Department of Justice and the FBI have been armed with effective new legal weapons forged by the 83rd Congress. We shall continue to ferret out and to destroy Communist subversion. We shall, in the process, carefully preserve our traditions and the basic rights of our citizens. Our civil defense program is also a key element in the protec- tion of our country. We are developing cooperative methods with State Governors, Mayors, and voluntary citizen groups, as well as among Federal agencies, in building the civil defense organization. Its significance in time of war is obvious; its swift assistance in disaster areas last year proved its importance in time of peace. An industry capable of rapid expansion and essential materials and facilities swiftly available in time of emergency are indispen- 14 Dwight D. Eisenhower^ ^955 ^ 4 sable to our defense. I urge, therefore, a two-year extension of the Defense Production Act and Tide II of the First War Powers Act of 1 94 1. These are cornerstones of our program for the development and maintenance of an adequate mobilization base. At this point, I should like to make this additional observation. Our quest for peace and freedom necessarily presumes that we who hold positions of public trust must rise above self and section — that we must subordinate to the general good our par- tisan, our personal pride and prejudice. Tirelessly, with united purpose, we must fortify the material and spiritual foundations of this land of freedom and of free nations throughout the world. As never before, there is need for unhesitating cooperation among the branches of our government. At this time the executive and legislative branches are under the management of different political parties. This fact places both parties on trial before the American people. In less perilous days of the past, division of governmental re- sponsibility among our great parties has produced a paralyzing indecision. We must not let this happen in our time. We must avoid a paralysis of the will for peace and international security. In the traditionally bipartisan areas — ^military security and for- eign relations — I can report to you that I have already, with the leaders of this Congress, expressed assurances of unreserved co- operation. Yet, the strength of our country requires more than mere maintenance of military strength and success in foreign affairs ; these vital matters are in turn dependent upon concerted and vigorous action in a number of supporting programs. I say, therefore, to the 84th Congress: In all areas basic to the strength of America, there will be — to the extent I can insure them — cooperative, constructive relations between the Executive and Legislative Branches of this govern- ment. Let the general good be our yardstick on every great issue of our time. 15 ^ 4 Public Papers of the Presidents Our efforts to defend our freedom and to secure a just peace are, of course, inseparable from the second great purpose of our government: to help maintain a strong, growing economy — an economy vigorous and free, in which there are ever-increasing opportunities, just rewards for effort, and a stable prosperity that is widely shared. In the past two years, many important governmental actions helped our economy adjust to conditions of peace; these and other actions created a chmate for renewed economic growth. Controls were removed from wages, prices and materials. Tax revisions encouraged increased private spending and employment. Federal expenditures were sharply reduced, making possible a record tax cut. These actions, together with flexible monetary and debt management pohcies, helped to halt inflation and sta- bilize the value of the dollar. A program of cooperation and partnership in resource development was begun. Social security and unemployment insurance laws were broadened and strength- ened. New laws started the long process of balancing farm pro- duction with farm markets. Expanded shipbuilding and stock- piling programs strengthened key sectors of the economy, while improving our mobilization base. A comprehensive new housing law brought impressive progress in an area fundamental to our economic strength and closed loopholes in the old laws per- mitting dishonest manipulation. Many of these programs are just beginning to exert their main stimulating effect upon the economy generally and upon specific communities and industries throughout the country. The past year — 1954 — ^^s one of the most prosperous years in our history. Business activity now surges with new strength. Pro- duction is rising. Employment is high. Toward the end of last year average weekly wages in manufacturing were higher than ever before. Personal income after taxes is at a record level. So is consumer spending. Construction activity is reaching new peaks. Export demand for our goods is strong. State and local 16 Dwight D, Eisenhower^ ig^^ ^ 4 government expenditures on public works are rising. Savings are high, and credit is readily available. So, today, the transition to a peacetime economy is largely behind us. The economic outlook is good. The many promising factors I have mentioned do not guar- antee sustained economic expansion; however, they do give us a strong position from which to carry forward our economic growth. If we as a people act wisely, within ten years our annual national output can rise from its present level of about $360 bil- lion to $500 billion, measured in dollars of stable buying power. My Budget Message on January 1 7, the Economic Report on the 20th of this month, and several special messages will set forth in detail major programs to foster the growth of our economy and to protect the integrity of the people's money. Today I shall discuss these programs only in general terms. Government efficiency and economy remain essential to steady progress toward a balanced budget. More than ten billion dollars were cut from the spending program proposed in the budget of January 9, 1953. Expenditures of that year were six and a half billion below those of the previous year. In the current fiscal year, government spending will be nearly four and a half billion dollars less than in the fiscal year which ended last June 30. New spending authority has been held below expenditures, re- ducing government obligations accumulated over the years. Last year we had a large tax cut and, for the first time in seventy-five years a basic revision of Federal tax laws. It is now clear that defense and other essential government costs must remain at a level precluding further tax reductions this year. Al- though excise and corporation income taxes must, therefore, be continued at their present rates, further tax cuts will be possible when justified by lower expenditures and by revenue increases arising from the nation's economic growth. I am hopeful that such reductions can be made next year. 17 ^ 4 Public Papers of the Presidents At the foundation of our economic growth are the raw materials and energy produced from our minerals and fuels, lands and forests, and water resources. With respect to them, I believe that the nation must adhere to three fundamental policies: first, to develop, wisely use and conserve basic resources from gener- ation to generation; second, to follow the historic pattern of de- veloping these resources primarily by private citizens under fair provisions of law, including restraints for proper conservation; and third, to treat resource development as a partnership under- taking— a partnership in which the participation of private citi- zens and State and local governments is as necessary as Federal participation. This policy of partnership and cooperation is producing good results, most immediately noticeable in respect to water resources. First, it has encouraged local public bodies and private citizens to plan their own power sources. Increasing numbers of applica- tions to the Federal Power Commission to conduct surveys and prepare plans for power development, notably in the Columbia River Basin, are evidence of local response. Second, the Federal Government and local and private organi- zations have been encouraged to coordinate their developments. This is important because Federal hydroelectric developments supply but a small fraction of the nation's power needs. Such partnership projects as Priest Rapids in Washington, the Coosa River development in Alabama, and Markham Ferry in Okla- homa already have the approval of the Congress. This year justifiable projects of a similar nature will again have Administra- tion support. Third, the Federal Government must shoulder its own partner- ship obligations by undertaking projects of such complexity and size that their success requires Federal development. In keep- ing with this principle, I again urge the Congress to approve the development of the Upper Colorado River Basin to conserve and assure better use of precious water essential to the future of the West. i8 Dwight D. Eisenhower^ 7955 ^ 4 In addition, the 1956 budget will recommend appropriations to start six new reclamation and more than thirty new Corps of Engineers projects of varying size. Going projects and investi- gations of potential new resource developments will be continued. Although this partnership approach is producing encouraging results, its full success requires a nation-wide comprehensive water resources policy firmly based in law. Such a policy is under preparation and when completed will be submitted to the Congress. In the interest of their proper conservation, development and use, continued vigilance will be maintained over our fisheries, wildlife resources, the national parks and forests, and the public lands; and we shall continue to encourage an orderly develop- ment of the nation's mineral resources. A modern, efficient highway system is essential to meet the needs of our growing population, our expanding economy, and our national security. We are accelerating our highway im- provement program as rapidly as possible under existing State and Federal laws and authorizations. However, this effort will not in itself assure our people of an adequate highway system. On my recommendation, this problem has been carefully con- sidered by the Conference of State Governors and by a special Advisory Committee on a National Highway Program, com- posed of leading private citizens. I have received the recom- mendations of the Governors' Conference and will shortly receive the views of the special Advisory Committee. Aided by their findings, I shall submit on January 27th detailed recommenda- tions which will meet our most pressing national highway needs. In further recognition of the importance of transportation to our economic strength and security, the Administration, through a Cabinet committee, is thoroughly examining existing Federal transportation policies to determine their effect on the adequacy of transportation services. This is the first such comprehensive review directly undertaken by the Executive Branch of the gov- ernment in modern times. We are not only examining major 19 ^ 4 Public Papers of the Presidents problems facing the various modes of transport; we are also study- ing closely the inter-relationships of civilian and government requirements for transportation. Legislation will be recom- mended to correct policy deficiencies which we may find. The nation's public works activities are tremendous in scope. It is expected that more than $12 billion will be expended in 1955 for the development of land, water and other resources; control of floods, and navigation and harbor improvements; construction of roads, schools, and municipal water supplies, and disposal of domestic and industrial wastes. Many of the Federal, State and local agencies responsible for this work are, in their separate capacities, highly eflficient. But public works activities are closely inter-related and have a substantial influence on the growth of the country. Moreover, in times of threatening economic contrac- tion, they may become a valuable sustaining force. To these ends, efficient planning and execution of the nation's public works require both the coordination of Federal activities and effective cooperation with State and local governments. The Council of Economic Advisers, through its public works planning section, has made important advances during the past year in effecting this coordination and cooperation. In view of the success of these initial efforts, and to give more emphasis and continuity to this essential coordination, I shall request the Con- gress to appropriate funds for the support of an Office of Coordi- nator of Public Works in the Executive Office of the President. A most significant element in our growing economy is an agri- culture that is stable, prosperous and free. The problems of our agriculture have evolved over many years and cannot be solved overnight; nevertheless, governmental actions last year hold great promise of fostering a better balance between production and markets and, consequently, a better and more stable income for our farmers. Through vigorous administration and through new authority provided by the 83rd Congress, surplus farm products are now moving into consumption. From February 1953 through Novem- 20 Dwight D, Eisenhower^ 1Q55 ^ 4 ber 1954, the rate of increase of government-held surpluses has been reduced by our moving into use more than 2.3 billion dollars' worth of government-owned farm commodities; this amount is equal to more than seven percent of a year's production of all our farms and ranches. Domestic consumption remains high, and farm exports will be higher than last year. As a result of the flexibility provided by the Agricultural Act of 1954, we can move toward less restrictive acreage controls. Thus, farm production is gradually adjusting to markets, mar- kets are being expanded, and stocks are moving into use. We can now look forward to an easing of the influences depressing farm prices, to reduced government expenditures for purchase of surplus products, and to less Federal intrusion into the lives and plans of our farm people. Agricultural programs have been re- directed toward better balance, greater stability and sustained prosperity. We are headed in the right direction. I urgently recommend to the Congress that we continue resolutely on this road. Greater attention must be directed to the needs of low-income farm families. Twenty-eight per cent of our farm-operator fam- ilies have net cash incomes of less than $1,000 per year. Last year, at my request, careful studies were made of the problems of these farm people. I shall later submit recommendations de- signed to assure the steady alleviation of their most pressing concerns. Because drought also remains a serious agricultural problem, I shall recommend legislation to strengthen Federal disaster assist- ance programs. This legislation will prescribe an improved ap- praisal of need, better adjustment of the various programs to local conditions, and a more equitable sharing of costs between the States and the Federal Government. The prosperity of our small business enterprises is an indispen- sable element in the maintenance of our economic strength. Creation of the Small Business Administration and recently en- 21 ^ 4 Public Papers of the Presidents acted tax laws facilitating small business expansion are but two of many important steps we have taken to encourage our smaller enterprises. I recommend that the Congress extend the Small Business Act of 1953 which is due to expire next June. We come now to the third great purpose of our government — its concern for the health, productivity and well-being of all our people. Every citizen wants to give full expression to his God-given talents and abilities and to have the recognition and respect ac- corded under our religious and political traditions. Americans also want a good material standard of living — not simply to ac- cumulate possessions, but to fulfill a legitimate aspiration for an environment in which their families may live meaningful and happy lives. Our people are committed, therefore, to the creation and preservation of opportunity for every citizen to lead a more rewarding life. They are equally committed to the alleviation of misfortune and distress among their fellow citizens. The aspirations of most of our people can best be fulfilled through their own enterprise and initiative, without government interference. This Administration, therefore, follows two simple rules: first, the Federal Government should perform an essential task only when it cannot otherwise be adequately performed; and jsecond, in performing that task, our government must not impair the self-respect, freedom and incentive of the individual. So long as these two rules are observed, the government can fully meet its obligation without creating a dependent population or a domineering bureaucracy. During the past two years, notable advances were made in these functions of government. Protection of old-age and sur- vivors' insurance was extended to an additional ten million of our people, and the benefits were substantially increased. Legislation was enacted to provide unemployment insurance protection to some four million additional Americans. Stabilization of living 22 Dwight D. Eisenhower, ig^^ ^ 4 costs and the halting of inflation protected the value of pensions and savings. A broad program now helps to bring good homes within the reach of the great majority of our people. With the States, we are providing rehabihtation facilities and more clinics, hospitals, and nursing homes for patients with chronic illnesses. Also with the States, we have begun a great and fruitful expansion in the restoration of disabled persons to employment and useful lives. In the areas of Federal responsibility, we have made his- toric progress in eliminating from among our people demeaning practices based on race or color. All of us may be proud of these achievements during the past two years. Yet essential Federal tasks remain to be done. As part of our efforts to provide decent, safe and sanitary hous- ing for low-income families, we must carry forward the housing program authorized during the 83rd Congress. We must also authorize contracts for a firm program of 35,000 additional public housing units in each of the next two fiscal years. This program will meet the most pressing obligations of the Federal Government into the 1958 fiscal year for planning and building public housing. By that time the private building industry, aided by the Housing Act of 1954, will have had the opportunity to assume its full role in providing adequate housing for our low- income families. The health of our people is one of our most precious assets. Preventable sickness should be prevented; knowledge available to combat disease and disability should be fully used. Otherwise, we as a people are guilty not only of neglect of human suffering but also of wasting our national strength. Constant advances in medical care are not available to enough of our citizens. Clearly our nation must do more to reduce the impact of accident and disease. Two fundamental problems con- front us: first, high and ever-rising costs of health services; sec- ond, serious gaps and shortages in these services. By special message on January 24, I shall propose a coordi- nated program to strengthen and improve existing health services. 23 ^ 4 Public Papers of the Presidents This program will continue to reject socialized medicine. It will emphasize individual and local responsibility. Under it the Fed- eral Government will neither dominate nor direct, but serve as a helpful partner. Within this framework, the program can be broad in scope. My recommendations will include a Federal health reinsur- ance service to encourage the development of more and better voluntary health insurance coverage by private organizations. I shall also recommend measures to improve the medical care of that group of our citizens who, because of need, receive Federal- State public assistance. These two proposals will help more of our people to meet the costs of health services. To reduce the gaps in these services, I shall propose : New measures to facilitate construction of needed health facili- ties and help reduce shortages of trained health personnel; Vigorous steps to combat the misery and national loss involved in mental illness; Improved services for crippled children and for maternal and child health ; Better consumer protection under our existing pure food and drug laws; and, finally. Strengthened programs to combat the increasingly serious pol- lution of our rivers and streams and the growing problem of air pollution. These measures together constitute a comprehensive program holding rich promise for better health for all of our people. Last year's expansion of social security coverage and our new program of improved medical care for public assistance recipi- ents together suggest modification of the formula for Federal sharing in old age assistance payments. I recommend modifica- tion of the formula where such payments will, in the future, supplement benefits received under the old age and survivors insurance system. It is the inalienable right of every person, from childhood on, to have access to knowledge. In our form of society, this 24 Dwight D. Eisenhower^ ig^^ ^ 4 right of the individual takes on a special meaning, for the educa- tion of all our citizens is imperative to the maintenance and in- vigoration of America's free institutions. Today, we face grave educational problems. Effective and up-to-date analyses of these problems and their solutions are being carried forward through the individual State conferences and the White House Conference to be completed this year. However, such factors as population growth, additional re- sponsibilities of schools, and increased and longer school attend- ance have produced an unprecedented classroom shortage. This shortage is of immediate concern to all of our people. Positive, affirmative action must be taken now. Without impairing in any way the responsibilities of our States, localities, communities, or families, the Federal government can and should serve as an effective catalyst in dealing with this problem. I shall forward a special message to the Congress on February 15, presenting an affirmative program dealing with this shortage. To help the States do a better and more timely job, we must strengthen their resources for preventing and dealing with juve- nile delinquency. I shall propose Federal legislation to assist the States to promote concerted action in dealing with this nation- wide problem. I shall carry forward the vigorous efforts of the Administration to improve the international control of the traffic in narcotics and, in cooperation with State and local agencies, to combat narcotic addiction in our country. I should like to speak now of additional matters of importance to all our people and especially to our wage earners. During the past year certain industrial changes and the read- justment of the economy to conditions of peace brought unem- ployment and other difficulties to various localities and indus- tries. These problems are engaging our most earnest attention. But for the overwhelming majority of our working people, the past year has meant good jobs. Moreover, the earnings and sav- ings of our wage earners are no longer depreciating in value. 25 ^ 4 Public Papers of the Presidents Because of cooperative relations between labor and manage- ment, fewer working days were lost through strikes in 1954 than in any year in the past decade. The outlook for our wage earners can be made still more promising by several legislative actions. First, in the past five years we have had economic growth which will support an increase in the Federal minimum wage. In the light of present economic conditions, I recommend its in- crease to ninety cents an hour. I also recommend that many others, at present excluded, be given the protection of a minimum wage. Second, I renew my recommendation of last year for amend- ment of the Labor Management Relations Act of 1947 to fur- ther the basic objectives of this statute. I especially call to the attention of the Congress amendments dealing with the right of economic strikers to vote in representation elections and the need for equalizing the obligation under the Act to file disclaimers of Communist affiliation. Third, the Administration will propose other important measures including occupational safety, workmen's compensation for longshoremen and harbor workers, and the "Eight Hour Laws" applicable to Federal contractors. Legislation will also be proposed respecting nonoccupational disability insurance and unemployment compensation in the District of Columbia. In considering human needs, the Federal Government must take special responsibility for citizens in its direct employ. On January 11 I shall propose a pay adjustment plan for civilian employees outside the Postal Field Service to correct inequities and increase individual pay rates. I shall also recommend volun- tary health insurance on a contributory basis for Federal em- ployees and their dependents. In keeping with the Group Life Insurance Act passed in the 83rd Congress, this protection should be provided on the group insurance principle and purchased from private facilities. Also on January 1 1 I shall recommend a mod- ern pay plan, including pay increases, for postal field employees. 26 Dwight D. Eisenhower^ ig55 ^ 4 As part of this program, and to carry forward our progress toward elimination of the large annual postal deficit, I shall renew my request for an increase in postal rates. Again I urge that in the future the fixing of rates be delegated to an impartial, independent body. More adequate training programs to equip career employees of the government to render improved public service will be rec- ommended, as will improvements in the laws affecting employees serving on foreign assignments. Needed improvements in survivor, disability, and retirement benefits for Federal civilian and military personnel have been extensively considered by the Committee on Retirement Policy for Federal personnel. The Committee's proposals would strengthen and improve benefits for our career people in govern- ment, and I endorse their broad objectives. Full contributory coverage under old-age and survivors' insurance should be made available to all Federal personnel, just as in private industry. For career military personnel, the protection of the old-age and sur- vivors' insurance system would be an important and long-needed addition, especially to their present unequal and inadequate survivorship protection. The military retirement pay system should remain separate and unchanged. Certain adjustments in the present civilian personnel retirement systems will be needed to reflect the additional protection of old-age and survivors' insur- ance. However, these systems also are a basic part of a total compensation and should be separately and independently retained. I also urge the Congress to approve a long overdue increase in the salaries of Members of the Congress and of the Federal judiciary to a level commensurate with their heavy responsibilities. Our concern for the individual in our country requires that we consider several additional problems. We must continue our program. to help our Indian citizens im- prove their lot and make their full contribution to national life. Two years ago I advised the Congress of injustices under exist- 27 ^ 4 Public Papers of the Presidents ing immigration laws. Through humane administration, the Department of Justice is doing what it legally can to alleviate hardships. Clearance of aliens before arrival has been initiated, and except for criminal offenders, the imprisonment of aliens awaiting admission or deportation has been stopped. Certain provisions of law, however, have the effect of compelling action in respect to aliens which are inequitable in some instances and discriminatory in others. These provisions should be corrected in this session of the Congress. As the complex problems of Alaska are resolved, that Territory should expect to achieve statehood. In the meantime, there is no justification for deferring the admission to statehood of Hawaii. I again urge approval of this measure. We have three splendid opportunities to demonstrate the strength of our belief in the right of suffrage. First, I again urge that a Constitutional amendment be submitted to the States to reduce the voting age for Federal elections. Second, I renew my request that the principle of self-government be extended and the right of suffrage granted to the citizens of the District of Columbia. Third, I again recommend that we work with the States to preserve the voting rights of citizens in the nation's service overseas. In our determination to keep faith with those who in the past have met the highest call of citizenship, we now have under study the system of benefits for veterans and for surviving dependents of deceased veterans and servicemen. Studies will be undertaken to determine the need for measures to ease the readjustment to civilian life of men required to enter the armed forces for two years of service. In the advancement of the various activities which will make our civilization endure and flourish, the Federal Government should do more to give official recognition to the importance of the arts and other cultural activities. I shall recommend the establishment of a Federal Advisory Commission on the Arts within the Department of Health, Education and Welfare, to 28 Dwight D. Eisenhower^ iq§5 ^ 4 advise the Federal Government on ways to encourage artistic endeavor and appreciation. I shall also propose that awards of merit be established whereby we can honor our fellow citizens who make great contribution to the advancement of our civilization. Every citizen rightly expects efficient and economical adminis- tration of these many government programs I have outlined today. I strongly recommend extension of the Reorganization Act and the law establishing the Commission on Intergovern- mental Relations, both of which expire this spring. Thus the Congress will assure continuation of the excellent progress recently made in improving government organization and admin- istration. In this connection we are looking forward with great interest to the reports which will soon be going to the Congress from the Commission on Organization of the Executive Branch of the Government. I am sure that these studies, made under the chairmanship of former President Herbert Hoover with the assistance of more than two hundred distinguished citizens, will be of great value in paving the way toward more efficiency and economy in the government. And now, I return to the point at which I began — the faith of our people. The many programs here summarized are, I believe, in full keeping with their needs, interests and aspirations. The obliga- tions upon us are clear : To labor earnestly, patiently, prayerfully, for peace, for free- dom, for justice, throughout the world ; To keep our economy vigorous and free, that our people may lead fuller, happier lives; To advance, not merely by our words but by our acts, the determination of our government that every citizen shall have opportunity to develop to his fullest capacity. As we do these things, before us is a future filled with oppor- 40308—59 5 SQ ^ 4 Public Papers of the Presidents tunity and hope. That future will be ours if in our time we keep alive the patience, the courage, the confidence in tomorrow, the deep faith, of the millions who, in years past, made and preserved us this nation. A decade ago, in the death and desolation of European battle- fields, I saw the courage and resolution, I felt the inspiration, of American youth. In these young men I felt America's buoyant confidence and irresistible will-to-do. In them I saw, too, a devout America, humble before God. And so, I know with all my heart — and I deeply believe that all Americans know — that, despite the anxieties of this divided world, our faith, and the cause in which we all believe, will surely prevail. DwiGHT D. Eisenhower note: This is the text of the docu- i, 84th Cong., istsess.). ment which the President signed and The Address as reported from the transmitted to the Senate and the floor appears in the Congressional House of Representatives (H. Doc. Record (vol. loi, p. 94). 5 ^ Special Message to the Senate Transmitting Mutual Defense Treaty Between the United States and the Republic of China. January 6, 1955 To the Senate of the United States: With a view to receiving the advice and consent of the Senate to ratification, I transmit herewith the Mutual Defense Treaty between the United States of America and the Republic of China, signed at Washington on December 2, 1954. I transmit also for the information of the Senate a document containing statements made by the Secretary of State and the Chinese Minister for Foreign Affairs on the occasion of the initialing of the Treaty on December 2, 1954, together with a joint statement regarding conclusion of negotiations for the 30 Dwight D. Eisenhower^ IQ55 ^ 5 Treaty issued simultaneously in Washington and Taipei on December 1, 1954. There is further transmitted for the information of the Senate the report made to me by the Secretary of State regarding the Treaty. Finally, there are transmitted for the information of the Sen- ate texts of notes exchanged by the Secretary of State and the Minister for Foreign Affairs of the Republic of China on Decem- ber 10, 1954 which, while not a part of the Treaty, express agreed understandings as to certain phases of its implementation. The Mutual Defense Treaty between the United States of America and the Republic of China is defensive and mutual in character, designed to deter any attempt by the Chinese Com- munist regime to bring its aggressive military ambitions to bear against the treaty area. This Mutual Defense Treaty, taken in conjunction with simi- lar treaties already concluded with Japan, Korea, the Philip- pines, and Australia and New Zealand, reinforces the system of collective security in the Pacific Area. It is also complementary to the action taken in the signing of the Southeast Asia Collec- tive Defense Treaty at Manila on September 8, 1954. I recommend that the Senate give early and favorable con- sideration to the Treaty submitted herewith, and advise and consent to its ratification. Dwight D. Eisenhower note: The text of the treaty and The treaty was ratified by the the documents submitted with this Senate on February 9, entered into message are printed in Senate Ex- force March 3, and was proclaimed ecutive A (84th Cong., ist sess.). by the President on April i, 1955. 31 ^ 6 Public Papers of the Presidents 6 ^ Special Message to the Congress on the Foreign Economic Policy of the United States. January lo, 1955 To the Congress of the United States: For the consideration of the Congress, I submit my recommen- dations for further developing the foreign economic policy of the United States. Although largely based upon my Special Message to the Congress of March 30, 1954, these proposals are the product of fresh review. The nation's enlightened self-interest and sense of responsi- bility as a leader among the free nations require a foreign eco- nomic program that will stimulate economic growth in the free world through enlarging opportunities for the fuller operation of the forces of free enterprise and competitive markets. Our own self-interest requires such a program because (i) economic strength among our aUies is essential to our security; (2) eco- nomic growth in underdeveloped areas is necessary to lessen in- ternational instability growing out of the vulnerability of such areas to Communist penetration and subversion; and (3) an increasing volume of world production and trade will help assure our own economic growth and a rising standard of living among our own people. In the world-wide struggle between the forces of freedom and those of communism, we have wisely recognized that the security of each nation in the free world is dependent upon the security of all other nations in the free world. The measure of that secu- rity in turn is dependent upon the economic strength of all free nations, for without economic strength they cannot support the military establishments that are necessary to deter Communist armed aggression. Economic strength is indispensable, as well, in securing themselves against internal Communist subversion. For every country in the free world, economic strength is de- 32 Dwight D. Eisenhower^ IQ55 ^ 6 pendent upon high levels of economic activity internally and high levels of international trade. No nation can be economically self-sufficient. Nations must buy from other nations, and in order to pay for what they buy they must sell. It is essential for the security of the United States and the rest of the free world that the United States take the leadership in promoting the achievement of those high levels of trade that will bring to all the economic strength upon which the freedom and security of all depends. Those high levels of trade can be promoted by the specific measures with respect to trade barriers recommended in this message, by the greater flow of capital among nations of the free world, by convertibility of currencies, by an expanded inter- change of technical counsel, and by an increase in international travel. From the military standpoint, our national strength has been augmented by the over-all military alliance of the nations con- stituting the free world. This free world alliance will be most firmly cemented when its association is based on flourishing mu- tual trade as well as common ideals, interests and aspirations. Mutually advantageous trade relationships are not only profit- able, but they are also more binding and more enduring than costly grants and other forms of aid. Today numerous uneconomic, man-made barriers to mutually advantageous trade and the flow of investment are preventing the nations of the free world from achieving their full economic potential. International trade and investment are not making their full contribution to production, employment and income. Over a large area of the world currencies are not yet convertible. We and our friends abroad must together undertake the lower- ing of the unjustifiable barriers to trade and investment, and we must do it on a mutual basis so that the benefits may be shared by all. Such action will add strength to our own domestic economy and help assure a rising standard of living among our people by opening new markets for our farms and factories and mines. 33 ^ 6 Public Papers of the Presidents The program that I am here recommending is moderate, gradual and reciprocal. Radical or sudden tariff reductions would not be to the interest of the United States and would not accomplish the goal we seek. A moderate program, however, can add immeasurably to the security and well-being of the United States and the rest of the free world. TRADE AGREEMENT AUTHORirY I request a three-year extension of Presidential authority to negotiate tariff reductions with other nations on a gradual, selec- tive and reciprocal basis. This authority would permit negotia- tions for reductions in those barriers that now limit the markets for our goods throughout the world. I shall ask all nations with whom we trade to take similar steps in their relations with each other. The three-year extension of the Trade Agreements Act should authorize, subject to the present peril and escape clause pro- visions: 1. Reduction, through multilateral and reciprocal negotia- tions, of tariff rates on selected commodities by not more than five percent per year for three years; 2. Reduction, through multilateral and reciprocal negotia- tions, of any tariff rates in excess of fifty percent to that level over a three-year period; and 3. Reduction, by not more than one-half over a three-year period, of tariff rates in effect on January i, 1945, on articles which are not now being imported or which are being imported only in negligible quantities. THE GENERAL AGREEMENT ON TARIFFS AND TRADE For approximately seven years the United States has cooper- ated with all the major trading nations of the free world in an effort to reduce trade barriers. The instrument of cooperation is the General Agreement on Tariffs and Trade. Through this Agreement the United States has sought to carry out the pro- 34 Dwight D. Eisenhower, ig^^ ^ 6 visions and purpose of the Trade Agreements Act. The United States and thirty-three other trading countries are now reviewing the provisions of the Agreement for the purpose of making it a simpler and more effective instrument for the devel- opment of a sound system of world trade. When the current negotiations on the revision of the organizational provisions of the General Agreement are satisfactorily completed, the results will be submitted to the Congress for its approval. CUSTOMS ADMINISTRATION AND PROCEDURE Considerable progress has been made in freeing imports from unnecessary customs administrative burdens. Still more, how- ever, needs to be done in the three areas I mentioned in my mes- sage last year: (i) the simplification of commodity definitions, classification and rate structures; (2) improvement in standards for the valuation of imports; and (3) further improvement of procedures for customs administration. An important step toward simplification of the tariff structure was taken by the Congress last year with the passage of the Cus- toms Simplification Act which directs the Tariff Commission to study the difficulties of commodity classification of imports. The interim report of the Tariff Commission to be made by next March 15 should help enable the Congress to determine whether further legislative steps should then be taken or should await submission of the final report. The uncertainties and confusion arising from the complex sys- tem of valuation on imported articles cause unwarranted delays in the determination of customs duties. I urge the Congress to give favorable consideration to legislation for remedying this situation. The improvement of customs admiaistration requires continu- ous effort, as the Congress recognized by enacting the Customs SimpHfication Acts of 1953 ^^d 1954. The Treasury Depart- ment in its annual report to the Congress will review the remain- ing reasons for delay or difficulty in processing imported articles 35 ^ 6 Public Papers of the Presidents through customs and will propose still further technical amend- ments to simplify customs procedures. UNITED STATES INVESTMENT ABROAD The whole free world needs capital; America is its largest source. In that light, the flow of capital abroad from our country must be stimulated and in such a manner that it results in invest- ment largely by individuals or private enterprises rather than by government. An increased flow of United States private investment funds abroad, especially to the underdeveloped areas, could contribute much to the expansion of two-way international trade. The un- derdeveloped countries would thus be enabled more easily to ac- quire the capital equipment so badly needed by them to achieve sound economic growth and higher living standards. This would do much to offset the false but alluring promises of the Communists. To facilitate the investment of capital abroad I recommend enactment of legislation providing for taxation of business income from foreign subsidiaries or branches at a rate fourteen percentage points lower than the corporate rate on domestic income, and a deferral of tax on income of foreign branches until it is removed from the country where it is earned. I propose also to explore the further use of tax treaties with the possible recognition of tax concessions made to foreign capital by other countries. Under proper safeguards, credit could be given for foreign income taxes which are waived for an initial limited period, as we now grant credit for taxes which are imposed. This would give maximum effectiveness to foreign tax laws designed to encourage new enterprises. As a further step to stimulate investment abroad, I recom- mend approval by the Congress at the appropriate time of mem- bership in the proposed International Finance Corporation, which will be affiliated with the International Bank for Reconstruction and Development. This Corporation will be designed to increase 36 Dwight D. Eisenhower, 1Q55 ^ 6 private investment in less developed countries by making loans without Government guarantees. Although the Corporation will not purchase stock, it will provide venture capital through invest- ing in debentures and similar obligations. Its operation will cover a field not dealt with by an existing institution. The Executive Branch will continue through our diplomatic representatives abroad to encourage a climate favorable to the private enterprise concept in investment. We shall continue to seek other new ways to enlarge the out- ward flow of capital. It must be recognized, however, that when American private capital moves abroad it properly expects to bring home its fair reward. This can only be accomplished in the last analysis by our willingness to purchase more goods and services from abroad in order to provide the dollars for these growing remittances. This fact is a further compelling reason for a fair and forward-looking trade policy on our part. TECHNICAL COOPERATION The United States has a vast store of practical and scientific know-how that is needed in the underdeveloped areas of the world. The United States has a responsibility to make it avail- able. Its flow for peaceful purposes must remain unfettered. United States participation in technical cooperation programs should be carried forward. These programs should be con- cerned with know-how rather than large funds. In my budget message next week, I shall recommend that the Congress make available the funds required to support the multilateral technical cooperation programs of the United Nations. The bilateral programs of the United States should be pressed vigorously. INTERNATIONAL TRAVEL The United States remains committed to the objective of free- dom of travel throughout the world. Encouragement given to travel abroad is extremely important both for its cultural and 40308—59 6 37 ^ 6 Public Papers of the Presidents social importance in the free world, and for its economic benefits. Travel abroad by Americans provides an important source of dollars for many countries. The Executive Branch shall continue to look for ways of facilitating international travel and shall con- tinue to cooperate with private travel agencies. One legislative action that would be beneficial in this field is the increase of the present duty-free allowances for tourists from $500 to $1,000 exercisable every six months. I recommend the passage of such legislation. TRADE FAIRS International trade fairs have been of major importance to foreign countries for many years, and most of the trading nations have strengthened the promotional aspects of their industrial displays in many fairs with a central exhibit designed to empha- size the industrial progress and achievement of the nation. Soviet and satellite exhibits, for example, have been costly, well- planned and housed in expensive structures designed to convey the impression that the USSR is producing on a large scale for peace and is creating a paradise for workers. The United States, which has a larger volume of international trade than any other nation, until recently has been conspicuous by its absence at these trade fairs. American visitors and partici- pants have pointed out the failure of their Government to tell adequately the story of our free enterprise system and to provide effective international trade promotion cooperation. As a result, I have undertaken an international trade fair pro- gram under the direction of the Department of Commerce. Since the inauguration of this program in August, participation has been authorized in eleven fairs to be held before June 30. Sixteen additional fairs are being considered for exhibition purposes in the latter part of the year. The first fair in which the United States presented a central exhibit is that at Bangkok, which opened December 7, 1954. At it our exhibit was awarded first 38 Dwight D. Eisenhower, IQ55 ^ 6 prize. Over 100 American companies supplied items for inclu- sion in it. I shall ask the Congress for funds to continue this program. CONVERTIBILITY Convertibility of currencies is required for the development of a steadily rising volume of world trade and investment. The achievement of convertibility has not been possible in the post-war period due to dislocations caused by the war, inflation and other domestic economic difficulties in many countries, which have contributed to an imbalance in international trade and payments. However, steady progress, particularly by western European countries, is being made toward our mutual objective of restoring currency convertibility. The foreign economic program pro- posed here will make an important contribution to the achieve- ment of convertibility. AGRICULTURE No single group within America has a greater stake in a healthy and expanding foreign trade than the farmers. One-fourth to one-third of some major crops, such as wheat, cotton and tobacco, must find markets abroad in order to maintain farm income at high levels. If they are to be successful, programs designed to promote the prosperity of agriculture should be consistent with our foreign economic program. We must take due account of the effect of any agricultural program on our foreign economic relations to assure that it contributes to the development of healthy, expand- ing foreign markets over the years. CONCLUSION The series of recommendations I have just made are all com- ponents of an integrated program, pointing in a single direction. Each contributes to the whole. Each advances our national security by bringing added strength and self-sufficiency to our 39 ^ 6 Public Papers of the Presidents allies. Each contributes to our economic growth and a rising standard of living among our people. DwiGHT D. Eisenhower note: The President's special mes- paragraph of this message, is printed sage to the Congress of March 30, in House Document 360 (83d Cong., 1954, referred to in the opening sdsess.). 7 ^ Message to the Congress Transmitting the President's First Semiannual Report on Activities Under the Agricultural Trade Development and Assistance Act. January lo^ 1955 To the Congress of the United States: I transmit herewith my first semi-amiual report on the ac- tivities carried on under Public Law 480, 83rd Congress, as re- quired by that Law. Public Law 480 is an expression by Congress of its determina- tion to deal with the abimdance of our agricultural production in a constructive way. Despite the problems created by this abundance, we may be thankful we live in a land which is able to produce plentifully rather than one which suffers the affiction of food shortages. The enclosed report includes the dollar value of the foreign currency for which commodities exported pursuant to Section 102 (a) of the Act have been sold, as well as the estimated order of magnitude of the total country programs which have been generally agreed on but not fully negotiated, together with the cost to the Commodity Credit Corporation of such sales. The report also contains a summary of the policies and operating techniques evolved for the administration of the Act during the first six months of its existence. DwiGHT D. Eisenhower note: The report is printed in House Document 62 (84th Cong., ist sess.) . 40 Dwight D. Eisenhower, ig^s ^ 8 8 ^ Special Message to the Congress on Federal Personnel Management. January 1 1, 1955 To the Congress of the United States: The Eighty-Third Congress made an outstanding record in progressive personnel legislation for the benefit of the Govern- ment and its employees. Among other steps forward, the new laws improved overtime pay practices, established a Government- wide incentive awards program, removed restrictive controls on appointments, authorized group life insurance and extended the benefits of the unemployment insurance system to Federal work- ers. These changes have taken us a long way toward the goal of combining the best practices of private employers with the special demands of public service. I am now reconmiending the enactment of legislation to im- prove other aspects of Federal personnel management, including adjustments in basic pay scales, group health insurance, employee training, personnel practices affecting Government employees stationed overseas, and increased travel allowances. Specific legis- lative proposals for carrying out these recommendations will be submitted shortly by the Civil Service Commission, the State Department and the Bureau of the Budget. Their purpose will be to bring the average governmental remuneration into line with prevailing non-governmental standards. I earnestly urge favor- able consideration of them by the Congress. ADJUSTMENTS OF PAY SCALES Pay adjustments are needed ( i ) to recognize more fully the differences between the duties and responsibilities of positions of varying levels, (2) to relieve as far as possible, imder the present ceiling, the increasing compression between the lower and higher salaries, and (3) to take into account the decline in the real income of many Federal employees. The inequities and deficiencies existing in the present pay 41 ^ 8 Public Papers of the Presidents scales of the Classification Act of 1949, as amended, should be corrected. Similar adjustments should also be made in the pay schedules provided for employees subject to the Foreign Service Act of 1946, as amended, and employees in the Veterans Admin- istration Department of Medicine and Surgery who are subject to Public Law 293, the 79th Congress, as amended. In a separate message submitted to the Congress today, I am recommending appropriate pay adjustments covering employees of the Postal Field Service. The recommended changes for the Classification Act group provide for an upward adjustment of pay rates for each grade, except that no change is recommended at this time in the ceiling pay rate of $14,800. Emphasis is placed upon a greater and more meaningful differential between pay scales of successive grades. The proposal recognizes the fact that, in general, com- pensation rates in the lower grades of the Classification Act are fairly well in line with those prevailing outside the Federal Gov- ernment while rates in the middle and upper grades have lagged behind. Insofar as possible, adjustments in the Foreign Service and Veterans Administration pay schedules should parallel the dollar amounts of pay adjustments provided for Classification Act em- ployees at similar levels. For Classification Act employees, the recommended pay adjustments would add an additional $202,000,000 or approxi- mately 5 percent to present payroll costs. Even though the cor- rection of inequities in the middle and upper pay levels is a primary objective of the Classification Act pay adjustments, 45.5 percent of the cost results from additional pay proposed for the lowest five grades. Only 4.5 percent will be applied in the highest five grades. The proposed pay schedules are presented in an appendix to this message. Proposed changes for employees subject to the Foreign Service Act and those in the Department of Medicine and Surgery of the Veterans Administration, which are incorporated in the com- 42 Dwight D. Eisenhower, IQ55 ^ 8 prehensive proposal, will add approximately $8,500,000 to the cost, making the over-all total approximately $210,000,000. The Classification Act of 1949, as amended, sets a ceiling on the number of positions that can be placed in grades 16, 17, and 18. Without regard to this ceiling, nineteen other statutory authorities permit or require the establishment of additional posi- tions in these three highest grades. The Classification Act limitation coupled with this complex array of other authorizatidhs seriously hampers our ability to meet the changing needs of the Govemment. These conditions prevent sound pay administra- tion and handicap the Federal Service in recruiting and retain- ing top level personnel. Therefore, I am recommending the re- moval of this ceiling, and urge the consolidation of all existing authorities. GROUP HEALTH INSURANCE As another means for strengthening the Federal Service, I pro- pose for the consideration of the Congress a contributory system of voluntary health insurance for civilian employees in all branches of the Government and their dependents. This contributory system has been designed to meet the require- ments of the Federal service and to take into account the experi- ence of private employers. The system would permit employees to choose either a standard plan of uniform benefits or an ap- proved plan operating in an individual community when more suitable to employees in that location. It is proposed that the Government contribute approximately one-third the cost of the insurance for the employees and their dependents. It is esti- mated that the annual cost to the Government will be approxi- mately $55,000,000. Under the standard plan, a comprehensive set of uniform bene- fits will be offered, including reimbursement for the costs of hos- pitalization, surgery, and other personal health services. The newest health insurance features, such as major medical or catastrophe coverage, are included. Appropriate provisions 43 ^ 8 Public Papers of the Presidents will be made for the continuance of substantial protection for employees and their dependents after they retire in the future — a valuable feature inasmuch as health insurance protection is fre- quently beyond the reach of those at the older ages. Where the standard plan is not desired, provision is also made for employees in the various localities to purchase, with Govern- ment contributions, approved plans of health insurance especially suited to their needs. All types of insurers are to be utilized under orderly processes established and supervised by the Civil Service Commission. This contributory system has been developed through the co- operative efforts of representatives of employee groups, insuring organizations and the leaders among the professions in the field of health. EMPLOYEE TRAINING Attainment of the greatest possible efficiency in governmental operations is a major goal of this Administration. Achievement of this goal requires the effective use of training facilities outside as well as within Government to maintain a high level of com- petence in the Federal civilian career service. Most civilian agencies of Government do not have compre- hensive and adequate training programs, chiefly because there is no general statutory authority to use outside training facilities. Although it is clearly in the Government's interest to do so, many agencies now cannot send employees to private laboratories, in- dustrial plants, universities, or state agencies for critically needed training in the use of new methods, techniques and machines. A comprehensive training program should be authorized that will ( I ) permit Government agencies to use outside facilities for training required to meet operating needs when it is in the Gov- ernment's interest, ( 2 ) consolidate in one law the training author- ities now carried in many separate statutes, and (3) permit the establishment of Government-wide policies and effective controls on the use of outside training facilities. 44 Dwight D, Eisenhower^ IQ55 ^ 8 OVERSEAS PERSONNEL MANAGEMENT At present many different Government agencies conduct a wide variety of governmental functions in the territories and foreign countries ranging from such activities as postal service and aid to veterans to such newer operations as economic and mili- tary aid and technical development programs. The development of sound personnel practices has not always been able to keep pace with the necessarily accelerated growth of Federal opera- tions overseas. The Civil Service Commission is now taking action, in coopera- tion with the Federal agencies concerned, to extend the com- petitive service to those operations overseas that should be in- cluded within the regular civil service system. This will be done in the near future and does not require new legislation. The State Department already has under way an action pro- gram designed to improve personnel administration in both its overseas and departmental activities at home. This program results from the recommendations made by a committee of dis- tinguished citizens appointed by the Secretary of State in March, 1954. Certain features of the program will require new legisla- tion in the form of amendments to the Foreign Service Act of 1946. These are now in preparation by the State Department. There is also a need for improvements in certain conditions affecting all United States citizens employed overseas. Such matters as allowances, leave, housing, retirement, and health, and medical care as well as the whole range of problems posed by the management of alien personnel, require attention. As a first step, the Civil Service Commission will propose for consideration by the Congress comprehensive recommendations on allowances and leave for overseas personnel. TRAVEL ALLOWANCES The per diem allowance of $9.00 for civilian employees who travel on official business was established in 1949. Since that 45 tewlston Public Ubrary Lewiston, Mainf- ^ 8 Public Papers of the Presidents time the cost of lodging, meals, and incidental expenses has in- creased. It is not fair to ask Government employees to defray part of their official travel and subsistence expenses from their personal funds. Recommendations soon will be submitted to the Congress for an appropriate increase in the present rate. The various measures, described in this message, are essential to the further improvement of the Federal career service, I earnestly urge that the necessary legislation be enacted by the Congress. DwiGHT D. Eisenhower NOTE : This message, together with ules, is published in House Document the appended proposed pay sched- 66 (84th Cong., ist sess.). 9 ^ Special Message to the Congress on Postal Pay and Rates. January 1 1 , 1 955. To the Congress of the United States: The Post Office Department, in its daily operations, affects the entire Ufe of the RepubUc from the family home to the great industry. A vast business-type enterprise within Government, the Post Office Department, consequently, requires a continuing vigilance that its methods, practices and policies assure the most efficient possible service to the public. The measures recom- mended in this message are designed to that end. Last August 23 in announcing my disapproval of H.R. 7774, "An Act to Increase the Rates of Compensation of Classified, Postal and Other Employees of the Govemment, and for Other Purposes", I expressed a purpose to continue to encourage the enactment of legislation to correct obvious distortions in the pay scales of the postal service and to provide for a more proper and effective relationship between pay and work performed. I also pointed out the necessity of adequate postage rates in 46 Dwight D. Eisenhower, ig^^ ^ 9 order to check a deficit in the operation of the Post Office De- partment which, since World War 11, has reached the staggering total of more than four billions of dollars. An increase in the average wage of Postal employees along with correction of the serious inequities in the salary structure is an essential step in bringing the wage scale into line with non- governmental standards and in furthering the progressive person- nel program to which the Administration is committed. The increase must be accompanied by a salary plan which will place the wages for postal service positions in proper relationship to each other so that inequities will be eliminated, incentive for advancement offered and the principle of higher pay for more difficult and responsible work followed. In order to accomplish these objectives, the Postmaster General will submit to the Congress a new postal salary plan along with a five percent increase in basic salary rates. This plan will in- clude reasonably detailed descriptions of the series of key posi- tions to which the great majority of postal employees are assigned. A rate range for each of these positions will be recommended, and together this series of rate ranges will make up a related, uniform and equitable salary schedule. The Congress will be asked to include the key position de- scriptions and their appropriate salary ranges in the legislation, thus assigning specific wage rates to the bulk of the positions common to all offices of the Postal Service. The Post Office Department should then be granted the au- thority to allocate the remaining positions, held by the relatively few employees whose work is not covered by a key position, to the proper level in the salary schedule on the basis of a compari- son of the duties and responsibilities of these positions with the duties and responsibilities of the key positions. In the allocation of the positions other than the key positions to the proper salary level an appeal procedure will be provided. Further, to insure that the salary plan will not work to the dis- advantage of any employee, the legislation proposed will incorpo- 47 ^ 9 Public Papers of the Presidents rate a guarantee against reduction of salary so long as the em- ployee occupies the same or a position comparable to that which he held at the time of the installation of the plan. This legislation would eliminate the inequities inherent in the present inflexible system which requires assignment of all em- ployees to a limited number of job titles, in many cases having no relation to the work actually performed. The present practice of paying salaries to some employees on the basis of the number of cubic feet in the area they supervise, or solely in relation to the number of employees under their direction, would be replaced by a system requiring that salaries be based on the actual duties and responsibilities of the position. Under this plan, postmasters of the nation would receive sal- aries commensurate with the volume of work and the level of the responsibility of their offices rather than solely on the basis of cash receipts which presently govern their compensation. This practice results in discrimination against those holding offices where incoming mail represents most of the business volume. The total cost of wage adjustments in the Postal Service is estimated at $129,000,000 a year. I recommend adoption of legislation incorporating these proposals. The 83 rd Congress authorized appropriations to be made for the furnishing of uniforms or the payment of an annual allow- ance to employees, including those of the Post Office Department, required by law or regulation to wear a prescribed uniform while on official duty. This measure, when Congress makes funds avail- able, will benefit Post Office employees by an estimated $13,500,000 a year. I am recommending in another special message today a health insurance plan to round out the federal personnel benefits pro- gram enacted by the 83rd Congress. This program already has provided group life insurance, unemployment compensation, elimination of restrictions on permanent promotions and rein- statements, adjustment of the statutory limit on the number of career employees, elimination of arbitrary restrictions on accu- 48 Dwight D. Eisenhower^ ig^^ ^ 9 mulation of annual leave, and a liberalized incentive awards system. I wish to reaffirm my position that sound fiscal management requires consideration of revenues as well as costs. To this end, I am requesting that Congress also consider legislation to adjust postal rates to provide needed revenue. The combined postal deficits of the 156 years of our history as a nation, up to 1945, are far less than the losses sustained in the last nine years. The anomaly of this situation is that the period which has witnessed this record-breaking deficit in the operations of the postal service has also been a decade of un- precedented national prosperity. Employment, production and use of the mails have been at an all time high and yet postal deficits have occurred year after year. Clearly it is time to re- affirm the need for sound fiscal management of the Post Office Department and to develop a positive program towards this end. In fiscal 1954 the Post Office Department received revenues of $2,268,000,000 for services performed at a cost of $2,667,000,000, thus leaving a deficit of $399,000,000 in its operation. The serv- ices performed by the Post Office Department are of measurable value to the recipients. When the rates of postal services fail to provide sufficient revenues to meet the total cost of the service, the difference must be made up by general tax revenues. A practice of this kind is neither equitable nor reasonable; it is neither good business nor good government. Even if a case could be made for regarding the postal patron and the taxpayer as one and the same, prudence and good sense would compel us to face the fact that it is far more efficient to collect the necessary revenues in direct exchange for services at the post office window than by the more costly methods of general taxation. The Post Office is constandy working to reduce the deficit by improving the efficiency of its operations. During the last two years substantial progress has been made in organization, mail handling, transportation, mechanization, record keeping, and accounting methods. The Postmaster General has also taken the 49 ^ 9 Public Papers of the Presidents initiative in increasing rates and fees within his jurisdiction. As a result of these measures there has been a recent reversal of the postwar trend of ever increasing postal deficits. These are the operating deficits for each of the last five years : Fiscal Operating Year Deficit 1950 $589, 500, 000 1 95 1 $55 1 , 500j 000 1952 $72 7> ooo> 000 1953 $618, 800, 000 1954 $399, 100, 000 The large deficits in the postwar years are, in part, a direct consequence of the same inflationary increases in costs which all business operations have faced. Private business has increased prices of goods and services to offset increased costs of production. The Post Office operates in the same economic climate as private business. It must meet rising costs in very much the same way. Since 1945, the largest part of the increase in postal expendi- tures is accounted for by salary increases legislated by Congress as follows: Annual Increase in Cost to Post Office Department $178, 767, 000 786, 000 $190,631, 000 684, 000 $112,489,000 278, 000 $248, 600, 000 I, 100, 000 These wage adjustments, combined with an expansion in the number of postal employees necessary to handle the greater volume of mail, have resulted in an increase in total salary costs from $858,000,000 in 1945 to $2,002,000,000 in the last fiscal year. The increases in wages and other costs since the end of World 50 Date Public Law July I, 1945 134 July I, 1945 106 Jan. I, 1946 381 July I, 1946 390 Nov. I, 1949 14281 I 500 Nov. I, 1949 429 July I, 195 1 204 July 8, 1 95 1 201 Dwight D. Eisenhower, ig^^ ^ 9 War II have affected all classes of mail. It is desirable that the rates governing each class of mail be advanced in fair proportion. The Committees of Congress responsible for postal rate legisla- tion will, of course, want to consider carefully the specific rates for each class of mail. The Postmaster General will soon sub- mit to Congress, in addition to his views on increases in postal pay, detailed recommendations for raising postal rates to more reasonable levels. I wish to emphasize at this time a few of the major considerations which seem to me important in raising rates. I. First-class mail has always provided by far the greater part of postal revenues. In 1933 the revenue contribution of first- class mail was more than 55 percent of total Post Office revenues. In the last fiscal year first-class mail provided only 40 percent of such revenues although the proportion of first class volume to the total volume was only three percentage points lower than in the earlier year. The failure of this type mail to maintain its revenue contribution is a major factor in the present postal deficit. There is, therefore, an urgent need to increase the rate of postage of first-class mail. Postal rates are payments made by users of the mails for serv- ices received. The rate established for each service should reflect the value of that service in terms of speed, priority of handling, and the privileges incorporated in each class of mail. If these factors are taken into consideration in rate-making, the revenue contribution of first-class mail is clearly inadequate. The privacy, security and swift dispatch of letter mail; the priority of service at all times, in all places; and the intrinsic value of such mail are factors which are pertinent to postal rate- making in addition to the cost factor. But the present 3 cent rate for first-class letter mail has not been increased in almost a quarter of a century. During this period the costs of all goods and services have almost doubled. I am convinced that the American people will understand, appre- ciate, respect and support Congressional action to provide for 51 ^ 9 Public Papers of the Presidents a long-overdue rate increase on letter mail which will go far towards balancing the postal budget. 2. The revenues derived from second-class mail are clearly inadequate. These rates which apply to newspapers and maga- zines should be increased until such matter makes a fair and reasonable contribution to postal revenues. The Postmaster General will recommend a two-step increase in second-class rates which will enable publishers to adjust more readily to the proposed rate changes. 3. Third-class mail consists largely of advertising matter. In fiscal year 1954 the revenue contribution of such mail fell sub- stantially below the cost of providing this service and was a major factor contributing to the postal deficit. The rates of postage on such matter should be increased so that the users of this class of mail pay a proportionately fair share of postal revenues. In view of the recurring fiscal problems of the Post Office De- partment, and of the heavy burden which postal deficits continue to impose on the Federal treasury, I strongly recommend to Congress the formal adoption of a policy which will ensure that in the future the Post Office Department will be essentially self-supporting. Certain services which are performed by the Post Office, such as those for the blind, are a part of general welfare services. The cost of such services should not be borne by users of the mails. Expenditures for them, and for services performed for the Government, should be identified and met by direct appropriation. If the Post Office is successfully to meet the challenge of the future its prices must be sufficiently flexible to reflect changes in costs and the developing needs of a dynamic economy. It is my belief that an independent Commission entrusted with the au- thority to establish and maintain fair and equitable postal rates can best provide this needed flexibility. There are also other advantages. Such a Commission, guided 52 Dwight D. Eisenhower^ igss ^ 9 by policies laid down by the Congress, would have the time and facilities to make thorough analytical studies before prescribing rate changes. A Commission well versed in the economics of modern pricing practices can continuously appraise and re- appraise the soundness of the postal rate structure. Legislation to secure these ends should be enacted by Congress. With these views in mind I recommend to Congress the adop- tion of a temporary increase in postal rates as an interim measure, and the establishment and activation within the interim period of a permanent Commission to prescribe future rate adjustments under broad policy guidance of Congress. Let me reiterate — the financial problems of the postal service result, in large measure, from lack of a positive program leading towards a well-defined fiscal goal. I am^ therefore, recommend- ing to Congress the following five-point program for the Post Office Department: 1. Approval of the new salary plan and a 5 percent increase in basic salary rates. 2. Adoption by Congress of the policy that henceforth the Post Office Department shall be self-supporting. 3. Separation of those postal costs to be paid by the patron from those costs which should be paid by general taxation. 4. Establishment by Congress of a permanent Commission authorized to prescribe postal rate adjustments under policy guidance of Congress. 5. Enactment by Congress of an interim rate bill which will, pending activation of the Rate Commission, provide immediate revenue to meet proposed pay increases and reduce the postal deficit. Approval of this program will be in the public interest for it will further assure efficient service by the Post Office Department. Dwight D. Eisenhower note: The President's message on a health program for Federal personnel appears as Item 25, below. 53 ^ lo Public Papers of the Presidents lo ^ The President's News Conference of January 12, 1955. [ This is a complete transcript of the news conference of this date. No portion of the conference was released for broadcasting or direct quotation at that time. ] THE PRESIDENT. Plcasc be Seated. I don't think I have had a chance to say Happy New Year to you, which I say now. There is only one short announcement. We have been reading in the papers about this trouble in Costa Rica, and I am informed that the commission set up by the Organization of American States, which has been successful in the past in settling disputes, left about 6: i8 this morning for the scene of the trouble. So, of course, we will have nothing to say about it here until that investigation is complete and the report is made. All right, we will go to questions. Q. Marvin L. Arrowsmith, Associated Press: Mr. President, do you see any need for any basic revision of the security program under which the Agriculture Department found Wolf Ladejinsky a security risk after the State Department had cleared him, and under which the Foreign Operations Administration then gave him full security clearance and a new sensitive job? THE PRESIDENT. Well, Mr. Arrowsmith, you state certain things in your question that I am not exactly sure are exactly right. For example, did they put him in a particularly sensitive job? I am not sure. In anything as delicate as is this security program, when the effort is to make certain that the Government is served by the finest people you can get, and where, at the same time, you don't want to take unnecessary risks of damaging the reputations of people who are, many reasons to believe, honest and sincere, it is a delicate operation and judgments will differ. Now, as you know, responsibility is placed by law upon the 54 Dwight D. Eisenhower^ IQ55 ^ 10 heads of the departments. In this case, on the evidence available, one department believed that the best interests of Government would be served by not hiring this man. Others differ. Obviously, it was a case where the evidence was of a kind that was not conclusive, apparently, to the other people. I have not been through this evidence in detail. I have seen the summarized reports of it. Now, this is one reason we have set up in the Department of Justice a separate special group under Mr. Tompkins, I believe his name is, to specialize in these matters and to be available as an adviser. He can't take the responsibility; that belongs to the Department head, but he can be a special adviser and counsel in these delicate cases. I would be the last to say that the program we have devised is perfect. Of course, it isn't. It has been made by humans, and it is bound to have its imperfections. These are difficult matters. Now, we constantly seek ways to improve. I know of no subject that takes so much time on the part of the entire Cabinet, both individually and collectively, as trying to get this thing absolutely straightened out. Now, while perfection will not be obtained, improvement will always be obtained ; that is about all I can tell you. Q, Merriman Smith, United Press: Mr. President, I am sure you are aware that Vice President Nixon has been attacked and criticized by certain political elements since the election for the manner in which he conducted himself during the 1954 congres- sional campaign. We are aware, too, that you wrote Mr. Nixon a congratulatory letter in late October. I wonder how you feel about these recent criticisms of the Vice President? THE PRESIDENT. I think here, Mr. Smith, I have a right to ask you one question. [Laughter] Is your question based upon an actual reading of Mr. Nixon's speeches or what you have learned from what the critics say about 55 ^ lo Public Papers of the Presidents his speeches? In other words, have you read his speeches in detail? Q. Mr. Smith : Yes, sir. My question was based on the Demo- cratic criticism of him, not as to what he said, not as to the content of his speeches. THE PRESIDENT. Well, I kuow this — I am going to give you just a few facts: I think it was before this body that once I found it necessary to say, and I know I have said it elsewhere, that I don't consider any party other than the Communists in the United States to be a party of treason; that there are just as many patriots and loyal and wonderful Americans in one of the great parties as in the other. So any sweeping condemnation of any party, certainly I have never made, and I have never heard of Mr. Nixon making them. On the contrary, he has assured me time and again he has never by any implication tried to condemn an entire party. He has talked about certain individual cases and the way they were handled administratively, and he has questioned good judgment but never loyalty. Now, exactly what these criticisms are trying to do, I am not so certain; but just as I defend and believe in the loyalty, the patriotism of some of the people that are possibly making the criticisms, I certainly believe in the loyalty and patriotism of Dick Nixon. I admire him. So I would be loath to believe that he was guilty of indiscre- tions, although I do admit that in the heat of campaign, words, particularly if they are taken out of context, can be made the subject of possibly legitimate criticisms. Q. Joseph C. Harsch, Christian Science Monitor: Mr. Presi- dent, in your letter to Secretary Wilson about the new military budget you referred to the need for mobile forces, and you said we should "provide for meeting lesser hostile" acts in situations "not broadened by the intervention of a major aggressor's forces." Could you enlarge for us your concept of what these mobile 56 Dwight D. Eisenhower^ ig^^ ^ lo forces would be like, the means for giving them mobility, their equipment and their weapons? THE PRESIDENT. Well, I wouldu't attempt to describe in detail because there is no military situation that can be visualized en- tirely in advance, and the cure prescribed. What we are trying to do around the world is to build up indigenous forces that can assure orderly government within the country and normally take care of any difficulty of rebellion, sub- version, where there isn't major outside interference. Consequently, the thought would be that if you were called upon by an established and friendly government to help out in some situation, that light forces, probably going in there by air, or fleet marine units in a nearby area could come in, and that would be sufficient to help out. Now, I can't possibly describe to you in all details, because they would vary in severity from something of a very minor character on up. The fact of it is that you have got to have things ready to move — and ready to move rapidly. I believe a stitch in time in this case is often one of those things that could save possibly very great disaster later. Q. Mr. Harsch: Do you contemplate their using tactical atomic weapons, sir? THE PRESIDENT. I would Say, normally no, because I can't con- ceive of an atomic weapon as being a police weapon, and we were talking really more police action. Police are to protect and stop trouble, not just to cause destruction. Now, nothing can be precluded in a military thing. Remember this : when you resort to force as the arbiter of human difficulty, you don't know where you are going; but, generally speaking, if you get deeper and deeper, there is just no limit except what is imposed by the limitations of force itself. But I would say, normally no, would be my answer. Q. Joseph A. Loftus, New York Times: With respect to the security program, Mr. President, can you say, is there anything specific being done or under consideration to revise it? 57 ^ lo Public Papers of the Presidents THE PRESIDENT. To do what? Q. Mr. Loftus: To revise it or make any changes in the processes. THE PRESIDENT. No, Other than the studies that come con- stantly from the group, that speciaKzed group, that we have set up for watching, trying to improve, this thing; that is the place from where I would expect it. Q. Chalmers M. Roberts, Washington Post and Times Herald : In connection with Mr. Harsch's question, in your state of the Union message, I believe it was, you have said that we should not have an undue reliance on one weapon, and you referred to flexibility of forces. Yet the general assumption in Washington appears to be that our forces are moving towards making nuclear weapons conven- tional weapons. I think you have even used that phrase yourself. When you were referring to not having undue reliance on one type of weapon, were you drawing a line between nuclear and non-nuclear or between strategic and tactical types of nuclear weapons? THE PRESIDENT. No. I just Said this: you cannot have too great a reliance on one kind of formation, one type of weapon, one kind of vehicle, or any other thing in an army. It has to be rounded, because you can't tell where is going to be the place you have to use your forces or the conditions under which you will have to use them. At the same time, though, that I urged that, I did urge this: that our forces, their formation, their training, their doctrine, keep pace with what science is constantly giving to us — ^in fact, forcing upon us. Now, you have got to be ready to do all of these things. And because this is so expensive, the only thing I say is, let's make certain that everything we do we need. It is no crime, you know, as far as I can see, to try to be effec- tive and efficient and economical. That is what we are trying to do. 58 Dwight D. Eisenhower^ igs^ ^ lo Therefore, we must have what we need, and no more taken out, staying constantly in forces that are, after all, negative in their purpose; they are to protect what you have got, not to produce. So my whole effort is to keep the kind of forces that can meet our situations logically, particularly those that can threaten directly our vital interests. I repeat again, which I have stated here so often, what is the thing today that, for the first time in our history, gives us legitimate cause for alarm as to our own safety? It is the advent of the atomic weapon, the weapon of great destructive force, and with means for delivering it. Up until that time, the oceans had seemed to us such wonder- ful protective areas that we could well afford the, almost, the unpreparedness that has been our history from the Revolutionary War down to the Korean War. We no longer can afford it. Now, that is all. Q. Mr. Roberts: Sir, may I ask, as a military man would you say that it is possible to draw a distinction between strategic and tactical nuclear weapons? THE PRESIDENT. As a matter of fact, I don't think it's possible to draw a sharp line even between strategy and tactics. I don't believe it is possible. Every expert, everybody that has ever written on this subject, has had his own definition of strategy and his own definition of tactics. They do merge, there is no sharp line. But I would say this: every military problem finally brings forward its own logical way of solving what you have to apply, when. Now, war is a political act, so politics — that is, world politics — are just as important in making your decisions as is the character of the weapon you use. I can't possibly stand here and, unless we take the world, con- struct for ourselves a logical military problem, could I give you my solution to that problem. I can't do it in the abstract. It is just impossible. But I do say you can draw no sharp line between 59 ^ lo Public Papers of the Presidents tactical use of atomic weapons and strategic use. Q. Clark R. MoUenhoff, Des Moines Register and Tribune: Mr. President, the Secretary of Agriculture, in commenting on the Ladejinsky case, branded Ladejinsky flatly as a member of two Communist front organizations, and as an economist, analyst, and investigator for Amtorg, the Russian trading agency. THE PRESIDENT. YcS. Q. Mr. MoUenhoff : If those facts are true, how can the FOA and the State Department clear this man, and Mr. Benson has not taken a backward step on his position? The other two de- partments have gone ahead, and these are facts that still stand on the record against the man. THE PRESIDENT. Well, I am really not going to try to say what animated either side. I do say here are honest men approaching this problem. They have reached different answers, that is obvious. One attached unquestionably more importance to a past asso- ciation, particularly in Amtorg, than do the others, who say that is a long time in the past and the man has had a lot of chances to reform. This man, by the way, I believe, wrote a book in which he was very severely critical of communism — in fact, condemned it; so you have got a nice balance in the case, and one believes one thing and the other believes another. Q. Mr. MoUenhoff: Mr. President, in connection with that, the Agriculture Department stated that he had a high position in Amtorg, and set it out specifically. In the State Department loyalty investigation, security investigation, he denied this under oath. This would seem to me to raise a pretty serious question, if the Agriculture Department is correct. THE PRESIDENT. Well, I wiU tcU you! I know of nothing you can do with this except to go to the people responsible for the decisions directly and ask them the questions. Q. Mr. MoUenhoff: Mr. President, will the White House make sure that we can get some of those answers? 60 Dwight D. Eisenhower, ig55 ^ lo THE PRESIDENT. I Can't assurc it. These people are responsi- ble people, but you ought go and try it, I should think. Q. Ray L. Scherer, National Broadcasting Company: Mr. President, it has been reported to us that you favor shifting the Presidential convention to September, thus making for a shorter campaign, which is the subject of considerable interest to a lot of people in this room. I wonder if you care to give us your views on that. THE PRESIDENT. Well, uow, this is what I said : they came to me — I mean the group, the chairman, I think it was — ^some weeks ago, and asked me what I would think about a later convention and shorter campaign. I said this at least: that if they would consult whoever was to be the candidate, I am sure he would favor it because he would have a shorter period in which he goes through an experience that only some of you who have traveled on one of those trains from beginning to end can have a faint idea — and it is only faint at that, I assure you. So I said that I really thought it was foolish to drag the thing out. But they brought up to me other considerations. You still have your primaries by law early in the year; and now what's going to happen through this long year of uncertainty and con- flicting ambitions? I am sure it is one of those things I wouldn't be too positive about. My impression is that it would be well to have later conventions. Q. Daniel L. Schorr, CBS News: Mr. President, were you aware, sir, in approving the idea of a late convention that you would be giving the impression that you will be the candidate? THE PRESIDENT. Bosh ! [Ldughter] Q. Cabell Phillips, New York Times : Mr. President, it wasn't clear from your answer to the earlier question as to whether Mr. Tompkins' unit in the Department of Justice has created a special group to study this security problem or whether it is just a part of their continuing study and responsibility. THE PRESIDENT. It was sct up as a special unit in the Attorney 40308—59 7 6 1 ^ 10 Public Papers of the Presidents General's Office to have this one problem; to study how to avoid, all right, anomalies like just have occurred ; to see whether, through giving expert advice, and all the way through, they can be helpful to each of the departments which must themselves carry the responsibility. Q. Mr. Phillips: May I also ask, sir, are you contemplating the appointment of a special commission of private citizens possibly to work with Senators and others in the Government to study this? THE PRESIDENT. That has been proposed from the beginning; of course, we had something like that, you know, under Senator Bingham when I came in here, to this office. It has been back and forth. I see no way right now in which such a commission could be helpful. Here is something that I know that honest men are studying every day, both collectively and individually, and if I do become convinced that such a com- mission is advisable, well then, of course, I will call on them. At this moment I don't see it. Q. Richard L. Wilson, Cowles Publications: I would like to ask you for an elaboration of the remark you made earlier in which you said you had seen the summary of the Ladejinsky case, and I would like to ask you if you had formed any conclusion of your own as a result of reading this summary, and if so, what that conclusion was? THE PRESIDENT. Well, it might be a little unfair to tell the de- tails because it was so informal, but the summary of this was read to me by the Secretary of Agriculture, and as he read it to me, I said, "Well, that would scare me." I think those are the words that I said because he was talking about hiring a new man. I didn't inquire into all of the circumstances, and it was my impression that both State and Agriculture felt the same way at that time, so I just said that. I never actually read it. I listened to it and just made that remark. I have never myself formed a judgment on this case because I just haven't time to take up the details of every one of these cases. 62 Dwight D. Eisenhower, ig^^ ^ lo Q. Mr. Wilson: But you did feel, sir, that on the preliminary showing there was a reasonable doubt about Ladejinsky's secu- rity? THE PRESIDENT. I thought there was some doubt about it. Now, as I say, remember I hadn't studied the other side of the question. It was brought up here that certain things were so. For instance, I think at that moment I doubt I knew the man had written a book on the other side of the question. Q. Sarah McClendon, El Paso Times: Mr. President, before you appoint the new Chairman of the Civil Aeronautics Board, would you be inquiring into his philosophy to see if he favors new entries in the field of commercial aviation and competition? THE PRESIDENT. Well, I would Certainly inquire into his gen- eral philosophy as to the relationship of government and free enterprise, but I would never really insult any individual by try- ing to ask him about his answers in advance to specific questions of every kind, whether he favors a route here or a route there. If a man would give me an answer to a question like that, I should never appoint him, I assure you. I would want to know what was his attitude toward efficient competition in this field, not just putting up competition in order to get another firm that the Government can pay money to be- cause the law says they must be profitable. Q. Alan S. Emory, Watertown Times: Mr. President, a Senate rules subcommittee, headed by Senator Jenner, in his recommen- dations a few days ago, recommended that newspapermen as wit- nesses before congressional committees be compelled to disclose their sources of information. I wonder if you had any comment on that? THE PRESIDENT. Well, I havc never heard of such a thing be- fore. I guess I am mistaken. I understood that the courts have time and again upheld the right of newspaper people to withhold that, but I may be wrong. But I haven't any comment because I don't know enough about it to talk intelligently about it. Q. KennethM.Scheibel, Gannett Newspapers: Mr. President, 63 ^ lo Public Papers of the Presidents could you tell us your views now about the question of developing the Niagara power, whether you would favor private enterprise to develop that or a public body? THE PRESIDENT. Well, I think it is a decision of New York State, as I understand it. That job has been turned over to New York. Q. Mr. Scheibel : Well, inasmuch as the Federal Government must issue a license to any group which does it, might you have a preference? THE PRESIDENT. Well, I dou't think it makes any difference whether I do or not. I am not decisive in such a case. I haven't had a chance to study this particular one. Generally speaking, I believe that the closer to the scene of action decision can be taken by that level of government, the better it is. I would rather the State would make the decision than the Federal Government, because I believe they are right there. Now, if we do have to approve the license, I believe that the CAB [FPC] — ^no, in that case the Congress reserved to itself the right to approve the license. Isn't that the one that they reserved? [Confers with Mr. Hagerty]. Well, it's Federal Power. I think the Congress reserved it to itself in that case, unless my memory is wrong. But I do believe that when we have an established body like the CAB [FPC] that the CAB [FPC] working in cooperation with the State is better than to inject another Federal influence in the matter. Q, Nat S. Finney, Buffalo Evening News: Mr. President, the Atomic Energy Commission sent the new schedule of its prices on uranium, and so forth, over to the Joint Committee on the Hill, as a classified document. Senator Anderson, the new chairman of the committee, told me yesterday that he refused to receive it as a classified document, and sent it back, and is raising the question as to whether those prices should or should not be secret. 64 Dwight D. Eisenhower^ ig^^ ^ lo Can you throw any light on that problem? THE PRESIDENT. Well, I wiU Say this: as of now, the Chairman believes that the promiscuous publication of their price structure would almost necessarily be revealing of things that shouldn't be broadcast. Now, obviously, both the committee, any bidding firms, any people that are properly cleared, must know about it; and I don't suppose that you could rate it, therefore, in the long run as the most delicate secret that the Government has. I haven't discussed this thing in detail with the head of the Commission, and this is the first time I had heard that they didn't accept it. But if it has become a matter of argument, I think that Chairman Strauss will be in to see me, and we will reach a real conclusion on it. Q. Mr. Finney: Mr. President, the debate has already started on the question of whether these prices are too high or too low, and we face the prospect of a public discussion, public debate over this question without any public knowledge of what the prices are. THE PRESIDENT [laughiug]. Well, I will have to take a look. You are bringing up one that I only knew that he did favor some restriction on it. Q, Edward T. FoUiard, Washington Post and Times Herald : Mr. President, it seems to me that there is still an unanswered question in connection with the Ladejinsky case. You have told how Secretary Benson read you a summary. You say, sir, that that scared you. THE PRESIDENT. I didn't Say "scared." I said, "Well, that would scare me," meaning that I would take a very jaundiced look at it. Q. Mr. FoUiard : I see. And that it did create a reasonable doubt in your mind? THE PRESIDENT. YcS. Q, Mr. FoUiard: Now the question is: Did Mr. Stassen, in 65 ^ lo Public Papers of the Presidents hiring Ladejiasky, did he know about your state of mind, that is, that you had a reasonable doubt? THE PRESIDENT. I dou't kuow, Mr. FolKard. I assume that he did because in the conversations that these men must have had, certainly they would have said that the matter had been suggested to me. But that is the only time, I will say, that the matter has ever been brought to me directly. I simply assure you, I am not going to go into those matters in detail, because it would break the back of any man if he tried to do that; these come up not only in such a highly publicized case as you are now talking about, but they come up every day. This one happened to affect two departments, and for that reason was suggested to me. Q. William H. Lawrence, New York Times: We have been under the impression that because State took one view and Agri- culture took another, that Mr. Stassen had clearance from the White House, and by that, sir, I do not necessarily mean you THE PRESIDENT. No. Q. Mr. Lawrence: Before he undertook to hire Mr. Lade- jinsky. THE PRESIDENT. He may have. I will tell you this, gentlemen : here is a difficult question to answer, and there are all stages of security and, let's say, sensitive positions. If Mr. Stassen thought that this man could acceptably fill the position, that it was not so sensitive that he could damage the United States, and that this was a good thing for the Govern- ment, then I would uphold his right to do it. But, remember this: he has to stand responsible, and, if some- thing would turn up to show that his judgment was wrong, then he is the one that is held responsible. And remember this: each one of these heads of department is running an enormous organ- ization. He himself has to work to find time to deal with these delicate cases; so, therefore, you have got to stand and back him up, which I do. In this case, I must say, it has created a situa- tion that is certainly not easy to explain, but I do uphold the right 66 Dwight D. Eisenhower^ igs^ ^ lo of each to make his own decision in the matter. Q. Paul Martin, Gannett Newspapers: Mr. President, in your discussions with Governor Dewey this week, did you talk about the possibility of him taking an appointment in the administra- tion? THE PRESIDENT. Well, I wiU tell you one thing, most of the time taken up between Mr. Dewey and me was his describing to me the joys of private life. [Laughter] Q. Norman Carignan, Associated Press: Mr. President, there are reports that your brother, Dr. Milton Eisenhower, might make a speech some time soon in Texas on Latin American relations. THE PRESIDENT. YcS. Q. Mr. Carignan: I wonder if you could tell us about that. THE PRESIDENT. Ycs, that is corrcct. It is early February some time, and, of course, we have — [confers with Mr. Hagerty] — yes, Dallas Council of World Affairs. It is on the Latin Ameri- can scene and situation in which, of course, my brother has taken a tremendous interest and remains, I think, very close to the State Department in discussing it. Q. Charles S. von Fremd, CBS News: Mr. President, I would like to ask a question, sir, which I am not, in turn, asking for a yes or no answer. It has to do with whether or not you may be a candidate in '56, and I ask it for this reason: there have been a number of people, politicians, who have said that they believe you will run for one big reason, and that is the word "duty,'' that they feel that as a man who spent more than 40 years of his life serving his country, that it is unthinkable that you could again refuse another call to duty. I wonder if you could comment on that and, possibly, give us your interpretation of the responsibility of duty. THE PRESIDENT. Well, you put up the big question. I hope that I would never be sufficiently self-centered that I would fail to respond to a call to duty, but who is to define for any individual his duty in such a case as this? I just can't say anything more at the moment. In one form or 67 ^ lo Public Papers of the Presidents another, this question has kept popping at me about duty ever since 1943, June. I will never forget the day. [Laughter'] Now, I finally think that in such cases the individual has to determine what he believes to be best for the country, because he is the only one to make the decision. As I say, I hope I would never fail to do my duty, but I would certainly want to know in critical circumstances what is my duty. Q. Robert G. Spivack, New York Post: Mr. President, in view of what has been said here this morning and in view of Secretary Benson's persistence in regarding Mr. Ladejinsky as a security risk, won't it be difficult for him to command the respect of the people of Viet-Nam in his new job? THE PRESIDENT. Well, I doubt whether our newspapers are circulated there as widely as they are here. [Laughter] I doubt that that would be a serious matter. Q. Mrs. May Craig, Maine Papers: Mr. President, I am a little confused by your remark about Governor Dewey. We under- stood he urged you to run again. Do I understand you that he was urging on you the joys of private life? [Laughter] THE PRESIDENT. Well, I read in the paper that he did a lot of urging. I must say that he may have, I don't recall in detail. Now, he may have said something that was taken for granted. But he did describe, as I say, at great length the joys of private life, and certainly he didn't do it in any terms where he seemed to be failing to commend it to me. [Laughter] Q. Edward T. FoUiard, Washington Post and Times Herald: Mr. President, so I won't be fretting over this for a week — [laughter] — ^would you tell us what happened in June 1 943 ? Was that the beginning of the boom? THE PRESIDENT. Well, I wiU tcU you what happened. There was a man from the United States, a political figure, and I am not going to name him because he is still alive. We had just cleaned up northern Africa, and this man came in to me and said, "I hope you know that no American general can have a success of this scope and kind and fail to be considered for the 68 Dwight D. Eisenhower^ IQ55 ^ 1 1 Presidency," and I kicked him out of the office. [Laughter] Merriman Smith, United Press: Thank you, Mr. President. note: President Eisenhower's fifty- 10:33 ^^ 11:06 o'clock on Wednes- seventh news conference was held in day morning, January 12, 1955. In the Executive Office Building from attendance: 177. II ^ Remarks at Luncheon Meeting of the Association of American Colleges. January 13, 1955 Mr. Chairman and President of this distinguished audience: I must first acknowledge and insist that my appearance today is really an ex officio one, because I do not presume that my short adventure, pleasant though it was, in the educational field, gives me the right to be here to talk to you. But as President it is a most pleasant duty and a truly great privilege to be able, on behalf of the Administration — the United States Government — to welcome this body here, to assure you of the interest with which we follow your work both collectively and in your individual capacities. As to a message of substance, I doubt that I can say anything that you have not heard, that you will not hear, and possibly that each of you already understands better than I. But it might be, nevertheless, of some significance that as the head of the Government charged with the responsibilities which were spoken of in the invocation, that by some simple statement I acknowledge clearly my appreciation of the importance of the work you people do — ^indeed, must do. I am going to talk about education for a moment, not in its spiritual or its intellectual or its materialistic values and purposes. I want to talk about it, really, as a great cementing force by its promotion of understanding. 40308—59- 69 Cjf 1 1 Public Papers of the Presidents For example, we have a clear comprehension that we need to strengthen the spiritual bases of our free institutions. We know, also, that we need as never before, experts, technicians in the sciences, people to conduct the research in every kind of discipline that applies to our material world. But it certainly takes under- standing, a deeper comprehension, than a true knowledge of either of these factors of human existence, to know how to put them together. How do you combine idealism and realism and never be guilty just of weak compromise? How do you establish for this nation great purposes, ideals that you are pursuing, and then manage other influences that come to bear and at least discolor or force a postponement of the achievement of those great ideals? How do you cooperate with others in the international field, certain that we have a great task of leadership to do? There we must realize that if we try to plant our own methods, our own concepts of man's dignity and worth instantly into another area, all we do is incur resistance, indeed enmity. How do we bring about understanding? We cannot be content merely with study- ing our own history and seeing how we have developed. We cannot be content with a mere study of the history of others so far as it affects us directly, or as they come in contact with us through wars or trade agreements. We must understand their cultures, their histories, their aspirations, if we are to recognize — to be sympathetic even — to the decisions that they take that, sometimes now, are almost incomprehensible to us. The great masses of people — the two and a half billions of peo- ple that make up the population of the world — are never going to grow closer together unless there is a promotion of imderstanding. I think this is in a very large sense spiritual in character. Whence did we come? Why are we here? What is the true rea- son for our existence? And where are we going? For all of this. 70 Dwight D. Eisenhower^ IQ55 ^ 1 1 in the answers, we have the assistance — ^we have the faith — of the Christian ethic, or of our own particular religious convictions. But others don't. Indeed, our greatest potential enemy in the world is the frank exponent of the doctrine of materialism, re- jecting all of these values. This is the kind of thing, it seems to me, that educators must concern themselves with, just as seriously as they do with mathe- matics and engineering and research and theology. The com- mon questions of humanity must be comprehended to meet — and it must be an integrated answer — to meet the crying needs of the human race in the twentieth century. Now I have only haltingly and possibly very roughly sketched out an idea that I think will portray to you my appreciation of your work. Consequently, you know how earnest I am when I say I could not wish anybody greater success than I do you people. In our schools, in our churches, indeed in our Govern- ment, in everything we do, we must find a way to supplement the efforts of the home to develop Americans of understanding, of great spiritual beliefs, intellectual capacity, and unexcelled col- lective material strength, in a prosperity that is so widely shared that we all march forward together. That, is seems to me, is my rough idea of what I think you people have got to do, if the United States is going to attain that future that is surely hers by right and that, under God, she will attain. Thank you very much. NOTE : The President spoke at the Fitzgerald, Chancellor of the Univer- Statler Hotel, Washington, D.G. His sity of Pittsburgh and President of opening words referred to Rufus H. the Association of American Colleges. 71 ^ 12 Public Papers of the Presidents 12 ^ Special Message to the Congress on National Security Requirements. January 13, 1955 To the Congress of the United States : The military security of the United States requires armed forces, disposed and alerted for instant action, quickly reinforce- able by imits ready for mobilization, assured an adequate pool of trained manpower for necessary expansion. Three elements are necessary to this military posture — (i) active forces in the strength and effectiveness necessary to meet, to repel and to punish a first massive assault or to conduct a lesser operation that does not require mobilization; (2) reserves so organized and trained as units that they can be speedily mobilized to reinforce the active forces in combat or to man defense operations at home; (3 ) an unorganized reserve pool, adequate in training and num- bers, to permit a quick general mobilization of all our military strength. Never, in peacetime, have we achieved this proper military posture. The penalties of our unreadiness have been mani- fold— in treasure, in blood, in the heartbreak of a mighty nation buying time with the lives of men. Now, in an uneasy peace, we can and must move toward this proper posture — at tolerable cost, with due regard for tradition, without disruption of human plans or the material economy. Korea and Indo-China are bitter reminders of the ever- present threat of aggression. The masses of armed men and the vast array of war-making machines, maintained by the Soviets and their satellites along the frontiers of the free world, sharpen the reminders. The first purpose of our defense planning remains the mainte- nance of a just, secure peace. If, however, unwanted war should come, it should find us ready with every resource at our command to repel and defeat the enemy. And, at home, we must have 72 Dwight D. Eisenhower^ IQ55 ^ 12 forces trained for every emergency, should an aggressor be so criminally unwise as to attempt an atomic attack. In seeking to attain these goals, we must remember that the active military forces are only the cutting edge of our nation's full strength. A vigorous economy, a strong mobilization base and trained citizens are the invincible elements in our military striking power. But we cannot possibly keep armed and in uniform the total forces that might ultimately be required in all-out war. The inescapable burdens would endanger the liberties and the eco- nomic system we are determined to defend. On the other hand, in case of a global war, the nation could not count on having time to marshal its strength while the enemy was engaged elsewhere. Unquestionably, the United States would be involved from the outset of such a conflict. We must be prepared. The Defense Establishment, through the past two years, has concentrated on effectiveness, economy and efficiency within the active military forces. The result is a formidable assurance to any aggressor that we would react to attack, instantly and powerfully. In the same period, exhaustive studies have been made on manpower — the key to a proper military posture. The recom- mendations herewith submitted, dealing with both the active and the reserve forces, are based on them. In summary, I recommend ( i ) that the present statutory pro- visions authorizing the induction of young men by the Selective Service System for 24 months of training and service, scheduled to expire July i, 1955, be extended until July i, 1959; (2) that the existing special statutory provisions authorizing the registra- tion and induction of doctors and dentists, also scheduled to expire on July I, 1955, be extended until July i, 1957; and (3) that legislation be enacted by the Congress to permit the strengthening of the reserve forces to meet essential mobilization requirements. The extension of Selective Service is necessary because experi- 73 ^ 12 Public Papers of the Presidents ence demonstrates that active Armed Forces of the size we must maintain cannot be raised by voluntary enhstments alone. The maximum number of volunteers will continue to be the recruiting goal of the services. But realistic estimates set the probable ceil- ing on voluntary forces, in the present economic situation, at a million and a half — ^more than i ,300,000 men short of the planned strength goal for the end of the Fiscal Year 1956. Active force strengths are continually under review in the light of changing missions and technological improvement of weapons. A major purpose is economy in the use of men. But I see no reasonable prospect that the world situation or technological advances, in the next four years, will render the draft unneces- sary. I earnestly recommend, consequently, that the extension be for four years. In the case of doctors and dentists I recom- mend that the extension be for another period of two years only. By that time it is expected that the medical personnel require- ments of the Armed Forces can be met adequately by other means. The term of service should be retained at the 24 month level established by the 82nd Congress after weighing the military efficiency and dollar-cost arguments involved. Those arguments, whose soundness was proved in the experience of the three past years, are now compellingly persuasive that shortening the term of service would seriously damage the combat readiness of our active forces. The present operation of selective service is recognized by the American people as an equitable and necessary solution to a na- tional problem. The calm planning for a call, the unquestioning acceptance of it, the smooth adjustment to a new way of life, manifested by milUons of our young men and their families, evi- dences the maturity of their attitude toward the problem of national security. Under the new National Reserve Plan, selective service and the reserve forces, in conjunction with our regular estabUshment, will fulfill our security needs with the least possible disruptive impact 74 Dwight D. Eisenhower^ ig^^ ^ 12 on the life of the individual citizen and the civilian economy. Flexibility is a primary characteristic of the Plan. Constant scrutiny and review of its operation by the Services will assure its increasing efficiency. The reserve program has been the subject of extensive study in the Congress, in various government agencies and in the military services themselves over long periods of time. As in our active forces, we will rely as heavily as possible on voluntary service. To further this purpose, recent surveys indicate that certain improve- ments can be accomplished within the Services, without legisla- tion, and steps have been taken to remedy existing deficiencies. I shall follow this action personally with particular attention to training for combat missions. In addition, however, there is need for certain changes in pres- ent laws relating to the reserves. There are five principal areas where affirmative legislation is needed to provide the basis for a strengthened reserve plan. First, present law divides reserve personnel into categories that do not lend themselves fully to strategic requirements. I recom- mend that this be altered so as to provide one group of reservists who can be organized into a force maintained in a high degree of readiness to meet immediate mobilization requirements, and a second non-organized group with prior service who would be called into military service by a selective process, if the need for their services should develop in a general mobilization. The first group should be kept ready through training, through the constant flow of new men into the group, and through the screening from the group of combat veterans and persons of es- sential civilian skills in excess of military requirements whenever possible. This makes provision for meeting the essential man- power needs of defense supporting activities as well as those of the Armed Forces. Both these needs must be met if we are to realize our maximum national strength in time of emergency. Second, present legislation does not make adequate provision for bringing young men directly into the reserve forces without 75 ^ 12 Public Papers of the Presidents either adversely affecting the readiness of the active forces or reducing the capabiKty of the active forces to recruit long-term volunteers. At present, the reserves are composed of older men who have completed their terms of active service. For example, less than 1 7 percent of the men now in the Army Reserves are under 24 years of age. I recommend that legislation be adopted by which physically fit yoimg men between the ages of 1 7 and 1 9 may volun- teer for six months' basic training, to be followed by active reserve participation for a period of nine and one-half years. During the six-month period of training, these young men would receive pay at the reduced rate of $30 a month. The total numbers accepted in the basic-type training should be subject to quotas, fixed by the President, to avoid bringing the manpower pool down to an undesirably low level; on the other hand, if an adequate number do not volunteer for this program, authority should be given to induct the needed young men through the Selective Service System. Men so selected would be between the agesof iS^andig. The six-months training program should be authorized for a term of four years, covering the same period as the requested extension of the draft. In connection with this program, the Na- tional Security Training Commission should serve in an advisory capacity to the Secretary of Defense and to the President as Commander-in-Chief. Third, under present legislation, there is no assurance that the National Guard, which by law is in the first line of defense and dependent on voluntary enlistments, receives an adequate supply of young men with appropriate basic training. Young men who enlist in the National Guard receive no concentrated initial train- ing of the type provided by the active services. I recommend that legislation be enacted by which the men enlisting in the Na- tional Guard receive basic training in the active services. There must be further assurance that the National Guard contain a hard core of men who have been schooled in leadership and technical 76 Dwight D. Eisenhower^ ig^^ ^ 12 military skills through longer periods of active training and service. Primary emphasis on voluntary recruitment of personnel for the National Guard should continue. However, subject to con- stitutional limitations, the legislation should provide that in the event of failure to recruit the necessary numbers and quality of volunteer personnel, and at the request or approval of the Gov- ernor of a State, personnel completing training or service in the Active Forces may be assigned to the National Guard for their obligated period of reserve participation. Fourth, I recommend that legislation be adopted to induce participation in reserve training by providing that men who have served less than two years may be recalled to active duty in order to maintain or restore proficiencies. It is also contemplated that reservists who fail or refuse to participate in the reserve training that may be required of them and choose not to restore lost proficiencies, will be given other than an honorable discharge at the end of their period of military obligation. Such action, which will be taken in accordance with existing statutory authority and procedures, is based upon the concept that honorable military service includes complete fulfill- ment of all service obligations, reserve as well as active. I ask that the Congress reaffirm this concept which is already contained in the law. Fifth, existing law does not permit states to maintain troops in addition to the National Guard. In view of the fact that the potential enemy possesses weapons of mass destruction and means for their delivery, it is a matter of urgent importance that there be no break between the time that National Guard units might be called into Federal service and the time that the states could raise additional forces to replace them. I therefore recommend that the Congress enact legislation which would permit the states to raise and maintain in time of peace organized militia forces which would take over the National Guard's domestic missions and support civil defense activities upon its withdrawal. These five remedies are suggested as amendments to our exist- 77 ^ 12 Public Papers of the Presidents ing legislative pattern, which is an essentially sound one. Through these amendments, certain broad objectives can be at- tained. To begin with, we will give each young man the maxi- mum possible right of self-determination by offering him a choice of methods of meeting his military obligation. At the threshold of his career, he will understand his obligations, so that he can make definite plans for his future. In addition, a more equitable sharing of the military obliga- tions will be accomplished. The program will go far toward assuring combat veterans that they will not be called in an emer- gency until younger men who have not had combat duty are called, thus alleviating an inequity made apparent during the Korean conflict. In sum, the program will constitute a substantial improvement in our present defense arrangements. It will make our determi- nation evident to every would-be aggressor. I believe that, under today's conditions, steps generally as out- lined above represent the best available approach to the problem of military security. I earnestly urge that Congress promptly initiate its studies of the detailed measures necessary and that legislation incorporating the principles of the program be enacted. DwiGHT D. Eisenhower 13 ^ Special Message to the Congress on Career Incentives for Military Personnel. January 13, 1955 To the Congress of the United States: We are traditionally a peace-loving people with a heritage founded on the dignity of the individual. Because our defense 78 Dwight D. Eisenhower^ ig^^ ^ 13 planning is developed within this framework, we seek to man our armed forces with volunteers to the greatest extent possible. This is a basic objective. To sustain our active forces at required levels of strength and efficiency, it is necessary to increase the present rate of voluntary enlistments. It is also necessary to induce volunteers, both offi- cers and enlisted men, to continue in the service on a career basis in order to obtain maximum usefulness from the skills and leader- ship which are achieved after long and costly training. The increasing mechanization and complexity of defense forces make technical skills and a wide background of experience vastly more important than ever before. The need for forces of the size now contemplated in our plan- ning is obvious. The responsibilities and obligations imposed on us by our position of leadership in world affairs require that we stand prepared to shoulder the accompanying burdens. PERSONNEL TURNOVER IN THE MILITARY SERVICES But at this time when we must still maintain large forces under arms and alerted throughout the world, it is difficult to attract and retain volunteers, both enlisted and commissioned. For example, only 1 1 .6 percent of Army personnel reenlisted in 1954 compared with a rate of 41.2 percent in 1949. The other services, particularly the Marine Corps, have also experi- enced sharp drops in the rate of reenlistments and today the com- posite rate for all services is 20 percent. Approximately one million enlisted men will become eligible for release from the military services during the coming year. Under present low reenlistment rates, it will be necessary to re- place about 800,000 of these men. The investment in this skilled manpower is enormous. For example, it costs approximately $3,200 to put one man through the normal course of basic training. It costs an additional $2,000 to $5,000 to train a man in the typical technical skills that are so 79 ^ 13 Public Papers of the Presidents essential in the military system of today. It costs $120,000 to train a jet pilot. These are just a few indications of the expense associated with training alone. Moreover, the cost of equipment, transporta- tion and other items goes up as the rate of personnel turnover increases. The seriousness of the situation was recognized by the 83rd Congress when it substantially raised reenlistment bonuses. REASONS FOR THE HIGH PERSONNEL TURNOVER Field studies made by the Services have attempted to pinpoint reasons for the high personnel turnover rate. A very large por- tion of the military personnel surveyed expressed dissatisfaction with traditional service benefits such as PX facilities, dependents' medical care, family housing, death benefits for survivors and related items. Wherever administrative action can improve con- ditions, action is being taken by the Services. However, legis- lation is necessary for changes in most benefits and in the level of compensation. Since 1949 there has been one increase in pay which, along with increases in allowances, amounted to an aggregate advance in compensation of 5.7 percent. Military pay, nevertheless, has fallen behind that of industry. In addition, supplementary pay practices, health, security and retirement benefits and bonus sys- tems are now widespread throughout industry, and this fact tends to neutralize such advantage as the military services had in these fields. EFFECTS OF HIGH TURNOVER RATE ON OPERATIONAL EFFICIENCY While the high turnover in military personnel is costly in dol- lars, even more costly is the loss of experience and operational efficiency which results from it. We are losing too many men trained in leadership and technical skills — the experienced hard core of a modern fighting force. To maintain required percentages of young officers we must 80 Dwight D. Eisenhower y IQ55 ^ 13 obtain them from the service academies and from reserve training units. A certain number should elect to continue a service career beyond the required minimum time. Yet not enough of our younger officers currently continue in military service. In 1954, 4,000 young Naval Reserve officers completed their obligated period of service. Only 200 of these elected to remain in the career service. As a result of the loss of younger officers, there is a noticeable shortage of officers and men in the services with intermediate levels of experience. In the Army, for example, there are sub- stantially fewer officers with 4 to 10 years service than with 10 to 15 years experience. In the other services, a similar situation exists. A large percentage of officers in the older age group who saw service in World War II and in Korea outnumbers a pro- portionately smaller group of younger officers. We must not allow this trend to continue. A continuing shrinkage in the rolls of young experienced com- missioned and non-commissioned officers will blunt the battle readiness of our combat units. HAZARDOUS AND SPECIAL DUTY Peacetime military service has become more arduous, more dangerous and more disruptive of normal living habits. The era of nuclear weapons and jet propulsion has drawn our services into new dimensions of hazard and uncertainty. For example, jet flying is ranked by insurance companies as the most hazardous of all occupations. Many young flyers find it impossible to secure insurance coverage and those who can get it must pay a sizable premium differential. While we are in a peacetime situation, many men in the Stra- tegic Air Command, the Air Defense Command, and various Naval units are on alert up to 60 hours per week, subject to sudden and prolonged absences from home and loved ones. Airborne troops of the Army and submarine crews of the Navy are also ex- posed to discomforts and dangers not found in civilian pursuits. 81 ^ 13 Public Papers of the Presidents CONCLUSIONS The fundamental objectives to be attained by the proposed leg- islation are the attraction of young men to a military career and the retention of men in this career once they have chosen it. In addition, it is necessary to offer special attractions to men who undertake the particularly hazardous jobs that are becoming more important as weapons become increasingly complex. These objectives require compensation which is more in line with that offered by private industry. They also require strength- ening of traditional service benefits in recognition of the unusual difficulties facing the serviceman and his family. Servicemen frequently live in isolated areas and under circumstances that can be extremely trying. They are subject to frequent and long absences from their families, enforced on them by their defense missions. Both pay and the non-pay benefits are important, varying with the status of the men we are trying to attract. At the present time, 60 percent of personnel on active duty are unmarried. These men are less likely to be attracted by deferred or family benefits than by an increase in pay. So our problem is twofold. On the one hand we must attract more of the young, unmarried men into a military career. On the other, we must provide advantageous benefits for those who have families. In proposing adjustments in pay I do not recommend that any across-the-board increase should be authorized. Such pay adjust- ments should foster career service. Specifically, no increase is proposed in the first two years for enlisted men, because this is the least valuable period of a man's service, and no increases are proposed in the first three years for officers. Our efforts should be directed at inducing men to stay on after those periods. For this reason, I consider it highly important that a schedule of selec- tive adjustments be approved. 82 Dwight D. Eisenhower^ ig^^ ^ 13 RECOMMENDATIONS In summary, my recommendations are as follows: ( 1 ) The compensation of military service personnel should be increased on a selective basis. The aggregate increase proposed would add approximately 6.7 percent to the present level of pay and allowances. (2) Hazardous duty pay for airmen and submarine crews should be increased, also on a selective basis, and increases also should be made in the hazardous duty pay for parachute duty, demolition work, deep-sea diving and certain other specialties. (3 ) Other non-pay benefits should be provided, including: {a) A "dislocation" allowance for military personnel with de- pendents who are ordered to a new permanent duty station. ( 6 ) An increase in the per diem allowance for temporary duty travel from $9 to $12, in keeping with a comparable proposal for civilian government employees. (c) More housing for service families in areas where present facilities are insufficient and authority for reduced rentals where men and their families must live temporarily in substandard housing. (d) Removal of existing inequities and provision for better medical care for military families. {e) Equalization of survivor benefits according to rank for active and retired personnel. These recommendations are vitally important to the welfare of our military people and to the sustained security of the nation. It is the objective of the Government that the size of the active military establishment shall be no greater than is consistent with the needs of national security. It shall always be our objective, in the present world situation, to maintain a military force that we can support for the many years that may be necessary to dispel the shadow of Communist threat. In my judgment, the meas- ures herein presented will strengthen our security and preserve our way of life. 83 ^ 13 Public Papers of the Presidents I urge that the Congress give early and favorable consideration to the recommendations I have herein submitted. DwiGHT D. Eisenhower 14 ^ Letter to the President of the Senate and to the Speaker of the House of Representatives Approving Certain Virgin Islands Corporation Activities. January 13, 1955 Sir: In accordance with section 7(a) of the Virgin Islands Cor- poration Act (48 U.S.G. i407f (a) ) I hereby report my approval of the emergency undertaking by the Virgin Islands Corporation of certain activities of a type authorized by the Act, but not in- cluded in the budget program or subsequently approved by the Congress. The activities undertaken are in connection with the manage- ment of the Federal properties in the Virgin Islands known as the Marine Corps Air Facility and the Naval Submarine Base. These properties had been transferred by the Navy to the Depart- ment of the Interior for operation and management under a revo- cable permit. The Department of the Interior had in turn leased the properties to the St. Thomas Development Authority, an in- strumentality of the Municipality of St. Thomas and St. John, Virgin Islands. When serious mismanagement of the properties was brought to the attention of the Secretary of the Interior in June 1954, he terminated the lease and directed the Virgin Islands Corporation to assume responsibility for operation and mainte- nance. Immediate action was necessary to avoid further revenue losses and deterioration of Federal property. Revenues from the operation of the property are expected to 84 Dwight D, Eisenhower^ ig^^ ^ i6 be sufficient to pay all expenses of operation and to restore the property to good condition. Respectfully yours, Dwight D. Eisenhower note: This is the text of identical Senate, and to the Honorable Sam letters addressed to the Honorable Raybum, Speaker of the House of Richard M. Nixon, President of the Representatives. 15 ^ Cablegram to Dr. Albert Schweitzer on the Occasion of His 80th Birthday. January 13,1 955 Dr. Albert Schweitzer Lambarene French Equatorial Africa My cordial greetings and best wishes on your eightieth birth- day. Your spirit and work have been an example and inspiration to all of us. Dwight D. Eisenhower 16 ^ Statement by the President on United Nations Negotiations With Communist China for Release of American Airmen and Other Personnel. January 14, 1955 THE SECRETARY GENERAL of the United Nations has re- turned from his mission to Peiping. He has not yet formally re- ported but has indicated that his visit represented only a first stage in United Nations negotiations to achieve the release of the American airmen and other United Nations personnel de- tained in Red China. He believes that progress has been made and urges that restraint be exercised to permit of further efforts. 85 ^ 1 6 Public Papers of the Presidents Quite naturally, the immediate reaction of all Americans to the Secretary General's announcement is disappointment. All of us are rightly aroused that our airmen have not long since been released by their Communist captors in accordance with the clear terms of the Korean Armistice. We must never forget one fimdamental thing: We want our airmen returned safely to their homes. All Americans are united and dedicated to this cause. Truth and right are on our side. We must have faith in the community of nations and in the tremendous influence of world opinion. It will not be easy for us to refrain from giving expression to thoughts of reprisal or retaliation. Yet this is what we must not now do. We must not fall into a Communist trap and through impetuous words or deeds endanger the lives of those imprisoned airmen who wear the uniform of our country. They are fighting men, trained to discipline. We now owe them discipline from ourselves. We must support the United Nations in its efforts so long as those efforts hold out any promise of success. 1 7 ^ Annual Budget Message to the Congress : Fiscal Year 1956. January 17, 1955 Part A To the Congress of the United States: I am transmitting to you today the Budget of the United States Government for the fiscal year 19565 which begins July i, 1955. The first part of this budget message summarizes the budget totals and highlights our policies and plans for next year, par- ticularly as related to the fiscal situation. The second part pre- sents summary tables and also contains my budget recommenda- tions for each major Government activity. The fiscal and budget story during this past year centers around 86 Dwight D. Eisenhower, ig^^ ^ 17 the fact that we successfully made the adjustment from a wartime to a peacetime type of economy, a truly significant achievement. Aided by a proper fiscal policy, the inevitable dislocations of this adjustment, while difficult for some, have not been serious on the whole. Our present growing prosperity has solid foundations, free from the artificial stimulations of war or inflation. How- ever, the peace in which we live is an insecure peace. We must be constantly on the alert. Along with the other free nations of the world we must continue to strengthen our defenses. At the same time to remain strong for what will apparently be a long period of uncertainty ahead, we must also progressively increase our prosperity and enhance our welfare. The 1956 budget is based on this outlook. Total expenditures will be reduced. However, I am recommending somewhat in- creased expenditures in particular areas important to human well-being. Budget expenditures for the fiscal year 1956 are now estimated at 62.4 billion dollars, i.i billion dollars less than for the current year. All parts of the administration will continue to work toward further reductions during the year by eliminating nonessentials and by doing necessary things more efficiently. We must maintain expenditures at the high level needed to guard our national security. Our economy is strong and pros- perous but we should not dissipate our economic strength through inflationary deficits. I have therefore recommended to the Con- gress extension for i year of present excise and corporate income tax rates which are scheduled for reduction on April i, 1955, under present law. If this is done, and employment and produc- tion increase as currently anticipated, we can expect budget receipts to rise i billion dollars over 1955, to a total of 60 billion dollars in the fiscal year 1956. On the basis of these estimates of expenditures and receipts, the deficit will be reduced from the presently estimated 4.5 billion dollars in the fiscal year 1955 to an estimated 2.4 billion dollars in 1956. Thus we continue to progress toward a balanced budget. 87 ^ 17 Public Papers of the Presidents BUDGET POLICIES Three broad considerations of national policy have guided me in framing the budget for the fiscal year 1956. First, we must defend our priceless heritage of political liberty and personal freedom against attack from without and under- mining from within. Our efforts to date have helped bring about encouraging results — cessation of fighting, new and stronger alliances, and some lessening of tensions. The grow- ing strength of the United States and its friends is a key factor in the improved outlook for peace. We must continue to build this strength. We must at the same time preserve our liberty at home by fostering the traditional initiative of the American peo- ple. We will increase the scope of private activity by continuing to take Government out of those things which the people can do better for themselves, and by undertaking on a partnership basis, wherever possible, those things for which Government action is necessary. Thus, people will be able to keep more of their earn- ings to use as they wish. Second, the Government must do its part to advance human welfare and encourage economic growth with constructive actions, but only where our people cannot take the necessary actions for themselves. As far as possible, these steps should be taken in partnership with State and local government and private enterprise. We must do our part to provide the environment for our free enterprise system to keep employment high, to create new jobs, and to raise the standard of living. We must broaden the opportunity for individuals to contribute to the growth of our economy and enjoy the fruits of its productivity. Third, we must maintain financial strength. Preserving the value of the dollar is a matter of vital concern to each of us. Surely no one would advocate a special tax on the widows and orphans, pensioners, and working people with fixed incomes. Yet inflation acts like a tax which hits these groups hardest. This administration has made a stable dollar and economy in Government operations positive policies from the top down. Ex- 88 Dwight D. Eisenhower^ ^955 ^ ^7 penditure reductions, together with a judicious tax program, effective monetary policy, and careful management of the pub- lic debt, will help to assure a stable cost-of-living — continuing our achievement of the past 2 years. A liberal attitude toward the welfare of people and a con- servative approach to the use of their money have shaped this budget. Our determination to keep working toward a balanced budget provides the discipline essential for wise and efficient management of the public business. NEW AUTHORITY TO INCUR OBLIGATIONS My recommendation for appropriations and other new author- ity to incur obligations for the fiscal year 1956 is 1.3 billion dollars more than the amoimt for the fiscal year 1955, primarily be- cause of new requirements for our military services. However, it represents a reduction of 32.8 billion dollars from 1952, 21.7 billion dollars from 1953, and 4.2 billion dollars from 1954. New authority to incur obligations Fiscal year: {in millions) 1952 $91.4 1953 80. 3 1954: As estimated, January 9, 1953 72. 2 Actual 62. 8 1955 estimated 57. 3 1956 recommended 58. 6 The new authority to incur obligations which I am recom- mending for our major national security programs is 2.4 billion dollars greater than in the fiscal year 1955. I am proposing a reduction in the total new authority for all other Government programs, although within this total, I am recommending selec- tive increases. Part of the reduction in 1955 of new authority for our major national security programs below the amount enacted for 1954 was possible because the military services improved their supply procedures, which resulted in larger use of existing stocks and 89 ^ 17 Public Papers of the Presidents reduction of the large backlog of unexpended balances. The accumulated unexpended balances of funds appropriated to all Government agencies in prior years are now on their way down to more reasonable levels and the continued downtrend in total unexpended balances will be less rapid in the future than in the fiscal year 1955. Recommended new authority for 1956 is less than both the anticipated revenues and the estimated expenditures for that year. By holding the level of new authority lower than antici- pated revenues, we can continue making progress toward balancing the budget. Likewise, as long as the amount of new authority is less than expenditures, we are continuing on the way toward lower levels of Government spending. BUDGET EXPENDrrURES In the fiscal year 1956, net budget expenditures are estimated to be 1 1.9 billion dollars below actual spending in the fiscal year 1 953. The record shows that this administration cut Government spending in 1954 by 6.5 billion dollars below 1953, and lo.i bil- lion dollars below the level estimated for 1954 on January 9, 1953. For 1955, an additional reduction of 4.3 billion dollars is now estimated and still another reduction in spending of i.i billion dollars is the present estimate for 1956. The fiscal year 1955 is only half completed and the beginning of 1956 is still 5J/2 months away. We shall continue working to improve efficiency and to reduce still further the totals now estimated for these years. Expenditures Fiscal year: {in billions) 1952 $65. 4 1953 74- 3 1954: As estimated, January 9, 1953 77.9 Actual 67. 8 1955 estimated 63.5 1956 estimated 62.4 The stern requirements of our national defense dictate the larg- est part of our budget, and it is chiefly these requirements which 90 Dwight D. Eisenhower^ ig^^ ^ 17 prevent us from decreasing budget expenditures faster at this time. Further progress in reducing expenditures must result in large part from increasing efficiency and from finding better ways of doing the things that must be done. Future savings will be more difficult than those already accomplished. However, we expect to continue reducing the cost of Government. Major national security. — Expenditures for major national security programs in the fiscal year 1956 are estimated at 40.5 billion dollars, 65 percent of total budget expenditures. This amount includes the cost of new legislation. I am proposing to establish an effective military reserve system and strengthen the career service. This budget provides for more expenditures by the Department of Defense for air power than ever before in peacetime history. New weapons for defensive and retaliatory action are being developed and produced in increasing quantities. High priority is being given to strengthening our continental de- fense system. Since military supplies are not being consumed in combat, the bulk of the military materiel being produced by our factories is adding to our capacity to defend ourselves. Our de- fense expenditures are now bringing about a steadily growing strength. Never in our peacetime history have we been as well prepared to defend ourselves as we are now. We will deliver about the same amount of military equipment to friendly nations as in 1954 ^^^ 1955. New atomic energy plants will be placed in operation and more than in any previous year will be spent for peaceful applications of atomic energy. The dollar value of our stockpile of strategic materials is expected to reach 78 percent of the minimum objective, compared with 58 percent in 1954. International affairs and finance. — Our international pro- grams are closely related to national security. The conduct of our foreign affairs is crucial in preserving peace. We have mate- rially contributed to the strengthening of friendly nations through the economic aspects of the mutual security program. Continua- tion of such assistance is urgendy needed for some countries. Net 91 ^ 17 Public Papers of the Presidents expenditures for international affairs and finance are estimated to be 1.3 billion dollars, 88 million dollars lower than in the fiscal year 1955. Keeping our own defenses strong and cooperating with our allies to increase their defenses will deter outside attacks on our freedom. We must at the same time look to the abiding sources of our intemal strength — our faith in the power of free men, our individual initiative, and our competitive enterprise. Commerce and manpower. — ^We are moving ahead in taking the Government out of business wherever this can properly be done. In addition to selling the Inland Waterways Corporation and liquidating the Reconstruction Finance Corporation, we have already sold or shut down a number of Department of Defense plants for processing scrap and manufacturing paint, clothing, and chlorine. Private industry is performing an increasing share, which has reached almost half, of major equipment overhauls for the Air Force. Most of the synthetic rubber plants have been sold to private purchasers, subject only to congressional approval. These actions not only serve to strengthen our system of private enterprise, but also in many cases reduce Government expendi- tures and increase tax receipts for cities, counties, and States as well as the Federal Government. During the past year, legislation was enacted permitting pri- vate lenders to make mortgage money available on more liberal terms so that more people can buy their own homes. Local pub- lic agencies, aided by private investors, are being encouraged to start comprehensive urban renewal programs. Provision has been made for extension of unemployment insurance to 4 million more workers. For the coming year, I am recommending that we start a 10- year program to modernize the interstate highway system in cooperation with State and local governments. I am also pro- posing that we step up aeronautical research, expand air naviga- tion facilities, and help industry build more ships. These activi- ties are important for our national security as well as for our 92 Dwight D. Eisenhower, iq§5 ^ 17 growing economy. I firmly believe that as large a proportion as possible of the expenditures of the Government should be borne by those directly benefiting therefrom. The user charge prin- ciple should be further extended. I have recommended to the Congress that postal rates be increased to make the postal system self-supporting in the near future. With the enactment of this legislation, total net expenditures for commerce and manpower in the fiscal year 1956 are expected to be 2.2 billion dollars, 364 million dollars below 1955. Natural resources. — ^An important policy of this Government is to encourage an increased sharing by State and local govern- ments of our long-range development projects. For example, the State of New York and the Province of Ontario are now jointly developing the power resources of the St. Lawrence River without cost to the Federal Government. Under legislation passed last year the Markham Ferry project in Oklahoma and the Priest Rapids project in the State of Washington, both with large power developments, will be built by State or local units, with modest Federal contributions only for those purposes such as flood control which involve national responsibilities. This budget proposes the start of several new construction projects under such partnership arrangements. Thus, we are continuing to develop our natural resources at less cost to the Federal Government. Net budget expenditures of 953 million dollars in 1956 are estimated for natural resources, 1 80 million dollars less than in 1955. Agriculture. — Greater freedom from Government direction and control of farming operations will be made possible in future years as a result of the new farm legislation enacted last summer. The flexible supports provided for therein will stimulate the con- sumption of farm products at home and abroad and will reduce Government expenditures for buying and storing surplus com- modities. Greater private participation in the financing of loans to farmers has also been brought about by legislation enacted last year. By increased use of fully insured private loans, the need for direct Federal loans for farm ownership and for soil and water 40308—59 9 93 ^ 17 Public Papers of the Presidents conservation has been reduced. A sound basis has also been pro- vided through the new watershed protection legislation for greater cooperation between the Federal Government and States and local groups in the upstream flood prevention program. In addition, through strengthened agricultural research and educational work, farmers can better work out solutions for their own problems. These steps reduce the dependence of farmers on the Govern- ment, encourage farmers to take the initiative in adjusting pro- duction to demand, and provide the conditions under which farmers can maintain their incomes with less interference by the Government. The flexible support legislation will not greatly affect expenditures for the fiscal year 1956. Estimated net ex- penditures for agricultural programs in 1956 will be 2.3 billion dollars, 871 miUion dollars less than in 1955. This reduction is principally due to the anticipated smaller outlays for farm price supports resulting from acreage restrictions and increased sales. Welfare, health, and education. — Our policy of partnership with State and local governments and with private enterprise is also enabling us to make significant contributions to human wel- fare. Our broadened programs of assistance for vocational re- habilitation and for construction of nonprofit hospitals and health centers will encourage greater State, local, and private activity in these fields. The extension of old-age and survivors insurance to I o million more persons and the increased contribution and benefit rates enacted last year are in keeping with our tradition of self- reliance and will diminish dependence on charity. This budget includes appropriations for the health improvement program which I shall outline in a special message. Increases in some programs, principally for public health and vocational rehabilita- tion, will be offset by some reductions in other programs. Total expenditures for welfare, health, and education are estimated at 2.3 billion dollars in the fiscal year 1956, about the same as in 1955- Veterans^ services and benefits. — Expenditures for veterans' benefits continue to increase as a result of the growing number of 94 Dwight D, Eisenhower y ^955 ^ ^7 veterans, now estimated at 2 1 million in civil life, becoming eligi- ble for benefits. Legislation enacted last year raised compensation and pension benefits to our ex-servicemen and women. I have recently issued a proclamation ending the time period for acquir- ing further rights to readjustment benefits intended for veterans of the Korean conflict. Estimated net expenditures for veterans' programs will be 4.6 billion dollars, about 200 million dollars more than in 1955. Interest and general government. — Expenditures for interest are estimated to amount to 6.4 billion dollars, 180 million dollars less than in 1955. In the field of general government, I recom- mend that we increase our expenditures for tax collection and management of Government property as further steps toward efficiency. I also recommend strengthening our law-enforcement agencies, particularly the Federal Bureau of Investigation. Finally, the Government should resume its payments as employer to the civil service retirement fund. As a result of these recom- mendations and anticipated increases in payments of certified claims, expenditures for general government purposes are ex- pected to rise 344 million dollars to 1.6 billion dollars in the fiscal year 1956. Special classification of expenditures. — ^The budget expendi- tures discussed above may be divided into four large groupings to show the ends for which we pay taxes and also the items which make our budgets big. These groupings are ( i ) the cost of civil operations and administration, (2) interest, (3) civil benefits to various parts of our society, and (4) the major cost of protection against war. The expenditures for civil operations and administration of the Government have been obscured for many years by the large expenditures for defense and by the variety and complexity of the domestic and international programs. The cost of keeping the civil functions of the Government running for the fiscal year 1956 is estimated to be 2.3 billion dollars or about 4 percent of the net budget expenditures. This includes most of the expenditures 95 ^ 1 7 Public Papers of the Presidents Special Classification of Net Budget Expenditures [Fiscal years. In billions] ^ 955 1 956 estimated 1 95 1 1952 1953 1954 esti- actual actual actual actual mated Amount Percent Current expenses for civil operations and administration $1.9 $2.2 $2.3 $1.9 $1.9 $2.3 4 Interest 5. 7 5. 9 6. 6 6. 5 6. 6 6. 4 10 Civil benefits 11. 5 12.2 13.4 11. 6 13.3 12.0 19 Protection 25.6 46.0 52.0 47.9 41.7 41.5 67 Undistributed (reserves and adjustments) ... — .7 — .9 .1 .3 Total 44.1 65.4 74.3 67.8 63.5 62.4 100 classified as general government plus the expenditures for repair, maintenance, and operation of Government civilian facilities, and for regulatory activities. The fluctuation shown in the cost of civil operations arises pri- marily from the contribution made by the Federal Government, as employer, to the civil service retirement fund. This contri- bution was 321 million dollars in the fiscal year 1953 and 216 million dollars is proposed for 1956. No contributions were made during 1954 ^^ ^955 pending a detailed review of all Federal retirement systems by a special commission. Increased funds are also provided for several departmental operations where there has been a longstanding backlog of work. Decreasing interest rates during the past 12 months, together with a change in the timing of interest payments, have made possible a forecast for lower expenditures for interest in the fiscal year 1956. The various civil benefit programs of the Govemment are esti- mated to amount to 12 billion dollars in the fiscal year 1956. Expenditures for veterans' benefits represent 38 percent of all civil benefits in that year. The variations in expenditures for farm price supports and mortgage purchases account for part of the changes in total benefit expenditures between the fiscal years 1953 and 1956. 96 Dwight D, Eisenhower y ig^^ ^ 17 The expenditures for protection, which account for two-thirds of total expenditures, include continental defense at home and mutual defense abroad. The total amount in the fiscal year 1956 consists of the 40.5 billion dollars for major national security programs and i billion dollars for economic and technical assist- ance imder the mutual security program. In addition, many items of smaller size scattered through other parts of the budget, not included in this category, are related in varying degrees to protection. Examples are the Coast Guard and the Selective Service System. TAX POLICY Last year we made great progress in reducing tax burdens and improving the tax structure. Total tax reductions of 7.4 billion dollars became effective. This was the largest tax reduction in any single year in the country's history. It was made possible only by large cuts in Government expenditures. The basic tax law was revised to relieve hardships for millions of individuals and to reduce tax barriers to economic growth. The budget would have been balanced for the current fiscal year if there had been no tax cuts. However, it was desirable to share the benefits from the large expenditure reductions. This enabled the people to have the extra money to spend for themselves which they retained because of the reduction in their taxes. In view of the prospective deficit, we cannot afford to have any further loss of revenue this year through reductions in taxes. The corporate tax rate would be automatically reduced under existing legislation from 52 to 47 percent on April i with a revenue loss of about 2 billion dollars for a full year unless ex- tended. Under existing law, the excise taxes on liquor, tobacco, gasoline, and automobiles would also be automatically reduced on April i, with a revenue loss of i billion dollars unless appro- priate legislation is enacted by the Congress extending them. In the fiscal year 1956, there will be an automatic revenue reduction (as compared with 1955) of almost 2 billion dollars 97 ^ 17 Public Papers of the Presidents under existing law, wholly apart from any changes in tax rates. The principal reason is the completion of the plan adopted 5 years ago under which payments of corporate taxes have been moved forward into earlier fiscal years. Fortunately, this re- duction in 1956 will be more than offset by increases in revenue due to the economic growth of the country. Because we must keep our existing revenues intact, I have already recommended to the Congress in my State of the Union Message that existing rates on both excises and corporate incomes be extended for i year. Any other course of action would result in either ( i ) inadequate expenditures for national security, or (2) inflationary borrowing. During the past year the Treasury Department has continued to examine possible changes in the tax laws concerning which no recommendations were made in the revision of the tax laws last year. As final conclusions are reached by the Department they will be sent to the Congress. I have also directed the Secretary of the Treasury promptly to make recommendations for any other changes in the laws which may be found necessary to prevent anyone from avoiding his fair share of the tax burden. The present tax take of nearly one-fourth of our national in- come is a serious obstacle to the long-term dynamic growth of the economy which is so necessary for the future. There must be the means for providing more and better jobs not only for those who are working today but also for the millions of young people who will come of working age in future years. The stimulus of further tax reductions is necessary just as soon as they can prop- erly be made. We must always make adequate provision for our security and other essential services, and further tax reductions can only be made as savings in governmental expenditures or increased rev- enues resulting from growth in our economy are in sight. However, further tax reduction remains a firm goal of this administration, and our policy is directed to achieving both the 98 Dwight D. Eisenhower^ ig^^ ^ 17 savings in expenditures and the economic growth that will make such reductions possible. I hope that tax reductions will be so justified next year. If so, I shall recommend a reduction in taxes to spread the relief fairly among all taxpayers in a way which will be the most effective to relieve individual tax burdens and to increase incentive for effort and investment. DEBT MANAGEMENT Debt management policy during the past year was keyed to Federal Reserve monetary policy to help assure the ready avail- ability of money and credit needed to sustain a high level of busi- ness activity. The Treasury refrained under the special circum- stances of 1954 from issuing long-term securities which would compete for long-term money available for the construction of new homes, for business expansion, or for new schools, highways, and hospitals at the State and local government level. At the same time, progress was made in improving the structure of the public debt by some extension of maturities through issuing more intermediate-term bonds. In each major Treasury financing during 1954, except for borrowing through tax anticipation secu- rities, investors had the opportunity to buy securities longer than I -year certificates. The result was a substantial reduction in the short-term debt. On December 31, 1954, the public debt subject to the stat- utory limit was 278.3 billion dollars. We expect to be able to operate this fiscal year within the temporary debt limit of 281 billion dollars voted by the Congress last August. The increase beyond 275 billion dollars provided by this legislation is, however, temporary. The statutory limit will go back to 275 billion dollars on June 30, 1955. We anticipate that the heavy tax receipts during the remainder of this fiscal year will enable us to reduce the debt to within that figure by June 30, 1955. At the start of the new fiscal year in July 1955 ^^e debt will already be pressing against the legal limit. With the present seasonal pattern of tax collections, expenditures will exceed re- 99 ^ 17 Public Papers of the Presidents ceipts in the first 6 months of the fiscal year 1956 by about 8 billion dollars. Thus, it will not be possible to pay the Government's bills in that period without exceeding the 275 billion dollar limit. We recognize that the statutory debt limit is valuable as an expression of firm intent to maintain fiscal soundness. With pres- ent requirements for national security we have not yet been able to achieve a balanced budget, even though we have made sub- stantial progress toward it. Therefore, I have no alternative but to ask the Congress to again increase the debt limit. During the past 2 years, we have proved that a free, democratic system can make the adjustment from war to peace without serious economic disturbances. A major factor in this achieve- ment has been the confidence of the people in the ability of the Government to bring its financial affairs under control and to conduct them in a responsible manner. Our objective of being provident in financial matters has paid and is still paying dividends in general well-being. We have re- duced expenditures and eased the crushing load of taxation. We have improved the structure of the public debt and provided a favorable environment for sound monetary policy. We have en- couraged private initiative by starting to take the Government out of competition with private enterprise. We have made prog- ress in housing and in protection against personal catastrophe. We are developing our natural resources in partnership with the State and local governments and with private initiative. These steps are designed to assure high and rising employment, a grow- ing prosperity, and a stable dollar. This administration will continue to exercise the utmost care in the manner in which it uses the taxpayers' money. It will con- tinue to purchase what we must have for our security, well-being, and prosperity with the fewest possible number of dollars. And it will continue to administer the huge Government organization more efficiently. It will put first things first and restrain spend- 100 Dwight D. Eisenhower^ JQ55 ^ 17 ing to items of high priority. Our success thus far in reducing taxes, expenditures, and the deficit is the best evidence of the earnestness of our efforts. With an indestructible faith in the destiny of this country, a faith equal to that of the founders who held that all men are Divinely endowed with inalienable rights; with full confidence that in the intelligent cooperation of free men is to be found the most effective way of solving group and national problems; with unshaken dedication to the pursuit of peace and justice at home and in the world, we shall continue to sustain our liberties and we shall meet and far surpass the objectives we now set for ourselves in promoting human welfare, happiness, and prosperity. Dwight D. Eisenhower Part B • [This second part of the budget message starts with three summary tables which are omitted. ] To the Congress of the United States: This second part of my message contains further details regard- ing budget expenditures and new appropriations and my legisla- tive recommendations. Major trust fund transactions are sum- marized. Expenditures are analyzed from two different points of view. Purposes of expenditures. — From one point of view, budget expenditures serve four broad purposes. These were summarized on page 96. Four percent goes for keeping the civil functions of Government running. Another 10 percent is necessary to pay the interest charges on the Government debt. A somewhat larger proportion, 19 percent, is devoted to the costs of various programs combined under the heading of civil benefits. Some of these benefit particular groups or localities. Others are in the nature of more general benefits. Another 67 percent is for the major programs for protection against possible war. 40308—59 10 lOI f 17 Public Papers of the Presidents That part of the expenditures of various agencies which is for current expenses of civil operations and administration is shown by agency in the following table : Current Expenses for Civil Operations and Administration [Fiscal years. In millions] I 95 I 1952 1953 1954 1955 1956 actual actual actual actual estimated estimated Legislative branch $57 $58 $53 $55 $64 $65 The Judiciary 25 27 27 28 30 33 Executive branch: Department of Agriculture .. . loi 89 96 139 138 139 Department of Commerce 105 145 112 50 84 82 Department of Defense — Civil functions 56 58 81 52 59 60 Department of Health, Educa- tion, and Welfare 7 8 8 8 9 10 Department of the Interior. . . 11 1 119 127 125 150 150 Department of Justice 150 194 169 181 184 200 Department of Labor 38 48 53 51 86 96 Post Office Department 74 70 35 ^6 Department of State 193 211 221 144 131 141 Treasury Department: Claims and judgments 98 76 137 213 163 250 Otiier 434 471 478 488 480 495 Civil Service Commission 324 332 346 50 48 235 Economic Stabilization Agen- cy 91 64 2 General Services Administra- tion 96 163 162 147 148 153 Otiier 43 13 130 135 143 144 Total 1,911 2,174 2,299 1,872 1,916 2,251 ^ Since August 15, 1953, the cost of Government mail has been paid by the various agencies. Expenditures for civil benefits are shown in the following table. These expenditures are partly for the acquisition of assets, which have varying degrees of recoverable value or permanency. Other expenditures are for long-range development, and for current aids and services to various groups. The largest amount of benefits goes to veterans for compensa- tion and pension payments, hospital and medical care, and read- 102 Dwight D. Eisenhower^ IQ55 ^ 17 justment benefits, including vocational training. The next largest current expense for benefits is for public assistance grants to States. Current expenses for agriculture consist of losses realized in dis- position of commodities acquired under price support programs, payment for the removal of surplus commodities, administrative expenses of loan programs and other aids to farmers. Expenditures for Civil Benefits [Fiscal years. In millions] I 95 I 1952 1953 1954 1955 1956 actual actual actual actual estimated estimated Federal assets (loans, construc- tion, major equipment, and additions to commodity in- ventories) $1,771 $2,905 $4,672 $2,840 $3,323 $2,013 Long-range development: State, local, and private assets (roads, airports, schools, and soil conservation) ... . 961 1,023 i> 124 1,022 1,131 i> 302 Expenditures for education, training, health, and re- search and development. . . 1,178 566 602 586 667 754 Current expenses for aids and services: Agriculture 905 463 305 540 995 750 Business: Post Office 521 670 624 307 267 1 15 Other 288 371 310 341 483 522 Labor 203 209 215 216 272 348 Home owners and tenants .. . —160 —129 —123 —116 —92 —48 Veterans 4,515 4» 7io 4, 178 4> 185 4,347 4,536 Public assistance i, 186 i, 178 i, 33° i> 43^ i, 445 i> 420 Other aids 141 186 176 209 420 371 Total 11,509 12,153 13,413 "»57o 13*259 11,984 1 Based on proposed increases in postal rates and postzd pay. Most of the postal deficit for 1954 and 1955 has been included among benefits to private business since the Post Office Depart- ment's analysis shows that it arises principally from inadequate second- and third-class mail rates. The proposed rate increase will practically absorb the postal deficit in 1956. Expenditures for protection, as shown in the next table, likewise 103 ^ 17 Public Papers of the Presidents include the acquisition of Federal assets, of varying degrees of permanent value, from airbases to aircraft, tanks, trucks, and bombs. Such expenditures also include long-range development, and current expenses. The last mentioned is primarily the cost of military pay and operations. Protection also includes a sub- stantial amount of military equipment and economic and tech- nical assistance furnished under the mutual security program, of which a significant amount goes to Korea and other Far Eastern countries. Expenditures for Protection [Fiscal years. In millions] I 95 I 1952 1953 1954 1955 1956 actual actual actual actual estimated estimated Federal assets (construction, plant and major equipment, and stockpiling) $6, 099 $15, 059 $21, 438 $19, 914 $16, 762 $16, 934 Long-range development (re- search and development) ... . 915 1,285 1,617 1,6x6 1,546 1,649 Current expenses (military pay, operations, maintenance, ad- ministration, and military aid abroad) 15*293 27,505 27,219 24,994 22,336 23,625 Current expenses of economic assistance abroad 3, 320 2, 154 i, 705 i, 339 i, 029 i, 017 Unallocated reduction in esti- mates (Department of De- fense) — I, 750 Total 25, 626 46, 002 51, 979 47» 863 41, 673 41, 475 Controllability of expenditures. — The preceding analysis has indicated the broad purposes of expenditures. It is important that we also consider our budget from another point of view. About one-fourth of the total expenditures can be classified as permitting little or no administrative discretion through the budget process. The level of these expenditures depends upon the provisions of the legislation which authorized the programs and on other factors independent of Executive control. 104 Dwight D. Eisenhower, IQ55 ^ 17 Summary of Net Budget Expenditures Indicating Controllability [Fiscal years. In miJlions] 1953 1954 1955 1956 Description actual actual estimated estimated Major national security programs $50, 274 $46, 522 $40, 644 $40, 458 Major programs not readily subject to administrative discretion through the budget process: Veterans' compensation, pensions, and selected benefit programs 3j 3^3 3^297 3,512 3,680 Veterans' unemployment compensation 26 82 131 150 Grants to States for public assistance. . i, 330 i, 438 i, 445 i, 420 Payment to railroad retirement fund for military service credits 33 35 Agricultural price support (Commodity Credit Corporation) i, 943 i, 526 2, 159 * i, 142 Removal of surplus agricultural com- modities 82 178 113 180 Conservation of agricultural land re- sources 273 171 190 212 Federal-aid highway grants 509 53 1 600 680 Grants to States for unemployment compensation and employment serv- ice administration 202 203 195 245 Payment to the unemployment trust fund 64 87 Claims and relief acts 129 213 163 250 Payments to Federal employees' retire- ment funds 321 31 30 217 Unemployment compensation for Fed- eral employees 33 40 Legislative and the Judiciary 88 87 102 116 Interest 6, 583 6, 470 6, 558 6, 378 Total 14*902 14,262 i5>295 14, 797 Another 9,098 6,988 7,565 7,153 Total budget expenditures 74, 274 67, 772 63, 504 62, 408 *For comparability with prior years, includes expenditures (127 million dollars) from appropriations to reimburse Commodity Credit Corporation. For example, interest depends upon the size of the public debt and the interest rates. Expenditures for veterans' benefits depend upon the benefit rates and the number of eligible veterans. Ex- penditures for agricultural price supports are affected by such 105 ^ 17 Public Papers of the Presidents factors as the weather, the level of world prices, and the ability of foreign purchasers to pay dollars. Grants to States are made under formulas fixed in legislation and vary with State partic- ipation and general economic conditions. Expenditures for rela- tively uncontrollable programs will be 14.8 billion dollars in the fiscal year 1956. This will be 498 million dollars less than in 1955. Increases for grants under the Federal-Aid Highway Act of 1954, veterans' benefits, payment of claims, and resumption of the Government's contribution to the civil service retirement and disability fund are more than offset by the decreases expected for agricultural price supports and interest on the public debt. Expenditures for major national security programs will decline 186 million dollars in the fiscal year 1956. All other Government expenditures are estimated to decline 412 million dollars. Al- though these latter expenditures are only 1 1 percent of the total, they include the great majority of the individual appropriation items in the budget. Between the fiscal years 1953 and 1956, these expenditures are estimated to be reduced by 1.9 billion dollars. Included in this total are expenditures for international affairs and finance, and for most of the regular operations of the Government such as enforcing laws, collecting taxes, promoting health, postal service, and civil public works. Major trust funds. — The budget receipts and expenditures which I have so far discussed reflect only transactions of funds which belong to the Federal Government. In addition, the Fed- eral Government engages in extensive transactions with funds which it does not own but holds in trust for others. The follow- ing table summarizes the receipts, expenditures, and balances for the major trust funds. These include the trust funds for vet- erans' life insurance, old-age and survivors' insurance, railroad retirement. Federal employees retirement, and unemployment compensation. The total receipts and expenditures of the many smaller trust funds which are not included in the table have amounted to about one-half billion dollars annually in recent years. 106 Dwight D. Eisenhower^ ig^^ ^ 17 Summary of Receipts, Expenditures, and Balances of Major Trust Funds [Fiscal years. In millions] 1954 1955 1956 ^ actual estimated estimated Balance in funds at start of year $43, 057 $44, 924 $46, 449 Receipts 8, 698 9, 343 i o, 882 Expenditures 6, 832 7, 819 8, 245 Balance in funds at close of year 44, 924 46, 449 49, 087 The accumulated balances of these funds will increase substan- tially from 43.1 billion dollars at the beginning of the fiscal year 1954 to an estimated 49.1 billion dollars at the close of 1956. Most of these balances are invested in special issues of United States Government securities. Receipts of these trust funds in- clude interest on such investments, payroll taxes paid by employ- ers and employees, and premiums paid by veterans for life insurance. Expenditures are primarily for the payment of bene- fits. Additional information on these funds can be found in part III of the budget document. Receipts from and payments to the public, — ^Transactions of trust funds and Federal funds are consolidated to show the total of the Federal Government's receipts from and payments to the public. This statement shows the total flow of funds for the year and is one measure of the inflationary or deflationary impact of Federal fiscal transactions on the national economy; it is not a substitute for the regular budget statements. Receipts From and Payments to the Public, Excluding Borrowing [Fiscal years. In millions] 1954 1955 1956 actual estimated estimated Gash receipts from the public $71, 636 $66, 649 $68, 793 Gash payments to the public 71, 868 69, 026 68, 235 Excess of cash receipts 558 Excess of cash payments 232 2, 377 MAJOR NATIONAL SECURITY The major national security category of the budget includes not only the military functions of the Department of Defense, but 107 ^ 17 Public Papers of the Presidents also the development of atomic energy, the stockpiling of strategic and critical materials, and the portions of the mutual security program which consist of military assistance and direct forces support to other free nations. These four major programs are the basic elements of our national security. Other programs with smaller totals and relating to activities which are not so exclusively defense are included under other classifications of the budget. For example, the commerce and manpower section includes the Coast Guard, merchant marine, the Selective Service System, civil defense, aeronautical research, and promotion of defense pro- duction. Expenditures for major national security programs in the fiscal year 1956 are estimated at 40.5 billion dollars. This total is 186 million dollars below that for 1955, and 6.1 billion dollars below the actual 1954 amount. Recommended new authority to incur obligations is greater than for 1955 but less than for 1954. After the cessation of combat operations in Korea, we were able to reduce our 1955 military appropriations because the unobligated balances available were greater than required and the large stocks of supplies on hand permitted the military services to "live off the shelf" to a large degree without replacing the items consumed. Recommendations in this budget for our major national secu- rity programs are based on the same philosophy which I recom- mended and the Congress adopted for the fiscal years 1954 and 1955. I then proposed that we should plan and finance our national security program on a long-term basis that would main- tain essential military strength over an indefinite period of time without impairing the basic soundness of the United States economy. This budget continues the concept of no assumed fixed date of maximum danger. Any other concept would lead to an inevitable let-down in strength and produce peaks and valleys in our defense spending and production. It is essential that we, together with other nations of the free world, maintain a level of military strength which will effectively 108 Dwight D. Eisenhower^ IQ55 ^ 17 discourage any would-be aggressor from attacking. We cannot accept less. The effectiveness of our power to deter rests princi- pally upon our capability to retaliate swiftly and decisively and upon our ability to defend ourselves against attack. The advent of nuclear weapons has profoundly affected our concepts of mili- tary strategy and tactics as well as our national security policies. Such weapons multiply many fold the striking power of any mili- tary force. This budget, therefore, continues the emphasis on the development and maintenance of effective nuclear-air retalia- tory power of the Air Force and Naval aviation as the principal deterrent to military aggression. Such power is being supple- mented by other military forces of great strength, flexibility, and mobility and by the forces of our allies. In order to safeguard our striking power and resources, we are giving continued high priority to the accelerated development of continental defense programs. Priority is also being given to the development and introduction into operating units of new weapons and techniques adapted to the radically changed conditions imposed by the potential of nu- clear warfare. This budget also provides for continued improve- ment in mobilization reserve stocks and for the cost of expanding and strengthening our military manpower reserves as outlined in my special message on this subject. The complexity of modem military equipment and the revolu- tion in military concepts in this atomic age put an extra preminum upon military leadership, skill, and training. Unfortunately, much of our investment in developing trained manpower is being lost, as too many servicemen are rejecting a military career for the attractions they expect from civilian life. My legislative pro- posals to meet these problems were set forth in my special message on military pay and incentives, and funds for them are provided in this budget. 109 ^ 17 Public Papers of the Presidents Major National Security [Fiscal years. In millions] Budget expenditures {net) Item Direction and coordination of defense Other central defense activi- ties Army defense activities Navy defense activities Air Force defense activities . . . Proposed legislation Unallocated reduction in esti- mates 1950 actual $10 199 3.983 4, TOO 3.600 1953 actual $15 394 16, 242 11,874 15.085 1954 actual $12 452 12,910 11.293 15, 668 1.955 estimated $12 488 8,900 9.775 15, 200 1956 estimated $12 588 8,850 9.700 15, 600 I, 000 -1.750 Subtotal, Department of Defense 11,892 550 43. 610 I. 791 40, 336 34. 375 2,050 34. 000 Development and control of atomic energy, present program Proposed legislation 1.895 1,910 90 Strategic and critical mate- rials 438 919 651 3.629 12 994 783 Mutual security (military): Military assistance, present program 130 3.954 2,675 550 2,875 200 500 100 Proposed legislation Direct forces support, pres- ent program Proposed legislation Subtotal, military as- sistance and support . 130 13, 010 3,954 3.641 46, 522 3.225 40, 644 3.675 Total budget expenditures . . . 50, 274 40, 458 IIO Dwight D. Eisenhower, 1Q55 f 17 Item Direction and coordination of defense Other central defense activities Army defense activities Navy defense activities Air Force defense activities . . . Proposed legislation Reduction through transfers of prior year appropriations Subtotal, Department of Defense Development and control of atomic energy Strategic and critical materials Mutual security (military): Military assistance, present program Proposed legislation Direct forces support, pres- ent program Proposed legislation Subtotal, military as- sistance and support . Total new obligational au- thority JVew obligational authority 1950 1953 1954 1955 1956 actual actual actual estimated recom" mended $11 $15 $13 $13 S13 180 540 778 645 627 4,392 15,221 12, 777 7,788 7,303 4,359 12,689 9,612 10,272 8,937 5,428 20,451 11,411 12,065 14,536 2,983 — 1,500 14,370 48,916 34,590 30,783 839 425 4,152 134 I, 118 I, 284 380 1,359 4,096 3,192 1,144 570 795 1,359 32, 899 1,292 522 1, 400 630 4,096 3,763 1,939 2,030 16,993 57,298 39,471 34,386 36,742 Department of Defense. — To maintain a strong military pos- ture and assure that our national security policy will adequately support our foreign policy, our military planning must be kept flexible and dynamic. The structure of our military forces must be subjected to continuing review and adjusted to reflect the rapid technological advances of this nuclear and electronic age. A year ago, I approved a long-range plan for our military forces upon which the fiscal year 1955 budget was based. Recent re- views of our plans and policies have resulted in reaffirmation of most of the elements of this long-range plan, but with some III ^ 1 7 Public Papers of the Presidents changes in timing. Our current military plans, in turn, will be subjected to continuing review so that they — as well as our mili- tary equipment — ^will be kept up-to-date. It is important that we do not attempt to fix our minds or plans upon any partic- ular set of numbers, for today's technological changes may make yesterday's numbers and concepts obsolete. In my judgment, the military forces and programs upon which this budget is based are accurately adjusted to the national needs. Under our current plans, the number of military personnel is scheduled to be reduced from the present level of approximately 3.2 million to about 3 million by June 30, 1955, and to something over 2.8 million by June 30, 1956, for an average of approxi- mately 2.9 million personnel during the fiscal year 1956, com- pared with an average of 3.2 miUion during the fiscal year 1955. Within this figure, however, the Air Force personnel strength will be somewhat increased. The cessation of hostilities and the buildup of the Republic of Korea forces have permitted us to withdraw five United States ground divisions from the Far East. We have thus increased the number of divisions in a central reserve of forces which can be deployed where and when needed. In addition, 1/3 Marine divisions will be withdrawn from the Far East in the near future, so that their capability as a highly trained, combat-ready, am- phibious force may be available as part of the central reserve. United States military forces will be maintained at appropriate levels in the Far East, with emphasis on highly mobile naval and air units of unparalleled striking power. The Army has devoted considerable effort to assessing the changes in Army organization and doctrine required to meet the conditions of the atomic battlefield. These studies are continu- ing, and it appears that the Army of the future will be organized into smaller, but more mobile and self-contained, units with greater fire power. The Navy will operate approximately 1,000 active ships — including 400 warships. The number of carrier air groups is to be increased from the present 16 to 17, and an addi- 112 Dwight D. Eisenhower, ig^^ ^ 17 tional attack carrier equipped with modern aircraft will be added to the fleet. The Navy will continue to maintain 15 anti- submarine warfare squadrons. The Marine Corps will main- tain 3 combat-ready divisions and 3 air wings. The current level of approximately 10,000 Naval and Marine operating air- craft will be maintained. The Air Force is continuing its buildup toward a goal of 137 wings, and expects to have 130 wings in being by June 30, 1956 — 119 of which will be combat wings. The major units of all services will be supplemented by appro- priate combat support units. All the services will continue their efforts to increase the proportion of military personnel assigned to combat units. About two-thirds of the projected Department of Defense expenditures in the fiscal year 1956 will be devoted to air power and related programs — ^both offensive and defensive. Expendi- tures for these programs will be the largest in our peacetime history. The active aircraft inventory in combat and support- ing units of the Air Force, Navy, and Marine air forces will increase from over 34,000 on June 30, 1954, to 36,000 on June 30, 1956, and will continue to increase in succeeding years toward the present objective of close to 40,000 aircraft. In addition, the Army will maintain 3,600 active aircraft, with more than a 20 percent increase during the next 2 years in the number of helicopters. The growth in our effective air power is far greater than these numbers indicate, for our aircraft continue to increase in size, speed, range, and striking power. By the end of the fiscal year 1956, the total number of aircraft in combat units of the Air Force, Navy, and Marine Corps will be approximately one-fourth greater than at the beginning of the current fiscal year. The number of jet aircraft in such units will increase by more than one-third during the same period. The increasing modernization of our air power is shown by the fact that by June 30, 1956, the Air Force combat units will be almost 100 percent jet equipped. The proportion of jets in the combat units of the Marines and Navy will increase by 113 ^ 1 7 Public Papers of the Presidents approximately 15 percent over the beginning of the current fiscal year. During the past year, continuing improvements have been made in the management and operations of the Department of Defense. The stock-fund principle, which has been applied in the Navy over a period of years, is now being broadly adopted by the Army and is being initiated in the Air Force. Stock funds have been extended to include 9.3 billion dollars in inventories. Major savings — ^particularly in the Army — are resulting from the extension of such property accounting and other businesslike management techniques. The Army is now beginning to account for its supplies in terms of dollar value, and is relating its needs and purchases to its inventories. Largely as a result of the Army's more efficient administration of the supplies and fiinancial assets in its stock fund account, operating stocks are being reduced to lower but better-balanced levels. In addition, military installations with i .6 billion dollars of annual transactions have been put on a businesslike basis through the use of industrial funds. Military functions of the Department of Defense will require 32.9 billion dollars of new authority to incur obligations in the fiscal year 1956, including proposed legislation. The gross re- quirements to finance proposed legislation total 3 billion dollars, but I am recommending that 1.5 billion dollars of this be met with currently available fimds which can be transferred as a result of actual and prospective savings and adjustments by the Department of Defense. Total expenditures for military functions of the Department of Defense will be greater than the new obligational authority required. Expenditures have been estimated at 34 billion dol- lars despite the fact that the present estimates for the many indi- vidual Department of Defense programs add to a total of 35.75 billion dollars. The success of the Secretary of Defense to date in introducing improvements in planning and increased efficiency in operations leads him to believe that he will find more oppor- 114 Dwight D. Eisenhower, IQ55 ^ 17 tunities for savings and economies. It is not feasible for the Secretary to predict at this time what the possible savings, slip- pages, and program adjustments will be in each category of military expenditures but he expects that total expenditures will not exceed 34 billion dollars. Consequently, the anticipated savings and adjustments are shown as an unallocated reduction of 1.75 billion dollars, about 5 percent of the total estimated ex- penditures of the Department of Defense. The estimated 34 billion dollars of expenditures for the fiscal year 1956 includes i billion dollars for proposed legislation. The total estimate is 375 million dollars lower than the current esti- mate of expenditures for the fiscal year 1955 and 6.3 billion dollars below expenditures in the fiscal year 1954. Department of Defense Costs by Major Categories [Fiscal years. In millions] Budget expenditures 1953 1954 Cost category actual actual Military personnel $i i, 556 Sio, 961 Operation and maintenance. lOj 379 9? 356 Major procurement and pro- duction (17, 123) (15, 958) Aircraft 7, 416 8, 334 Ships 1,191 1, 090 Other 8, 516 6, 534 Military public works i, 913 i, 706 Reserve components 522 584 Research and development. . i, 412 i, 385 Establishmen t- wide activities . 759 771 Working capital (revolving) funds —54 —384 Unallocated reduction in esti- mates Reduction through transfers of prior year appropriations 1955 estimated $10,245 7,869 (12,627) 7,557 888 4, 182 1,418 705 1,307 719 -515 Recommended new obliga- 1 956 tional author^ estimated ityjor 1956 $10,295 $10,612 8, 576 9, 184 (12,718) 7,550 999 4,169 1,749 927 1,369 793 -677 -1,750 (9, 524) 6,064 1,317 2,143 1,914 1,037 1,370 758 ■1,500 Total. 43,610 40,336 34,375 34,000 32,899 Military personnel costs, which include the compensation of military personnel, family allowances, subsistence, clothing, and 115 ^ 17 Public Papers of the Presidents permanent-change-of-station transportation, will be approxi- mately the same in 1956 as during the current fiscal year but about 6 percent below the fiscal year 1954. Although the num- ber of military personnel is scheduled to decrease during the fiscal year 1956, the resulting decrease in expenditures will be more than offset by the added costs of the pay increase and other bene- fits proposed in my special message. I am again recommending legislation to provide medical care for dependents of members of our Armed Forces in both military and civilian medical facilities. Funds are included in this budget for this proposal. I will also recommend an extension of the Dependents Assistance Act and funds are included in this budget to cover these costs. Continuing improvements in organization and management of the Department of Defense have resulted in significant savings in the costs of operating and maintaining posts, stations, airbases, aircraft, ships, and other military equipment during the past 2 years. The planned reduction in numbers of military personnel will permit further savings through appropriate reductions in the number of supporting establishments. Nevertheless, total ex- penditures for operation and maintenance will be greater in the coming fiscal year than during the fiscal year 1955, since the cost reductions will be more than offset by the increasing costs of operating and maintaining the modern equipment being provided for our forces, and for operating our expanding system of conti- nental defense in which all services participate. Major strides have been made during the past year in expand- ing the system for defense of continental United States against possible enemy attack. NIKE guided-missile battalions are rapidly being installed for the defense of key potential targets. A separate Continental Air Defense Command, reporting directly to the Joint Chiefs of Staff, has been established. It has opera- tional control over continental defense forces, including ( i ) Air Force fighter interceptors and aircraft control and warning net- works, (2) Army anti-aircraft and guided missile battalions, (3 ) Navy radar picket ships and air units in the contiguous radar 116 Dwight D. Eisenhower^ IQ55 ^ 17 system, and (4) additional forces from other Air Force, Navy, Marine Corps, and Air National Guard fighter and radar units when made available for air defense. Our radar screen is being expanded and existing gaps in coverage are being filled. Our Air Defense forces, as well as the Strategic Air Command and Naval air power, are being kept on an alert basis. A surprise enemy attack would find us with increasing readiness to resist attack and retaliate with devastating effect. These measures in- evitably lead to increased operating costs for continental defense, which are now higher than ever before in our history and are still rising. Expenditures for procurement and production of major items of equipment will continue at approximately the same level as during the current fiscal year and will constitute more than one- third of the total projected expenditures of the Department of Defense. Procurement of aircraft and guided missiles will con- tinue at the same level as during the current year and will account for two-thirds of total major procurement expenditures. Ship- building expenditures will increase over the current fiscal year. This budget provides for an increased number of new shipbuild- ing starts. This continues the program I recommended in the 1955 budget to cope with the problem of "block obsolescence" of the fleet, which was largely built during World War II. In- cluded in the proposed shipbuilding program for the fiscal year 1 956 is a fifth carrier of the Forrestal class. Appropriations enacted in prior years have permitted us to build our mobilization stocks of key military items to greater levels than ever before accumulated except in time of war. My recom- mendations in this budget will permit us to continue the accumu- lation of reserves of selected types of materiel. They also provide for our operating needs for newer weapons and equipment. As has been the policy of this administration in the past, maximum feasible reliance will also be placed upon keeping military pro- duction facilities in operation rather than on accumulating even larger reserve stocks of end-items. 117 ^ 17 Public Papers of the Presidents Military construction expenditures during the fiscal year 1956 are expected to increase substantially over the 1955 level, reflect- ing progress in all Services on construction of bases. A substantial portion of the military public works projects proposed to be under- taken during the fiscal year 1956 are related to the continental defense program. In addition, this budget provides for essential increments to overseas construction programs now nearing com- pletion and for rounding out the facilities needed for the approved military force levels. The program includes a portion of the family housing greatly needed at military installations. Limited provision is also made for replacing a small portion of substandard World War II construction which has passed the point of econom- ical maintenance and operation. In my special message I recommended urgently needed legisla- tion to create a more effective military reserve. Expenditures for the reserve components are expected to increase markedly during the fiscal year 1956 as a result of this legislation. Reservists in drill pay status are estimated to increase from 697,000 as of June 30, 1954, to about 857,000 at the end of the current fiscal year and a little over 1,000,000 at the end of the fiscal year 1956. In addition, under the terms of the proposed new program, there will be approximately 50,000 reservists in drill pay status who will have completed 6 months' active duty training by the end of the fiscal year 1956. This budget also provides for continuation of the present high level of research and development in the Department of Defense. Major emphasis is being placed on developments which will more effectively utilize nuclear energy in military operations. New equipment and techniques are being developed to provide the mobility needed to meet the changed requirements of nuclear warfare. We shall continue to concentrate on those programs which show the greatest promise of providing reliable new weap- ons and significant improvements in both our offensive and de- fensive capabilities under the conditions of modem warfare. It is my belief that increased returns in military research and de- 118 Dwight D. Eisenhower^ ig^^ ^ 17 velopment can best come from maintaining a stable high level program. Although this level of program utilizes, either through direct employment or on a contractual basis, about one-half the research scientists and engineers in the United States, it also permits a high level of nonmilitary research and development essential to an expanding economy. Civil defense. — Civil defense is also an integral part of the overall program for defense of the continental United States against enemy attack. Although the major part of continental defense is in the military budget, expenditures by the Federal Civil Defense Administration are classified in the commerce and manpower section together with those for dealing with peacetime disasters. The concept of civil defense adopted last year takes account of the destructive threat of modern weapons and places emphasis on improved warning of impending attack, to allow time for evac- uation of potential target cities. Since this policy was announced, the Federal Civil Defense Administration has developed its plans more fully and individual cities have tested mass evacuation. I cannot stress too much that civil defense will succeed or fail in proportion to the willingness of American communities to meet the peril. The Federal Government is developing cooperative methods with State governors, mayors, and voluntary citizen groups, as well as among Federal agencies, in building the civil defense organization. In accordance with the Federal Civil De- fense Act of 1950, the primary responsibility for civil defense rests with the States and their political subdivisions. Development and control of atomic energy. — It is our purpose, working in concert with other nations, to banish the threat of atomic warfare which now confronts the world. Progress is being made toward establishing an international agency for co- operation in developing the peaceful uses of atomic energy, as I proposed to the United Nations on December 8, 1953. The budget of the Atomic Energy Commission for the fiscal year 1956 provides for greater expenditures than ever before on projects to 119 ^ 1 7 Public Papers of the Presidents develop peaceful applications of atomic energy. We shall con- tinue unabated our efforts to assure that this great force will be used, not for war, but for the well-being of all mankind. Until such assurance can be achieved, however, we have no alternative but to strengthen further our most effective deterrent to armed aggression — the power of our nuclear weapons stockpile. Despite a growing program, I am recommending for 1956 only a slight increase over 1955 in new authority to incur obligations because of the availability of large unobligated balances, due partly to savings in construction costs. Total expenditures in the fiscal year 1956 are estimated at 2 billion dollars, 50 million dollars less than in 1955. Operating expenditures will rise in the fiscal year 1956 to the highest rate yet attained. They will increase from 1.2 billion dollars in 1955 to 1.5 billion dollars in 1956 principally because of an expected higher level of procurement of raw uranium ores and concentrates and because of greater production at the Com- mission's plants as new facilities are completed and placed in operation. The estimates assume continuing reductions in unit production costs. Capital expenditures in the fiscal year 1956 will drop con- siderably as the large new production plants authorized in prior years approach completion. Recommended new construction will include : ( i ) plant improvements and other facilities to in- crease the efficiency and capacity of the production complex, (2) certain weapons research facilities, (3) a medical research center, (4) an international training school in reactor technology, and (5) developmental atomic reactor projects. The national effort to develop industrial atomic power for peacetime uses will go forward with increased vigor. The Atomic Energy Act of 1954 makes possible substantial private activity and investment in the constructive applications of atomic energy. Construction of one large atomic powerplant jointly financed by the Government and industry is already underway. As I stated in my message of February 17, 1954, to the Congress, 'Tt is 120 Dwight D. Eisenhower^ ig^^ ^ 17 essential that this program so proceed that this new industry will develop self-reliance and self-sufficiency." Accordingly, it is ex- pected that industry will finance an increasingly larger share of the total national effort in developing power reactor technology. However, to speed progress in getting the new technology estab- lished, the Atomic Energy Commission in 1956 will expand sub- stantially its program to develop industrial power reactors. Con- struction of several experimental reactors will be started in 1955 and 1 956. Of these, one of the most significant is a power breeder, designed to produce more fissionable material than it consumes. Nearly 15 million dollars is included in the budget for this project. Effective progress in military propulsion reactors will continue. The launching in 1954 of the first atomic submarine, the U.S.S. Nautilus^ will be followed by the launching in 1955 ^^ ^^ U.S.S. Sea Wolf, an atomic submarine of different design. In addition, two atomic-powered attack type submarines have been financed by Department of Defense appropriations in the fiscal year 1955. My recommendations for the Department for 1956 include addi- tional submarines of this type. In 1956, development work will proceed on improved types of submarine reactors, and on a re- actor to power larger naval vessels. The Atomic Energy Com- mission and the Department of Defense will expand and accele- rate research on atomic powered aircraft, and will continue development work on small transportable power reactors for military use. The basic — as distinct from applied — research which is funda- mental to progress in all aspects of nuclear energy will be pursued energetically and will entail somewhat higher expenditures in 1956, both in the Commission's own laboratories and through support of research in universities and other institutions. I again recommend that the Congress approve legislation to allow the residents of Oak Ridge, Tennessee, and Richland, Wash- ington, to purchase their homes and establish self-government, thus taking the Federal Government out of the business of owning and governing these communities. 121 ^ I J Public Papers of the Presidents Stockpiling of strategic and critical materials. — ^A ntw long- term stockpile level has been established to provide an additional measure of security over and above the minimum goals. Pro- curement of the additional minerals will generally be limited to instances where purchases at favorable prices will serve both to meet the long-term stockpile objectives and to maintain essential domestic production, as in the case of lead and zinc in the past 6 months. Preliminary reviews of 50 minerals indicate that the new policy may eventually increase the inventories of materials by 3.3 billion dollars above the 6.5 billion dollars of minimum objectives. By the end of the fiscal year 1956, about 5.1 billion dollars of ma- terials within the minimum objectives, and an additional 1.2 bil- lion dollars toward the long-term objectives will be in inventory, compared with June 1954 levels of 3.8 billion dollars and 700 million dollars, respectively. In considerable measure, this prog- ress is made possible under the Defense Production Act, discussed in the commerce and manpower section of this message. Mutual security program. — Military assistance and direct forces support help other free nations to train and equip the mod- ern armed forces which are necessary for our security as well as their own. Such assistance is an integral part of our own national security program for it helps to create, in crucial areas of the free world, essential military strength which bolsters our own forces. Because our allies generally provide the major portion of the costs of maintaining the forces, this strength is being created at a rela- tively low cost to the United States taxpayer. The military assistance and direct forces support programs are two parts of an integrated mutual security program which in its entirety is designed to provide other nations with the margin of outside assistance which they need to develop and maintain their political, military, and economic strength, which is in our interest. Other parts of this program are discussed in the international affairs and finance section of this message. I shall submit to the Congress proposals for necessary changes in the Mutual Security 122 Dwight D. Eisenhower^ 1^55 § 17 Act. These will include my specific requests for authorization of appropriations for the fiscal year 1956. Total expenditures for mutual security are estimated at 4.7 billion dollars in the fiscal year 1956, including the provisions for a program in Asia. Rec- ommended new authority to incur obligations is 3.5 billion dollars. Organization for mutual security operations, — The organiza- tional arrangements to carry on the mutual security program beyond the present fiscal year are now under careful study and I shall in the near future present to the Congress my recommenda- tions regarding them. Mutual Security Program, Military and Economic [Fiscal years. In millions] Expenditures Military: Military assistance: Present programs . . . Proposed legislation . Direct forces support: Present programs . . . Proposed legislation . Nonmilitary: Present programs Proposed legislation . . . 1954 1955 actual estimated $3, 629 $2, 675 Recommended new obligational au- ^.95" thorityfor 1956 estimated %2, 875 200 550 1,241 1,075 500 100 725 300 Si, 400 630 1,500 Total: Present programs . . . Proposed legislation . 4,882 4,300 4, 100 600 ' 3» 530 1 Compares with new obligational authority of 4,725 million dollars in 1954 and 2,781 million dollars in 1955. Military assistance. — ^The mutual mihtary assistance proposed for the fiscal year 1956 will further help our allies to complete equipping and training the equivalent of more than 180 divisions, 551 combat vessels, 278 air squadrons, and related supporting units. Our assistance goes only for forces determined to be essential by our Joint Chiefs of Staff. It provides only the criti- cal margin of training and equipment which the countries cannot 123 ^ 17 Public Papers of the Presidents provide for themselves. During the past 5 years we have de- livered over 6,000 airplanes, almost 900 naval vessels of all types, 36,000 tanks and combat vehicles, nearly 200,000 transport vehicles, billions of rounds of ammunition, and many other items. Furthermore, specialized training courses have been conducted for officers and technicians from 32 countries. Expenditures for military assistance in the fiscal year 1956 are estimated at 3.1 billion dollars as compared with 3.6 billion dollars in the fiscal year 1954, ^^^ ^^ estimated 2.7 biUion dollars in 1955. The decline in estimated expenditures from 1954 to 1955, and the subsequent increase projected for 1956, do not accurately reflect the probable rates of delivery of equip- ment to our allies during 1956. Actual deliveries are expected to continue in the fiscal years 1955 and 1956 at around the 3- billion dollar level which was attained in the fiscal year 1954. The fluctuations in expenditure estimates are due to a change in the method of financing wherein the Department of Defense finances the production of common type materiel, pending de- livery to the mutual security program and subsequent reimburse- ment of Department of Defense appropriations. Much of our mutual military assistance continues to strengthen our allies in the North Atlantic Treaty Organization, and I hope that we may soon begin furnishing certain items of military equipment which will be needed by the new German forces. To the extent that this materiel cannot be financed by the Federal Republic of Germany from its own resources, it will be financed from appropriations made for the mutual security program. The continuing growth of economic strength in Europe and com- pletion of the financing of much of the capital equipment which was required for the initial rapid military buildup will make it possible to reduce military assistance for this area in the immedi- ate future below the level of the last few years. The military assistance program proposed for the fiscal year 1956 will include aid to Korea which, in previous years, was financed from regular Department of Defense appropriations. 124 Dwight D. Eisenhower^ ig^^ ^ 17 We are also proposing the continuation of assistance designed to strengthen further the defenses of Formosa, Japan, and certain other countries in Asia which are presently receiving military assistance. Expenditures in the fiscal year 1956 will be largely from appropriations made in previous years. At the same time, how- ever, new authority of 1.4 billion dollars, which I am recom- mending, is needed to incur obligations in the fiscal year 1956 to finance in advance certain new requirements such as the Korean program. Direct forces support. — ^The present Mutual Security Act dis- tinguishes between military equipment and those supporting items which are necessary to make the soldiers and weapons effec- tive. These supporting items, commonly referred to as direct forces support, include gasoline, tires, uniforms, medicines, rations, and similar items which all military forces consume every day. For the fiscal year 1956 I propose that direct forces support be provided to only a few selected countries. These countries, primarily in Asia, are ones where our mutual security requires the maintenance of active forces larger than those which these countries could support from their own resources. In the fiscal year 1956 direct forces support for the armed forces of the Re- public of Korea, which was formerly provided for in the Depart- ment of Defense budget, will be covered for the first time by the mutual security program. Direct forces support will continue to be a significant part of the mutual security program for so long as the security of the free world requires that large military forces be maintained in Asia and the Near East. I recommend 630 million dollars of new obligational authority under proposed legislation for this purpose. Expenditures for this program from existing appro- priations and from the proposed legislation are estimated at 600 million dollars in the fiscal year 1956, as compared with 550 million dollars in the fiscal year 1955. 40308—59 11 1 25 ^ 17 Public Papers of the Presidents INTERNATIONAL AFFAIRS AND FINANCE During the past year the free world, despite some setbacks, has made heartening progress in building the strength and unity which are so important to our security. In this hemisphere, in Europe, Asia, and Africa, the free nations acted together to strengthen their defenses against international communism, to widen economic cooperation, and to settle long standing disputes which have undermined free world imity. In these developments the United States has played a vital role. My program for the coming year is designed to consolidate these gains and to make further progress. Particular emphasis will be laid on further strengthening the foreign service organi- zation of the Department of State which carries the burden of foreign policy leadership and negotiations. We are likewise placing emphasis on revision of our several international pro- grams to give appropriate attention to the important trouble spots around the world today. My budget recommendations for international affairs and fi- nance reflect a coordinated plan for the conduct of foreign affairs, for the expansion of trade and investment, for mutual security economic assistance, and for foreign information. Total net budget expenditures for the fiscal year 1956 are estimated at 1.3 billion dollars, as compared with 1.4 billion dollars for the current year. Recommended new authority to incur obligations in the fiscal year 1956 amounts to 1.9 billion dollars, 291 million dollars more than for 1955. Major items of this increase in new obligational authority result from increased emphasis on defense support and development assistance in Asia and reimbursement of the Com- modity Credit Corporation for emergency assistance in the form of commodities furnished in previous years. 126 Dwight D. Eisenhower, ig^^ ^ 17 International Affairs and Finance [Fiscal years. In millions] Expenditures gram or agency Gross expenditures: Economic and technical development: International investment activities: International Finance Corpora- tion (proposed legislation) . . . Export-Import Bank (including Reconstruction Finance Cor- poration liquidation) Investment guaranties Mutual security program (non- military) : Defense support and develop- ment assistance Technical cooperation Refugee and other aid (contribu- tions to international agencies) Proposed legislation Civil assistance programs, Depart- ment of Defense Emergency commodity assistance, Department of Agriculture Other assistance Other refugee activities (Depart- ment of State) Foreign information and exchange activities: United States Information Agency. Department of State Emergency fund for international affairs Conduct of foreign affairs (Depart- ment of State and other) Total ' Deduct applicable receipts: Export-Import Bank Reconstruction Finance Corporation Investment guaranties Commodity Credit Corporation .... Net budget expenditures 1954 actual $534 4 1,241 87 74 3 71 QO 130 2, 166 434 9 2 1955 estimated $334 6 1.075 30 124 6 77 18 4 116 1, 800 376 1956 estimated $35 335 7 725 300 6 177 9 15 86 21 124 1,841 425 4 79 Recommended new obliga- tional author^ ityfor 1956 $35 1.332 1,500 ^79 9 16 88 22 123 1,876 1,720 1,420 ^ Appropriation to reimburse the Commodity Credit Corporation for commodity as- sistance provided in previous years. 2 Compares with new obligational authority of $1,268 million in 1954 and $1,585 million in 1955. 127 ^ 17 Public Papers of the Presidents International investment activities. — In my recent special mes- sage on foreign economic policy, I made recommendations which will enable us to expand foreign trade and investment. As a further step in providing capital to underdeveloped areas through stimulating private investment, the United States is participating with other members of the International Bank for Reconstruction and Development in working out proposals for an International Finance Corporation. Such a corporation, although it could not purchase stock, could provide venture capital by making special types of loans without government guaranties to private enter- prises in less developed countries. This budget includes 35 mil- lion dollars as the United States' share of the corporation's capital of 100 million dollars. Moreover, in keeping with legislation approved last year, the Export-Import Bank estimates an increase in direct loans and guaranties of private loans from 460 million dollars in the fiscal year 1955 to 665 million dollars in 1956. It is expected that a significant part of this increase will consist of guaranties of private loans which are not included in gross budget expenditures. New direct loans are expected to be authorized in the amount of 403 million dollars. The collections on old loans, including lend-lease and postwar reconstruction credits in Europe, will exceed dis- bursements against new direct loans, so that a net receipt of 90 million dollars to the Treasury is estimated in 1 956. Defense support and development assistance. — We anticipate that the trade and investment policies outlined above, and the marked advance in economic strength of many foreign countries over the past 2 years, will increasingly enable us to confine direct Government assistance for defense support and economic develop- ment abroad generally to two types of situations, both of which are related intimately to our own future security. In the first place, we will find it necessary for some time to provide defense support to certain countries which have under- taken a military effort beyond the capacity of their own economies to support. This defense support includes consumption goods and 128 Dwight D. Eisenhower, ig^^ ^ 17 capital equipment to support the general economy, as contrasted with direct forces support which provides assistance to the mili- tary forces of the country. In the second place, our national inter- est will require direct assistance to certain less developed countries where a rate of economic progress which would be impossible without such assistance is essential to their becoming and remain- ing strong and healthy members of the community of free nations capable of resisting Communist penetration and subversion. Employment, production, and foreign exchange reserves in free European countries are generally increasing. Most of these coun- tries can now strengthen their military establishments and at the same time improve their living standards without further United States defense support. In the fiscal year 1955, defense support has been limited to very few countries, and a similar situation is expected to prevail in 1956. Latin America, an area with which we have well-established trade and investment relations, has a great need for capital for economic development. Nevertheless, if Latin American coun- tries follow a policy of encouraging private investment, domestic and foreign, they should be able to continue to raise the capital needed for further economic growth. In those cases in which private or International Bank resources are not available or not appropriate for financing sound projects, the Export-Import Bank will welcome applications for loans. The new International Finance Corporation, when organized, can also help provide capital. Grants in Latin America have been necessary only in special situations such as in Bolivia and Guatemala. In Asia, active warfare has only recently ceased and the free countries of this continent continue to face the threat of Com- munist subversion and external aggresssion. We therefore have been furnishing and propose to continue to f umish defense support to several countries including Korea, Formosa, Vietnam, Laos, and Cambodia. Some assistance in economic development has been extended to India. Unless such support is provided, we may expect economic de- 129 ^ I J Public Papers of the Presidents terioration and dangerous reductions in the military defenses of the free world. Moreover, without such assistance, these coun- tries, most of which border on Russia and Communist China, will not achieve the economic progress which is necessary to meet the threat of Communist subversion. The loss of northern Vietnam makes this support more imperative than ever. In the Middle East and Africa, we have provided some grant and loan assistance to promote economic development and polit- ical stability, and will request funds to continue this type of assist- ance in the fiscal year 1956. This assistance has gone to Iran, Israel, Lebanon, Jordan, Egypt, and Libya. My budget proposals for the mutual security program were developed on the assumption that all requirements for that pro- gram will be met from appropriations made for that purpose. Therefore if it becomes desirable to utilize foreign currencies accruing from sales of surplus agricultural commodities made under the Agricultural Trade Development and Assistance Act for mutual security purposes, mutual security appropriations will be used to reimburse the Commodity Credit Corporation for currencies so utilized. Technical cooperation. — Over recent years, technical co- operation has become a continuing part of United States policy toward the rest of the world. American experts help the people in foreign countries, and foreign technicians come to the United States to observe our methods. As a result, millions of people are learning how to produce more food, to improve health and educational standards, and to operate modern industries more effectively. Agreements for technical cooperation are in effect in 68 countries and territories in Latin America, Asia, the Near East, and Africa. In addition to these bilateral efforts, we have contributed to meeting the total cost of the United Nations technical assistance program, for which experts and financial contributions come from many nations. I am proposing new obligational authority to cover the total proposed contributions of the United States to 130 Dwight D. Eisenhower, ig^^ ^ 17 this program for both calendar years 1955 and 1956. Refugee and other foreign relief. — The 1953 Refugee Relief Act provides for the admission of 214,000 people beyond regular immigration quotas before December 31, 1956. Approximately 1 7,000 visas have been granted to date. Sufficient progress has been made on concluding agreements with other countries, organizing staff abroad, and completing arrangements with voluntary agencies in the United States to justify the expectation that the program can be completed in accordance with the pro- visions of the act. To accomplish this, I recommend an increase for the Department of State appropriation for the fiscal year 1956, and a supplemental appropriation for 1955. I am also recommending continued United States support of those programs and international agencies through which funds have been made available for relief, rehabilitation, and resettle- ment of escapees, refugees, and other special groups. These agencies include the Intergovernmental Committee for European Migration, and the United Nations agencies for Palestine refugees, and for emergency aid to children. In addi- tion, this budget makes provision for a small contribution to help the United Nations High Commissioner for Refugees take refugees out of camps and make them part of the local commimities. Foreign information and exchange activities. — ^The United States Information Agency has done a capable job of redirecting its work and is increasingly effective. It is carrying out its mis- sion in 79 countries through local radio, press, films, and informa- tion centers. Its worldwide radio broadcasting is increasingly directed to the countries beyond the Iron Curtain. But the Soviet efforts to divide the United States from other nations of the free world by twisting our motives, as well as its efforts to sow fear and distrust, are mounting in tempo in many areas of the world. I believe it is of the highest importance that our pro- gram for telling the truth to peoples of other nations be stepped up to meet the needs of our foreign policy. 131 ^ ij Public Papers of the Presidents The Department of State's educational exchange program is primarily directed toward the exchange of educators, newsmen, labor and management officials, students and others who influence the formation of public opinion abroad. The sharing of ideas strengthens the community of interest so vital to our relations with other people. I recommend that these exchanges be increased, particularly with underdeveloped areas. Conduct of foreign affairs. — ^A prerequisite to the achievement of all our international affairs and finance programs is dynamic, positive, and dedicated leadership by the Department of State. This budget recognizes the essentiality of a stronger and better trained career corps of foreign service officers. We should also provide more adequate facilities for carrying out statutory con- sular functions. Finally, more comprehensive commercial, labor, and other economic data are necessary to assist American business- men to increase their foreign investment and trade. As a result of the recommendations of the Committee on Gov- ernment Operations of the House of Representatives and a com- mittee of distinguished citizens, we are starting a series of improve- ments in the foreign service. The foreign service will be expanded to cover departmental positions; officers will be rotated more regularly between United States and foreign posts; and training will be improved. Appropriations to initiate these reforms are recommended. veterans'" services and benefits Expenditures for veterans' programs are now rising — reversing the decline from the peak in 1947 as World War II veterans com- pleted their readjustment to civilian life. In the fiscal year 1956, the Federal Government will spend an estimated 4.6 billion dollars for a wide variety of aids to veterans, an increase of 9 percent over the actual outlays in 1954 and 5 percent over 1955. This increase will occur notwithstanding the savings made through improved management of the Veterans Administration, and the long-run 132 Dwight D. Eisenhower, 1Q55 ^ 17 outlook under present laws is for continued large increases in payments to veterans. Three main factors account for this outlook. First, World War II, the Korean conflict, and large defense requirements have in- creased the present and potential veteran population tremen- dously. Twenty-one million veterans are now in civilian life, 5 times the number before World War II. An additional 3 million men and women now in the Armed Forces have acquired rights to wartime veterans' benefits by serving during the Korean emergency. Second, the 3 million veterans of World War I are reaching age 65 and are qualifying for pensions in large numbers. A service- incurred disability is not required for these benefits. Third, benefits for veterans who served during wartime or an emergency have been increased in scope and liberality. Last year, laws were enacted which will add more than 1 70 million dollars in estimated expenditures for veterans' benefits for the fiscal year 1956, principally for increased pension and compensation payments. These facts require sober consideration. Our Government has a responsibility to provide generous assistance to those who have special needs arising from service in the Armed Forces, partic- ularly war service. We must make sure that benefits which are provided to veterans and their survivors are timely and reach those who need them most. At the same time, we must bear in mind that Government policies designed to assist in the mainte- nance of a prosperous economy and to support social security, health, and other humanitarian programs are all of value to veterans as well as to other people. Since more than two-fifths of all adult males are entitled to veterans' benefits, expenditures for veterans are a budgetary problem of major interest to the whole population. Our veterans' pension and compensation laws, in particular, are in need of constructive reconsideration. The non-service- 40308—59 12 1 33 ^ 17 Public Papers of the Presidents connected pension system dates back to the Revolutionary War, and its principles require reexamination in the light of recent developments, including the nearly universal coverage of the old- age and survivors insurance system. The overall system of statutes and regulations governing eligibility and payment rates for service-connected compensation has not had a fundamental re- view for many years. It also needs to be reappraised in the light of the great improvement in medical and rehabilitation tech- niques and the actual economic situation of the many beneficiaries. I am therefore appointing a Commission on Veterans' Pen- sions to study the entire structure, scope, and philosophy of our veterans' pension and compensation laws in relation to each other and to other Government programs. This budget includes 300,000 dollars for the continuation of the work of this Commis- sion in the fiscal year 1956. An especially complex and difficult problem exists in the field of survivor benefits for military personnel and veterans, where 4 different agencies now provide 5 major benefits. This problem has received extensive attention within the executive branch and from the Select Committee on Survivor Benefits of the House of Representatives. I hope that our mutual efforts will result in enactment of adequate and improved programs which will in- clude full coverage for military personnel under our basic old-age and survivors insurance program and will properly relate benefits provided military personnel to those for veterans. I have recently issued a proclamation terminating accrual of eligibility after January 31, 1955, for various benefits authorized for veterans who served during the Korean conflict. Few of those discharged during the fiscal year 1956 will be materially affected by this action. Studies will be undertaken to determine the need for measures to ease the readjustment to civilian life of men required to enter the Armed Forces for 2 years of service. 134 Dwight D. Eisenhower, ig^^ f 17 Veterans' Services and Benefits [Fiscal years. In millions] Program or agency Gross expenditures: Readjustment benefits: Education and training Loan guaranty and other benefits (Veterans Administration) Unemployment compensation (De- partment of Labor) Compensation and pensions Insurance and servicemen's indemni- ties. Hospital and medical care: Current expenses Hospital construction Other services and administration (Veterans Administration and other) Total Deduct applicable receipts: Insurance programs (Veterans Ad- ministration) Other services and administration (Veterans Administration, prima- rily canteen services) Recommended Expenditures new obliga- 1954 actual 1955 estimated 1956 estimated thorityfor 1956 $546 $602 $587 $587 76 38 40 40 82 131 150 150 2,482 2,679 2,800 2,800 104 72 135 127 724 688 710 716 59 48 60 20 217 173 4,289 4,468 4,684 *4j6i5 29 28 16 29 Net budget expenditures 4, 256 4, 431 4, 640 1 Compares with new obligational authority of 4,272 million dollars in 1954 and 4,285 million dollars in 1955. Readjustment benefits, — The Veterans' Readjustment Assist- ance Act of 1952 authorizes education and training, loan guaranty, and unemployment compensation benefits for veterans who served during the Korean conflict. Many World War II vet- erans are still eligible for loan guaranty benefits and some are still completing their education and training under the original "GI bill." In addition, special vocational rehabilitation aid is pro- vided under other laws for veterans of both conflicts who were disabled in service. 135 ^ 17 Public Papers of the Presidents The total estimated expenditures of 777 million dollars for all readjustment benefits in the fiscal year 1956 will be at about the same level as in the current year, and 10 percent higher than in 1954. The proportion of total readjustment benefits going to veterans of the Korean conflict has been increasing, and is expected to exceed 90 percent in the fiscal year 1956. An average of 516,000 trainees is expected in the school, job, and farm training courses during the fiscal year 1956. One out of each 4 of the 4.7 million veterans eligible for these Korean conflict benefits will have participated in education or training by the end of the fiscal year 1956. The reservoir of potential enroUees is still large, considering that i out of each 2 World War II veterans received such benefits. Budget expenditures under the loan guaranty program have declined sharply since the fiscal year 1954 because payments for the first year of interest on mortgages have ceased. It is expected that 467,000 loans totaling 5 billion dollars will be insured or guaranteed during the fiscal year 1956. Almost all of these loans will be for housing. The estimated 40 million dollars of expendi- tures in this category for 1956 includes 25 million dollars for acquisition of properties and losses on defaulted guaranteed loans. The other 15 million dollars is for tuition and supplies in the vocational rehabilitation program and grants of up to 10,000 dol- lars each for special housing for certain severely disabled veterans. Expenditures for the Veterans Administration direct housing loan program under present law and its proposed extension are in- cluded among aids for private housing in the commerce and man- power section of this message. Federal unemployment compensation benefits of 26 dollars a week for a maximum of 26 weeks are payable through State agen- cies to veterans of the Korean conflict. Where the veteran who is insured under a State unemployment compensation system re- ceives lower benefits from that system, the United States Depart- ment of Labor supplements the State benefit. Expenditures for this purpose are increasing as the number of eligible veterans rises. 136 Dwight D. Eisenhower^ ig^^ ^ 17 In the fiscal year 1956 an estimated weekly average of 138,000 veterans will receive unemployment benefits, wholly or partly financed by the Federal Government. These unemployment benefits were intended to assist veterans of the Korean conflict during their transitional period immedi- ately following separation from military service. Possibly by in- advertence, the present provisions were so written that a veteran of the Korean conflict may apply for these benefits at any time up to January 31, i960, no matter how many years have passed since his discharge. I recommend that the law be amended to limit the time for filing claims to 3 years after separation or enact- ment of the amendment, whichever is later. Compensation and pensions. — The upward trend in total ex- penditures for veterans results mainly from the rise in compensa- tion and pensions. Expenditures for this purpose are estimated to increase more than 300 million dollars from the fiscal year 1954 to 19565 to a total of 2.8 billion dollars. They will equal more than half of all payments from the old-age and survivors insurance system. On the basis of present laws and veteran population, the present annual rate of expenditures for veterans' pensions and compensation is expected to double in 3 or 4 decades. The estimated expenditures of 2.8 billion dollars include 1.9 billion dollars in payments to nearly 2,486,000 families and veterans for death or disability resulting from service, and 859 million dollars for pension payments in 1,046,000 cases where death or disability was not connected with military service. During the fiscal year 1954, an average of 2,412,000 cases re- ceived about 1.7 billion dollars in death and disability compensa- tion benefits, and 716 million dollars in pensions were paid in 902,000 cases. The expenditures for 1956 also include 17 mil- lion dollars for 110,000 burial awards and 26 million dollars in subsistence payments to disabled veterans during their vocational rehabilitation. Insurance and servicemen^s indemnities. — Payments for insur- 137 ^ 17 Public Papers of the Presidents ance and indemnity benefits go to families of personnel who die in military service. The increase in expenditures in the fiscal year 1956 reflects (i) a steady increase in indemnity benefits, and (2) an imusual increase in insurance expenditures resulting from recently declared deaths of servicemen who were previously reported missing during the hostilities in Korea. Indemnity benefits of $92.90 a month are paid for 120 months to the family of each serviceman who dies while on active mili- tary service or within 120 days after separation. The benefits are reduced proportionately if the serviceman has any Veterans Administration insurance. Payments of 42 million dollars esti- mated for the fiscal year 1956 are 79 percent higher than in 1954- While no new national service life insurance or United States Government life insurance has been issued since 1951, previously issued policies continue in force. Where deaths are caused by the hazards of war, or occur during military service while premiums have been waived, the Government reimburses the insurance trust funds for losses. The Government also pays benefits directly to certain policyholders. Budget expenditures for insurance losses are estimated at 93 million dollars in the fiscal year 1956, somewhat more than in 1954 and more than double the amount in 1955. Hospital and medical care. — ^A rising patient load in the vet- erans' hospital and medical program will result in an increase in current expenses for the fiscal year 1956. The average number of patients in Veterans Administration and contract hospitals is expected to rise 4 percent above the 1955 level to 1 14,500. While the proportion of service-connected cases is slowly increasing as more veterans of the Korean conflict are treated, it is estimated that more than two-thirds of the expenditures in 1956 will still be for patients hospitalized or treated for ailments not connected with military service. The number of persons in Veterans Admin- istration and State homes is estimated to be 25,700 in the fiscal year 1956. The workload for out-patient care to service-incurred 138 Dwight D. Eisenhower^ ig^^ ^ 17 dental and medical cases is expected to be about 14 percent below that in 1954, with a total of 2,340,000 examinations and treat- ments in 1956. About four-fifths of the estimated average em- ployment of 171,000 in the Veterans Administration during the fiscal year 1956 will be in the hospital and medical programs. The budget includes recommended new authority to incur ob- ligations of 20 million dollars for construction and improvements at Veterans Administration facilities. Most of this is for modern- ization of existing structures. Expenditures for construction and improvements in the fiscal year 1956 are estimated at 60 million dollars, approximately the same amount as in 1954 and somewhat higher than in 1955. Expenditures will be greater than the rec- ommended new appropriations because funds for three large new hospitals to be built in 1956 were appropriated in previous years. Other services and administration. — ^The general operating expenses of the Veterans Administration are estimated to decline further in the fiscal year 1956, reflecting declining workloads in some parts of this agency, especially in the insurance programs, and better organization and management throughout the agency. Average employment in nonmedical activities in 1956 is esti- mated at 34,500, or 13 percent below the 1954 kvel. Trust funds. — Nearly 6 million national service life insurance and United States Government life insurance policies, which provide more than 40 billion dollars of protection, continue in force. About i million of these policies are held by personnel still in the Armed Forces, largely on a waiver-of -premium basis. The remainder are held by veterans who pay premiums. As the special dividend payments to the policyholders declared in 1954 ^^^ earlier years are completed, the receipts of the insurance trust accounts begin to exceed their disbursements. The transactions in these, as well as other, trust funds are not included in the budget totals. 139 ^ I J Public Papers of the Presidents Veterans' Life Insurance Funds (Trust funds) [Fiscal years. In millions] 1954 Item actual Balance in funds at start of year $6, 613 Receipts: Transfers from general and special accounts. 72 Interest on investments 200 Premiums and other 426 Total 697 Expenditures: Dividends to policyholders 267 Benefits and other 503 Total 769 Net accumulation (+ ) or withdrawal (— ) — 72 Balance in funds at close of year 6, 541 6, 574 1955 , estimated $6, 541 1956 estimated S6, 574 31 208 414 81 269 406 652 696 174 446 160 444 620 604 + 33 + 92 6,665 WELFARE, HEALTH, AND EDUCATION Major advances have been made in the past year in the fields of social security, health, and education, pursuant to recommen- dations which I made to the Congress. We have demonstrated that the well-being of our people can be strengthened without yielding to the dangers of centralized power in the Federal Gov- ernment, and we shall continue firmly to resist any project which would seem to us to involve such dangers. We have found ways to provide greater human security and social opportunity, while restricting the Federal Government's role to that of assisting pri- vate action and State and local responsibility with research and technical assistance, social insurance, and grants-in-aid. We be- lieve that these gains can be continued through cooperative action among all levels of American government together with private participation. 140 Dwight D, Eisenhower^ ig^^ ^ 17 In the last Congress, old-age and survivors insurance was ex- tended to 10 million more persons and benefits were improved. Vocational rehabilitation grants to the States have been stepped up toward the objective for 1959 of helping 200,000 people a year to rehabilitate themselves. We have undertaken to aid the construction of medical diagnostic and treatment centers, reha- bilitation facilities, nursing homes, and chronic disease hospitals, as well as general hospitals. To assist in the search for solution of the Nation's serious school problems, the White House Conference on Education was authorized. The Office of Education has been strengthened. Assistance to schools especially affected by Federal activities was extended. In this budget, I recommend increased appropriations for cer- tain activities, including health research and the training of health personnel, and basic scientific research. I am also proposing new legislation to help fill gaps in present programs for health care, public assistance, and old-age and survivors insurance, and to obtain better coordination among them. Estimates for new legislation include 3 million dollars for grants-in-aid to enable State, local, and private agencies to deal more effectively with juvenile delinquency. I am recommending the enactment of legislation to establish an Advisory Commission on Fine Arts within the Department of Health, Education, and Welfare, to provide recognition of the importance of the further development of our cultural heritage. Budget expenditures for welfare, health, and education, includ- ing proposed legislation, are estimated at 2.3 billion dollars in the fiscal year 1956, a decrease of 4 million dollars from 1955. These figures do not include expenditures for health, education, and research which are classified among veterans' benefits or in the military, atomic energy, and other programs in other sections of the budget. 141 ^ 17 Public Papers of the Presidents Welfare, Health, and Education [Fiscal years. In Baillions] Budget expenditures (net) Recommended new obliga- ^ 954 ^ 955 1 956 tional author- Program or agency actual estimated estimated ityforig^G Promotion of public health: Present programs $288 $292 $32 1 $335 Proposed legislation 17 52 Public assistance: Present program i, 439 i, 447 i, 402 i, 402 Proposed legislation 20 20 Other welfare aids and services: School lunch program 84 84 68 68 Vocational rehabilitation 24 29 43 43 Indian health, education, and wel- fare 49 59 76 80 Other 106 77 80 83 Promotion of education: Assistance for schools in federally- affected areas 184 224 173 89 Vocational education 25 31 31 31 Other educational aids 25 30 33 30 General-purpose research: National Science Foundation 6 10 21 31 Department of Commerce 17 35 27 27 Total 2,248 2,316 2,312 ^2,289 ^ Compares with new obligational authority of 2,190 million dollars in 1954 and 2,310 million dollars in 1955. Promotion of public health. — This budget includes funds necessary to assist an expansion of existing services and initiate appropriate new measures which will carry out the objectives of a coordinated health program which I shall outline shortly in a special message to the Congress. Under existing legislation, budget expenditures for public health are estimated at 321 million dollars in the fiscal year 1956. The principal expenditures are for grants to States for construction of hospitals and other health facilities, public health services, maternal and child health, and the control of various diseases; for research programs, including grants to universities and medical schools; and for operation of Public Health Service hospitals. 142 Dwight D. Eisenhower^ ig^^ ^ 17 Significant items in the 29-miliion-dollar increase of expendi- tures over 1955 ^^^ f^^ expansion of the research and training activities of the National Institutes of Health, including special emphasis on mental health; construction of more health facilities; an intensified attack on problems of air and water pollution; and strengthened enforcement of the food and drug laws. I am recommending elsewhere in this message that the Atomic Energy Commission be authorized to build a new medical re- search center containing a nuclear reactor designed specifically for medical research and therapy. This will be a significant addition to the Nation's facilities for basic research in the field of health. The new health legislation which I shall recommend will re- quire budget expenditures of approximately 37 million dollars in the fiscal year 1 956. This legislation includes health reinsurance — the best method yet proposed for encouraging adequate health insurance cover- age for our people. It includes also the part-year cost of a pro- gram of grants-in-aid for medical care for public assistance recipients, shown in the table under proposed legislation for pub- lic assistance. Other measures in the health program are de- signed to foster construction of more adequate medical facilities, training of nurses and other necessary medical personnel, and general improvement of key services in the States and local communities. Public assistance. — The recent expansion of old-age and sur- vivors insurance should gradually reduce the need for public assistance, with a consequent saving to all levels of Government in budget outlays for this purpose. Further savings will result over the long run from amendments to public assistance legislation which I am recommending. The present grant-in-aid formula requires the Federal Government to pay each State 20 dollars of the first 25 dollars of average monthly old-age assistance benefits, and half of the next 30 dol- lars for any recipient. One of the proposed amendments would 143 ^ I J Public Papers of the Presidents modify the public assistance law so that Federal grants can be adjusted downward to reflect gradually, by application to new cases, the number of old-age and survivor insurance beneficiaries who also need supplementary old-age assistance. By limiting to 50 percent the Federal share of old-age assistance for these future recipients of both types of benefits, this amendment would result in a more equitable sharing of costs between the State and Federal governments. The other amendment would encourage States to help needy individuals to become self-supporting or to care for themselves at home. Other welfare aids and services. — Expenditures of 84 million dollars from the school lunch appropriation in the fiscal years 1954 and 1955 include about 67 million dollars for cash pay- ments to States and nearly all of the rest is for commodities. The appropriation recommended for 1956 covers only the cash payments to the States and the costs of administration. In addi- tion, contributions of surplus commodities, financed mainly from a permanent appropriation to the Department of Agriculture for this purpose, are expected to continue at a high level, so that the combined total of Federal cash payments and food donations will remain approximately the same in 1956 as in 1955. More- over, the new school milk program authorized by the Agricultural Act of 1954 provides 50 million dollars a year in the fiscal years 1955 and 1956 to encourage increased consumption of milk by schoolchildren. Taken together, these various aids will make Federal support of the overall school lunch program the largest in our history. The expenditures for surplus commodities and school milk are classified under agriculture and agricultural resources. This budget fully supports the enlarged vocational rehabilita- tion program enacted last year and will make possible the re- habilitation of 95,000 people in the fiscal year 1956. The Congress last year provided for the transfer of Indian health services from the Department of the Interior to the De- partment of Health, Education, and Welfare, where they can be 144 Dwight D. Eisenhower, ig55 ^ 17 administered with other health programs. The appropriations recommended for the fiscal year 1956 will provide improved medical care for our Indian population. Social insurance and retirement trust funds. — ^The Federal Gov- ernment acts as trustee of three large, publicly sponsored retire- ment and insurance programs — old-age and survivors insurance, railroad retirement, and Federal employees' retirement. Contri- butions under these programs, including Federal payments, are collected in the respective trust funds and maintained separately from the budget accounts of the Government. In connection with old-age and survivors insurance, I am rec- ommending two legislative measures. One is the coordination of income and old-age insurance tax collection procedures to make reporting easier for wage earners and employers and at the same time to reduce Government costs for collecting taxes and paying benefits. The second is extension of this insurance to military personnel and to those Federal civilian personnel not now covered, as the basic part of improved systems of survivorship, disability, and retirement protection, with existing staff retirement systems retained as independent and separate entities. The military re- tirement pay system should remain unchanged. Certain adjust- ments in the present civilian personnel retirement systems will be needed. Promotion of education. — ^We are all aware that our schools are passing through a period of extraordinary stress. School-age population is increasing faster than classroom space has been en- larged and qualified teachers recruited. In some communities, the available fiscal resources have been strained severely by efforts to meet these needs; in too many States and school districts, the financial support given to schools has not kept pace with recent increases in taxable resources. The national problem is to find means of overcoming these difficulties within the present framework of responsibilities. In our system of government, the States and their subdivisions have 145 ^ 17 Public Papers of the Presidents Social Insurance and Retirement Funds (Trust funds) [Fiscal years. In millions] 1954 1955 Fund and item actual estimated Federal old-age and survivors insurance trust fund: Balance in fund at start of year $18, 363 $20, 040 Receipts: Appropriation from general receipts 4? 537 Deposits by States 92 Interest and other 45 1 Payments of benefits, construction and administra- tive expenses, and tax refunds — 3, 405 Net accumulation i , 675 Balance in fund at close of year 20, 040 Railroad retirement fund: Balance in fund at start of year 3, 183 Receipts: Appropriation from general receipts 638 Interest on investments 99 Payments of benefits, salaries, and expenses — 502 Net accumulation 235 Balance in fund at close of year 3, 418 Federal employees' retirement funds (Civil Service and Foreign Service): Balance in funds at start of year 5, 652 5, 932 Receipts: Employee contributions 430 444 Interest 226 234 Transfer from budget accounts and other: Present law 35 34 Proposed legislation Payments of annuities and refunds, and expenses. . —411 ~~447 Net accumulation 280 265 Balance in funds at close of year 5, 932 6, 1 96 1956 estimated $21,356 5,190 6,175 120 130 464 494 -4, 459 -4,968 1,315 1,831 21,356 23, 187 ■ 3,418 3,538 600 625 102 106 -581 -590 121 141 3,538 3,679 6, 196 502 222 5 216 -489 456 6,652 146 Dwight D. Eisenhower^ ig^^ ^ 17 the privilege and the responsibiUty of providing free public edu- cation. The role of the Federal Government has wisely been confined to encouragement and special assistance. I am confident that the overwhelming majority of our people agree that there should be no dilution of that State and local responsibility. I have called a White House conference this fall of represent- atives from all the States. Some local and State conferences of citizens and professional educators have already been held in preparation for this national assembly. Others will meet this spring and summer. These meetings will highlight possible long- range solutions to the problems and will place in better perspective the obligations and opportunities of the respective levels of government. Concurrently, without impairment in any way of State, local, community, and family responsibility, the Federal Government should serve as an effective catalyst in dealing with the problem of classroom shortages. I shall send to the Congress, in February, a special message presenting an affirmative program. The major Federal expenditure for promotion of education consists of grants to aid school construction and operation in dis- tricts where enrollment has grown significantly because of Federal operations. Last year, the Congress extended the temporary pro- gram of aid for construction for 2 years. To finance this exten- sion, I am recommending an appropriation of an additional 70 million dollars for the current fiscal year and 24 million dollars for 1956. The Congress also delayed a requirement that these school dis- tricts absorb a greater proportion of the operating costs resulting from increased enrollments. Primarily for this reason, a supple- mental appropriation of 19 million dollars will be needed this year. In the fiscal year 1956, greater absorption of the increased enrollments by the local districts will reduce the assistance pay- ments for operations 6 million dollars below 1955, to a total now estimated at 70 million dollars. 147 ^ 17 Public Papers of the Presidents The budget recommendations provide for continuing the in- crease in vocational education grants which was enacted for 1955, and will permit the Office of Education to initiate a program of cooperative research as authorized by the last Congress. General-purpose research, — Despite our tremendous technolog- ical strides in recent years, our national interest requires that we support a strong program of basic research and that we train a greater number of highly qualified scientists and engineers. Accordingly, this budget recommends increased National Science Foundation grants for basic research and for training more grad- uate students, college instructors, and high school science teach- ers. It includes also the remaining necessary financial support for United States participation in the International Geophysical Year, a worldwide scientific undertaking which will yield great long-range benefits to this country. The budget estimates for the Department of Commerce in- clude substantial expansion in the general scientific and tech- nological work of the National Bureau of Standards as recom- mended by a committee of outstanding scientists. Another aspect of general-purpose research is the statistical work of the Census Bureau. We do not have all the statistical information required in our dynamic economy. I am therefore recommending a govemmentwide effort to improve statistics in those areas where our work has been most handicapped by in- complete information. Increases in appropriations are recom- mended for the Census Bureau for statistics on the labor force and for an intercensal survey on housing. At the same time, in other parts of the budget, increases are recommended for statis- tics on agriculture, production, construction, employment, and finance. AGRICULTURE AND AGRICULTURAL RESOURCES The basic agricultural legislation which I recommended and which the Congress enacted last year will help to promote a stable, prosperous, and free agriculture. By helping farmers solve many 148 Dwight D. Eisenhower^ ^955 ^ ^7 of their own problems we shall make possible reduced reliance on Government intervention such as production controls, and on Government spending for support of farm income. The Agri- cultural Act of 1954 ^^d the Agricultural Trade Development and Assistance Act will facilitate readjustment of farm produc- tion, expansion of agricultural exports, and stimulation of domestic consumption of farm products. The Watershed Pro- tection and Flood Prevention Act of 1954 provides a sound basis for Federal partnership with States and local groups in upstream flood prevention and soil and water conservation. The Farmers' Home Administration was given expanded authority to make loans for soil and water conservation, and a basis was provided for greater participation of private lenders in the financing of this and other loan programs. My recommendations for agricultural programs in this budget will carry forward the broad objectives reflected in this new legislation. They will also continue the steps taken last year to place greater emphasis on research and educational activities. I have confidence in the ability and willingness of farmers to deal with many of their economic problems if given help through ex- panded agricultural research and advice in making use of the research results. Gross expenditures for agriculture and agricultural resources in the fiscal year 1956 are estimated at 7.6 billion dollars. Re- ceipts, estimated at about 5.4 billion dollars, consist mainly of collections on loans and sales of commodities. Net budget ex- penditures are estimated at 2.3 billion dollars in the fiscal year 1956, which is 871 million dollars less than estimated for 1955 and 298 million dollars less than in 1954. The reduction in net budget expenditures for 1956 is primarily due to anticipated smaller outlays for farm price supports. New authority to incur obligations recommended for the fiscal year 1956 is 1.3 billion dollars, as compared with 2.6 billion dol- lars in 1955 and 4 billion dollars in 1954. The reduction in 1956 is accounted for almost entirely by the Commodity Credit Corpo- 149 ^ 17 Public Papers of the Presidents ration. The Corporation's present borrowing authority, which was increased from 6.75 billion dollars to 10 billion dollars during the fiscal years 1954 ^^^ 1955? ^^ now expected to be adequate to finance price support activities in the fiscal year 1956. Stabilization of farm prices and farm income. — ^Establishment of the principle of flexible supports and provision for a gradual shift to modernized parity for the basic agricultural commodities in the legislation enacted last year will encourage farmers to adjust their production to realistic market prices in keeping with the current needs of the economy. Since the transition to the new basis for price supports will be gradual, the benefits for the agricultural economy and for the Nation will not be fully realized for several years. Based on the best information now available, gross price sup- port expenditures in the fiscal year 1956 are estimated at 4.2 billion dollars, 1.5 billion dollars less than the amount estimated for 1955. These gross expenditures do not represent losses; rather they are outlays for loans and commodities to be acquired during the year, and for redemption of certificates of interest in commodity loans previously sold to private lenders. A substan- tial part of these outlays will be recovered from collections on loans and sales of commodities in later periods. Receipts from commodity sales and collections on loans in 1956 are estimated at 3.2 billion dollars, resulting in net budget expenditures of 968 million dollars. The decline in net price support expenditures anticipated in the budget will be brought about by two major factors. First, con- tinuation of acreage restrictions, particularly on 1955 crop year cotton and wheat, and lower support levels on some commodities are expected to result in a lower volume of price support loans. Second, receipts from sales of such commodities as cotton, com, and wool are expected to increase as our efforts to find new and expanded markets for agricultural products begin to show results. These factors will be offset in part by increased Commodity Credit 150 Dwight D. Eisenhower, IQ55 f 17 d X^ 10 <M CO 0 CO CI CI 4^ 10 <£) «D CO CI t^ -^ <2 ^ o Q < H a 1 ?1 CO -^ o ^ en (J) ^D 00 00 ^D CO 6^ CD CI CO O^ CO CO •-« CO 10 t^C£> »-* iOC£> CO ' G t^CO CO a; 0 ■-* CI sS 0 C4 0 CI in Tf" 0 0^ 8 1 r^ 0 10 J^ c< CI (1 "cS cT 0 1 0 8 10 T) CD 0 0 § X^OO CO 2 a 0 g • IH CO 2 - 0 1^ 0 1 1) 1 1) '0 1 CO 10 10 10 V 8 CO CI CO CO 10 s:^ 1^ CO !>• 00 CO lO Th CI CI CI CO incocot-^co'-' ioco^-< r>. •-« .- CO »H .-. O O) CO CO O) *-< CI m x>. CO CO Tf o^ to CO O x^co '-' o CO 10 s ;h •• bo V o i ^ s s g o a Q S '^ o 5^ "-< 03 O 03 ■M in ^j i. ^ ^ ^ So ^ -H '§ 0 C/3 fa < fl fe _5 00 ro +3 M ^^5 "3 t) 151 ^ I J Public Papers of the Presidents Corporation expenditures to retire certificates of interest in prior- year crop loans sold to banks and private lenders, because a sub- stantially smaller volume of new commodity loans will be available in 1956 than in 1955 to serve as a basis for certificates of interest. Also, funds of the Corporation will be used to provide for in- creased milk consumption by schoolchildren and members of the Armed Forces during 1955 and 1956 when supplies of dairy products are expected to be plentiful. Expenditures in 1956 under the International Wheat Agree- ment are estimated to be lower than in 1955, but higher than in 1954. In the fiscal year 1954 a total of 119 million bushels of wheat was exported under this program. The average amount paid by the Government to cover the difference between the do- mestic price and the Wheat Agreement price was 48 cents per bushel. Larger exports under this program are expected in both 1955 and 1956. In addition to exports under the Wheat Agreement, the Com- modity Credit Corporation has offered to sell wheat in limited quantities for export at competitive world prices. Net costs to the Corporation of these additional exports in 1954 were 26 mil- lion dollars and are estimated at 59 million dollars in each of the fiscal years 1955 and 1956. The Corporation may also sell surplus agricultural commodities for foreign currencies under the Agricultural Trade Development and Assistance Act. The law provides for a 3 -year program with total cost to the Corporation to be reimbursed by appropriations limited to 700 million dollars. With due regard to the impact on world markets, we are moving ahead in an orderly manner in the negotiation of agreements, and it is expected that transactions completed during the fiscal year 1955 will account for a substantial part of the costs under this Act. Except for expenditures under the International Wheat Agreement, these expenditures for ex- port programs are included in the total shown for the Commodity Credit Corporation. The trade development act is helpful in marketing commodity 152 Dwight D. Eisenhower^ ig^^ ^ 17 surpluses and tends to reduce current outlays under the regular price support program. However, it is unwise to rely upon this means as a final solution to our surplus problem. We must con- tinue our efforts to restore a sound position for agriculture in world markets. Financing farm ownership and operation, — The agricultural credit institutions supervised by the Farm Credit Administration make standard risk loans to farmers and their cooperatives on both a short- and long-term basis. Some of these loans are made with funds obtained through the federally owned intermediate credit banks. New loans of the Federal intermediate credit banks are estimated to be nearly 2 billion dollars in the fiscal year 1956, and will exceed loan collections by 40 million dollars. Receipts from other operations will reduce total net budget ex- penditures of the Farm Credit Administration to 37 million dollars. The Farmers' Home Administration makes direct loans to farmers to supplement the credit services provided by private and cooperative credit agencies, and also insures loans by private lenders. By greater reliance on insured loans, the services of the Farmers' Home Administration can be increased without increasing budget expenditures. Under legislation enacted last year the interest rate on insured loans for farm ownership, farm housing, and other improvements has been set at a level that will attract a larger volume of funds from private lenders. Insured loans will also be used to finance an increase in soil and water conservation loans, which the new legislation has made available in all States. In addition, the Farmers' Home Administration can now take second mortgages as security for direct loans. This will permit private lenders to continue as first mortgage holders in the financing of farm ownership and development, thereby in- creasing the number of borrowers that can be served under that program. Financing rural electrification and rural telephones. — The pro- grams of the Rural Electrification Administration have brought 153 ^ 17 Public Papers of the Presidents about great advances for rural America, and this administration will continue to make loans available to meet all legitimate needs for rural electrification and telephones. The need for electrification loans to provide initial connections of farm homes with central station service is much less than in earlier years. But this is more than offset by larger requirements for improvements of existing systems and for power generation. My budget recommendations, therefore, provide for a higher level of new electrification loans in 1956 than in the current fiscal year. The rural telephone program is still in an early stage of devel- opment. Progress is being made in resolving the various prob- lems involved in achieving adequate telephone service in rural areas. This budget makes provision for new loan authority suffi- cient to raise the level of telephone loans in 1956 to 80 million dollars, which is 5 million dollars higher than in 1955. Agricultural land and water resources. — My recommendations for agricultural land and water resources for the fiscal year 1956 recognize the great importance to the Nation of soil and water conservation activities. The new watershed protection legisla- tion enacted last year is a vital part of our conservation program. It provides a practical basis for partnership between the Federal Govemment and State and local groups in the planning and carrying out of a coordinated program for upstream flood pre- vention and soil and water conservation. This budget recom- mends an increase of 4 million dollars for 1956 to provide for the necessary Federal participation in watershed protection projects. Under the forward authorization for the 1955 ^^^P Y^^^ ^&^i" cultural conservation program, contained in the 1955 appropria- tion act, larger expenditures will be required for payments to farmers in the fiscal year 1956 than in 1955. This program assists farmers in applying sound soil conservation practices and in put- ting to proper use farm land diverted from its previous use through acreage allotments. Because the problems created by 154 Dwight D. Eisenhower, ig^s ^ 17 diverted acreage are expected to become progressively less press- ing, I am recommending a forward authorization of 1 75 million dollars for the 1956 crop year as compared with the 250 million dollars provided for the current crop year. Research and other agricultural services. — ^Additional research and educational work on problems of agricultural production, soil and water conservation, and marketing of farm products, can make important contributions to a more efficient and stable agri- culture capable of meeting the needs of a growing population. These activities not only contribute directly to the solution of immediate problems of farmers, but also benefit consumers of farm products by more efficient production and marketing. The 1956 budget provides for an increase of 9 million dollars in ex- penditures for research and an increase of 6 million dollars for extension work. These additional amounts are needed to expand the Federal-State cooperative research and extension programs and to strengthen the basic agricultural research program carried on by the Federal Government. As part of the coordinated plan to improve economic statistics of the Government, this budget includes added funds to strengthen the work of the Department of Agriculture in developing ade- quate farm income and production statistics. Expenditures for other agricultural services also include 10 million dollars in 1955 and 15 million dollars in 1956 for eradication of brucellosis in cattle. The necessary funds are to be made available by transfer from the Commodity Credit Corporation. This program is de- signed both to assist in stabilizing the dairy industry and to give added protection to the health of our citizens. NATURAL RESOURCES This administration believes that achievement of the resource development basic to the economic progress and security of the Nation requires encouragement of local public and private initi- ative and, where Federal participation is necessary, emphasis on the partnership aspects of essential cooperative arrangements with 155 ^ 17 Public Papers of the Presidents State and local governments or with private enterprise. To the greatest extent possible, the responsibility for resource develop- ment, and its cost, should be borne by those who receive the benefits. In many instances private interests or State and local governments can best carry on the needed programs. In other instances Federal participation or initiative may be necessary to safeguard the public interest or to accomplish broad national objectives, where projects because of size or complexity are beyond the means or the needs of local public or private enterprise. The Federal Government must be willing and ready to bear the cost of improvements made for national purposes; but in all cases where the partnership principle logically applies there is auto- matically acquired a concern for economy and efficiency that is often lacking when no local contribution is required. As a result of this partnership policy and the willingness of State, local, and private interests to undertake or cooperate in the development of our natural resources, it has been possible to reduce Federal expenditures for these programs since the fiscal year 1954. ^^ the same time, we have strengthened our resource development programs. The conservation and development of our natural resources will require estimated net Federal expenditures of 953 million dollars in the fiscal year 1 956, as compared with i . i billion dollars in 1 955 and 1.2 billion dollars in 1954. About two-thirds of the net expenditures in 1956 will be for flood control, irrigation, power and multiple-purpose river basin development. The other one- third will be largely for the management and development of the national forests, parks, and public lands, and for our fish and wildlife and mineral resources programs. Federal expenditures for natural resources, if wisely made in proper relation to local public and private efforts, are investments for the benefit of the Nation; in many cases they also result in receipts to the Treasury, thus often providing reimbursement in later years for part of the costs incurred. 156 Dwight D. Eisenhower, IQ55 f 17 Natural Resources [Fiscal years. In millions] Gross expenditures 1954 actual Program or agency Land and water resources: Corps of Engineers: Flood control and multiple- purpose projects: Present programs. $416 Proposed legislation: Passamaquoddy Bay sur- vey Partnership projects Department of the Interior: Bureau of Reclamation: Irrigation and multi- ple-purpose projects: Present programs 1 99 Proposed legislation: Federal projects Partnership projects. Power transmission agen- cies Indian lands resources . . . Bureau of Land Manage- ment and other Tennessee Valley Authority. Department of State Federal Power Commission . Forest resources Mineral resources: Present programs Proposed legislation: Aid for anthracite mine drainage . Fish and wildlife resources . . . Recreational use of resources. General resource surveys and other 1955 1956 esti' esti- mated mated Net expenditures 1954 1955 1956 actual esti' esti' mated mated $366 $363 $416 $366 $363 I 10 I 10 Recom' mended new obli" gational authority Jor 1956 $371 I 10 168 177 196 165 174 180 5 5 7 10 10 10 53 48 41 53 48 41 25 33 37 41 32 36 40 24 15 17 18 15 17 18 17 409 431 250 238 214 2 28 7 5 4 7 5 4 2 4 4 5 4 4 5 5 117 121 "5 117 121 "5 116 41 47 46 37 43 42 40 2 3 2 3 .• 38 46 43 38 46 43 41 33 39 50 33 39 50 25 27 26 26 27 26 26 26 Total 1,391 1,358 1,209 1,213 1,133 953 *929 1 Compares with new obligational authority of 1,196 million dollars in 1954 and 967 million dollars in 1955. 40308—59- -13 157 ^ 17 Public Papers of the Presidents Land and water resources. — Under the recommendations for the fiscal year 1956, the Federal Government will spend 673 mil- lion dollars for the development of land and water resources. A large share of this total — 430 million dollars — is for continuation of work on 152 river-basin development projects and units under construction by the Bureau of Reclamation and the Corps of Engineers. Much of this work is multiple-purpose development for irrigation, flood control, navigation, and hydroelectric power. Construction on 37 of these projects will be virtually completed in 1956. Funds recommended for work underway in 1956 will maintain power generation schedules and continue nonpower projects at economical rates. Maintenance and operation activities will be at a level which will provide reasonable protec- tion of the Federal investment. My recommendations are intended to encourage States and local public and private groups to take the initiative in develop- ing our valuable water resources with Federal cooperation where national interests are involved. This budget includes 20 million dollars under proposed legislation to enable the Bureau of Reclamation and the Corps of Engineers to participate, in 1956, in partnership water developments. Five million dollars of this amount is proposed for three multiple-purpose projects with power facilities in the Pacific Northwest. It is expected that local interests will install and operate the power facilities of the Cougar and Green Peter-White Bridge projects in Oregon and that the Corps of Engineers will build the flood control and other facilities in which there is a national interest. Non-Federal interests are also expected to build the Rocky Reach project in Washington, and the Corps of Engineers will assist in financing the nonpower facilities having national benefits. Assistance will be given to other partnership projects as specific proposals are developed. In addition, provision will be made for cooperation in authorized partnership projects, such as Priest Rapids in Washington and Markham Ferry in Oklahoma, when satisfac- tory arrangements have been completed. 158 Dwight D. Eisenhower, IQ55 ^ 17 I also recommend enactment of legislation authorizing the Bureau of Reclamation to undertake construction of two com- prehensive river-basin improvements which are beyond the ca- pacity of local initiative, public or private, but which are needed for irrigation, power, flood control and municipal and industrial water supply. These are the Upper Colorado River Basin devel- opment in the States of Colorado, Utah, Wyoming, Arizona, and New Mexico, and the Fryingpan- Arkansas development in Colo- rado. The Colorado River development will enable the Upper Basin States to conserve flood waters and to assure the availability of water and power necessary for the economic growth of the region. The total cost of these major developments is estimated at I.I billion dollars, with first-year expenditures of 5 million dollars. Sale of power generated at these developments will repay the power investment within 50 years and will make a contribu- tion toward repayment of other investments. In furtherance of the policy to move forward with needed water use and control projects, the 1956 budget provides for the starting of a number of new authorized Federal projects. For each au- thorized project recommended, planning has advanced to the stage where the project could be placed under construction early in 1956. Most of the projects are small or intermediate-sized developments, having a high degree of financial participation by local interests or a reasonable excess of benefits over costs. Some of them are essential to permit full functioning of Federal works already completed or under construction. This budget makes provision for the Bureau of Reclamation to start construction on 5 new irrigation and water supply projects, and for the Corps of Engineers to begin work on 10 local flood protection projects, 2 flood control projects of broader scope, 8 projects for beach erosion control, and 14 navigation projects. It also provides for resumption of work which was suspended a few years ago on i local flood protection project and i navigation project. These add up to 39 new projects and 2 resumptions. In addition, 2 million dollars is recommended for the construction 159 ^ 17 Public Papers of the Presidents of a number of small projects to be selected by the Secretary of the Army, none of which may cost more than 150,000 dollars. The total cost of all this new work is estimated at 347 million dollars, of which expenditures of 23 million dollars are contem- plated for the fiscal year 1956. The navigation projects included in the above construction starts, at an estimated cost of 198 million dollars, are discussed in the commerce and manpower section of this message. In the selection of reclamation projects, consideration has been given to ( I ) more efficient use of present water supply and cor- rection of adverse water supply conditions, and ( 2 ) the proportion of the irrigation investment which will be repaid by the water users. The new local flood protection works will provide benefits primarily in highly urban and industrialized areas. The new flood control projects are the Eagle Gorge Reservoir in Washington, on which there will be substantial local contributions in related work and cash, and the Old River Control project in Louisiana. The latter project is essential to prevent the diversion of the Mis- sissippi River to the Atchafalaya River channel, with resultant disruption to the economy of the lower Mississippi River area. Adequate collection and evaluation of basic data on topog- raphy, minerals, soils, and water and weather conditions are essential to provide a soimd basis for water resources projects. Current progress in collection of basic data will be continued. It is also essential to prepare adequate project designs prior to con- struction to assure efficient construction and to safeguard the pub- lic investment. I am recommending increased funds for general investigations by the Bureau of Reclamation to assure a proper basis for project authorization. Advance planning of authorized projects by the Corps of Engineers and the Bureau of Reclamation will proceed at a rate which will permit early initiation of con- struction on projects in accordance with needs and budget policy. This budget also provides i million dollars under proposed legis- lation for a survey to determine whether hydroelectric power can 160 Dwight D. Eisenhower^ IQ55 ^ i^j be economically developed from the tremendous tides at Passa- maquoddy Bay. Expenditures of the Bonneville, Southeastern and Southwest- em Power Administrations in the fiscal year 1956 are in line with the partnership poUcy whereby State, local, and private interests participate in power development and transmission. The expen- diture estimates also reflect the approaching completion of trans- mission systems for marketing power from Federal projects now under construction. In order to establish equity between the Federal Government and other interests, I recommended in my 1955 budget message enactment of legislation to provide that the Federal Government make payments to non-Federal owners of water resources projects when Federal hydroelectric power developments benefit from these projects. Payments are now required from other licensees deriving such benefits and I see no reason why the Federal Gov- ernment should be exempted. I hope the Congress will amend the Federal Power Act during this session to require such Federal payments. The Tennessee Valley Authority, in the fiscal years 1955 and 1956, will continue installation of steam electric and hydroelectric generation units started in prior years. With construction on some of the facilities nearing completion, gross expenditures of the Authority are estimated to show a very substantial decrease from 431 million dollars in 1955 to 250 million dollars in 1956. Receipts from operations, largely from the sale of power, are expected to increase from 217 million dollars to 248 million dol- lars. Thus, an approximate balance between expenditures and receipts is estimated for 1956, with net budget expenditures of 2 million dollars. No appropriations have been recommended for new power generation units in the fiscal years 1955 or 1956 for the Tennessee Valley Authority. After 600,000 kilowatts contracted for by the Atomic Energy Commission with the Mississippi Valley Gen- erating Company become available for replacing power furnished 161 ^ 17 Public Papers of the Presidents the AEC by TVA, the scheduled capacity of the TVA system will provide for a substantial increase in loads through the calen- dar year 1958. The Tennessee Valley Authority is giving immediate attention to the possibilities of financing further ex- pansion of its power system by means other than Federal appro- priations. The Authority has been requested to complete its studies in time to permit consideration by the Congress at this session of any legislation that may be necessary. It is expected that the power needs for the system will be reexamined after the Congress has had an opportunity to consider legislation to provide for future financing. Legislation will also be presented to the Congress to provide that an adequate rate of interest be paid to the Treasury on appropriated funds invested in power facilities of the Tennessee Valley Authority. National forest and other public lands. — ^Forest and range lands managed by the Forest Service and the Bureau of Land Manage- ment provide valuable timber, range, and mineral resources. Receipts from these lands are estimated at 165 milUon dollars in 1956. Part of these receipts are appropriated for payments to the States and counties in which the lands are located. In- creased expenditures are recommended in 1956 for construction of forest roads and trails, supervision of timber sales, and soil and moisture conservation work. As a result of Federal coopera- tive assistance in the past. States are now assuming greater re- sponsibility for forest fire control on non-Federal lands and some reduction in Federal payments is proposed for 1956. Expendi- tures on Indian lands and resources will provide for management of forest and range lands at the current level, but some increases are recommended for soil and moisture conservation, mainte- nance of buildings and utilities, and construction of roads. In the fiscal year 1955, the submerged lands of the Outer Continental Shelf were first offered for drilling for oil and gas under Federal leases. Receipts from these leases, deposited in the Treasury, are estimated at 147 million dollars in 1955 and 162 Dwight D. Eisenhower^ ig55 ^ 17 100 million dollars in 1956. Leasing of these lands will con- tinue to provide substantial receipts in later years. Urgent needs for maintenance and for improved services to the increasing number of visitors will require some increase in expenditures for our national parks, monuments, and historic sites. Employment of additional personnel to collect admission fees, together with the increase in fees put into effect during the cur- rent year, will result in increased receipts to the Treasury. Parkways, roads, and trails will be extended in 1956, pursuant to authority provided in the Federal Aid Highway Act of 1954. Mineral resources. — During the past year, the Cabinet Com- mittee on Minerals Policy has recommended, and I have ap- proved, general guidelines for developing mineral resources in accordance with our national security needs. Case by case studies of individual mineral industries will be made to determine within the framework of our overall domestic and foreign economic policies the proper level of efficient domestic production necessary for our mobilization base. Where necessary, the various means available to the Government will be used to support essential parts of the mobilization base. The factfinding and research activities of the Geological Survey and the Bureau of Mines will contribute to this end. I recommend legislation and a supplemental appropriation in the fiscal year 1955 to enable the Federal Government to co- operate with the State of Pennsylvania in providing facilities for surface water drainage in the anthracite coal region. This will afford protection against the flooding of valuable resources and the decrease in employment which would result if additional mines were closed. COMMERCE AND MANPOWER The basic principle underlying budget recommendations for programs in the field of transportation, housing, and business is that the national interest is best served by privately owned and operated industry, which is assisted by a minimum of Federal 163 ^ 17 Public Papers of the Presidents funds and Federal basic facilities operated at the lowest feasible cost and financed, where possible, by charges levied on the users of the services. Budget recommendations for manpower programs are designed to help the Nation's productive system function smoothly and efiiciently, by providing economic safeguards for workers, by helping bring together jobseekers and jobs, and by fostering orderly labor relations and the amicable settlement of disputes. In the past 2 years, in furtherance of these principles, we have strengthened our major commerce and manpower programs by placing increased reliance on expansion of private investment, by encouraging greater participation of State and local governments, and by providing for the extension of coverage of unemployment insurance. Wherever possible. Federal programs are being placed on a self-supporting basis. As a result, a large share of the Gov- ernment's operations in these areas is being financed from program receipts, rather than from tax revenues. After 30 years of discussion, the United States is joining with Canada in constructing the Saint Lawrence Seaway. A joint program is underway with industry to modernize our merchant fleet. Federal aids to States for highway construction have been increased. Positive steps have been taken to promote an econom- ically sound system of air transportation with reduced reliance on Federal subsidies. The Post Office Department has made major improvements in service and substantially reduced its op- erating deficit. Limited attacks on urban blight through slum clearance have been expanded into a comprehensive urban re- newal program. More private investment in housing is being encouraged by more liberal mortgage insurance, by the voluntary home mortgage credit program, and by permitting private inves- tors to retire gradually the Government's investment in the sec- ondary mortgage market. Meanwhile, other housing loans and Government-owned housing are being liquidated as rapidly as feasible. Our production capacity has been expanded to make possible speedier mobilization in case of future emergencies. 164 Dwight D. Eisenhower, igss ^ 17 Provision has been made for extension of coverage of the Federal- State unemployment compensation system to 4 million more workers. Commerce and Manpower [Fiscal years. In millions] Gross expenditures Net expenditures Recommended new obliga" ^ tional 1954 1955 1956 1954 1955 1956 authority actual estimated estimated actual estimated estimated for 1956 Program or agency Provision of highways $586 $659 $725 $586 $659 $725 Merchant marine 236 228 198 153 209 192 Navigation aids and facili- ties 403 409 441 313 325 353 Promotion of aviation 275 274 283 275 274 283 Postal service: Present program 2, 686 2, 741 2, 81 1 312 268 Proposed pay and rate mcreases Other transportation and communication programs. 62 Urban development and redevelopment : Present programs 37 Proposed legislation Aids to private housing: Federal Housing Admin- istration 125 Federal National Mort- gage Association 563 Veterans Administration: Present programs 118 Proposed legislation Other 31 Public housing programs . . 658 Other housing and com- munity facilities 93 Civil defense and disaster relief 103 Promotion of defense pro- duction: Present programs 936 i, 061 Proposed legislation Business loans and guaran- ties: Present programs 131 Proposed legislation 58 86 143 813 170 5 570 83 80 -270 60 145 -28 22 36 56 294 270 42 94 130 —28 338 —221 85 92 90 5 604 52 76 626 12 -42 -67 243 -193 "8 39 90 — 16 —29 —29 34 —401 53 61 216 -85 54 72 76 44 70 104 12 50 II —100 —38 —106 28 28 S919 235 330 284 295 —270 37 4 200 96 19 71 67 40308—59- -14 165 ^ I J Public Papers of the Presidents Commerce and Manpower — Continued [Fiscal years. In millions] Recommended Gross expenditures Net expenditures new obliga- liQYial 1954 ?955 1.956 1954 1955 ^95^ authority Program or agency actual estimated estimated actual estimated estimated for 1956 Other promotion or regula- tion of business $33 $37 $37 $17 $21 $36 $36 Unemployment compensa- tion and placement: Administration 211 204 254 209 203 253 257 Payment to Unemploy- ment Trust Fund 64 87 64 87 87 Other labor and manpower programs: Present programs 67 65 66 67 65 66 66 Proposed legislation 4 4 5 Total 7,355 7,800 6,908 1,577 2,550 2,186 12,846 1 Compares with new obligational authority of 2,846 million dollars in 1954 and 3,381 million dollars in 1955. The appropriations recommended in this budget will permit even greater progress in the fiscal year 1956 and later. In addi- tion I am recommending legislation ( i ) to bring the interstate highway system up to modem standards in the next decade; (2) to make the postal system self-supporting; (3) to increase au- thority for mortgage insurance and urban renewal grants and to authorize contracts for additional public housing units; (4) to extend the Defense Production Act, the Small Business Act, and the veterans' housing loan program beyond their present expira- tion dates of June 30, 1955; and (5) to raise the minimum wage now provided under the Fair Labor Standards Act and modern- ize Federal workmen's compensation and other labor laws. Gross expenditures for commerce and manpower, including proposed legislation, will be reduced from an estimated 7.8 billion dollars in the fiscal year 1955 to 6.9 billion dollars in 1956, pri- marily because of reduced purchases of mortgages by the Federal National Mortgage Association and lower spending for defense production activities. Assuming enactment of the recommended increase in postal rates, net budget expenditures for 1956 are 166 Dwight D. Eisenhower, IQ55 ^ 17 estimated at less than 2.2 billion dollars, 364 million dollars below 1955. Highways. — In the past decade and a half we have not kept pace with the rapidly growing needs for highways adequate for economic development and national security. I plan to send a special message to the Congress in the near future recommending a program of coordinated action by Federal, State, and local gov- ernments, to overcome major highway deficiencies. The addi- tional budget expenditures, if any, required in the fiscal year 1956 would be relatively minor. Budget expenditures for highways under present programs will continue to increase as a result of the enlarged program already provided in the Federal Aid Highway Act of 1954. Grants to States (including Federal administrative expenses) will amount to 680 million dollars, with an additional 45 million dollars of expenditures for highways in Federal forests, on public lands, and in Alaska. Merchant marine, — ^To continue our program of helping to bring the merchant fleet up to date, I am recommending for the fiscal year 1956 new obligational authority for ship construction of 103 million dollars. These funds will : ( i ) continue the trade- in-and-build tanker program begun this year; (2) start orderly replacement of cargo ships built during or before World War II; (3) finance construction of two cargo ships and one tanker as prototypes for mass production in an emergency; (4) provide for the construction or conversion of four passenger-cargo ships; and (5) continue essential research and development work on ship design. The appropriation of 103 million dollars will be more than matched by private funds, resulting in total investment of about 225 million dollars in new ship construction. Together with the joint 400-million-dollar program now underway and with expanded naval construction in private yards, it should maintain a substantial nucleus of peacetime shipyard employment. Payment of subsidies to American ship operators to offset lower 167 ^ 17 Public Papers of the Presidents operating costs of foreign ships will require appropriations esti- mated at 115 million dollars in 1956. The rapid rise recently in expenditures for this purpose and the possibility of continued increases make it important to provide more effective budgetary control over the level of subsidized operations. I am, therefore, proposing in this budget to establish a limitation on new long- term contracts to pay operating-differential subsidies. Such a limitation will permit annual review by the President and the Congress of the extent of our future subsidy commitments. Navigation aids and facilities. — In accordance with legislation enacted last May, the Saint Lawrence Seaway Development Cor- poration has been established to construct, operate, and maintain that part of the new Seaway located in United States territory. Construction is being pushed at maximum speed because of the Seaway's importance to economic development and national security. Almost one-quarter of the work is scheduled for completion by the end of the fiscal year 1956. The Corps of Engineers program for rivers and harbors gives primary emphasis to inland waterways and to those navigation projects needed to provide reliable access to important ports or to relieve serious congestion for important established deep draft traffic. The increase in expenditures from 108 million dollars in 1955 to 135 million dollars in 1956 reflects mainly the normal rate of progress on construction of projects started in 1955 and the resumption of urgently needed maintenance of shallow draft channels. In addition, 14 new navigation projects and the resumption of one project previously suspended are recommended in the fiscal year 1956. These are projects which promise to yield benefits relatively high in comparison to the construction costs involved or which have substantial local participation. With 2 exceptions, these are relatively small or intermediate-sized projects. Dredg- ing of the Delaware River channel between Philadelphia and Trenton is proposed, but specific recommendations will be sent to the Congress only on the basis that provision be made for 168 Dwight D. Eisenhower^ ig^s ^ 17 adequate cost-sharing in some form. Appropriations are recom- mended to widen the Calumet-Sag Waterway in Illinois to make this vital channel adequate to handle present and steadily increasing traffic needs. Although expenditures of the Coast Guard will continue to decline from 205 million dollars in 1955 ^^ ^93 niillion dollars in 19565 the basic aids provided for air and water commerce will be maintained at their current strength. In addition, the Coast Guard will again operate the ocean weather-station network for the Department of Defense. Promotion of aviation. — ^We have made shifts in Federal aviation programs during the past 2 years in order to reduce assistance no longer required and to concentrate on those Federal aids which are indispensable to the continued rapid progress of aviation. Since October 1953, when responsibility for subsidy payments to commercial air carriers was placed in the Civil Aeronautics Board, substantial progress has been made in decreasing the level of subsidies. Expenditures by the Civil Aeronautics Board for this purpose in 1955 are now estimated at 70 million dollars com- pared to 80 million dollars estimated a year ago; a further decline to 63 million dollars is anticipated for 1956. This trend is con- sistent with the recommendations made by the Air Coordinating Committee after a comprehensive study made at my request of our basic civil aviation policies. In addition, wherever possible, military mail is being carried by commercial airlines, thus not only eliminating Government competition with private business, but also helping to reduce subsidies to the private carriers. The continuing growth of civil and military air traffic has in- creased congestion on the airways system — at times restricting aircraft operations in areas of heavy traffic. As a step to main- tain high standards of safety and increase the regularity of flights, I am recommending increased appropriations for the Civil Aeronautics Administration for expansion and improvement of 169 ^ 17 Public Papers of the Presidents air navigation facilities and for more radar traffic control equipment. With the increasing maturity of civil aviation, the Federal Government soon should be able to reduce substantially its safety promotion and enforcement activities without affecting the present high level of safety. I have requested the early prepara- tion of a plan, in cooperation with industry, to achieve this objective. I again recommend incorporation of Washington National Air- port to provide the administrative flexibility needed for efficient operation of this business-type enterprise. The work of the National Advisory Committee for Aeronautics is of key significance in strengthening our military aircraft and guided missiles programs and in supporting our continued progress in the air. During recent years we have achieved spectacular success in flying at speeds well beyond the speed of sound. However, we have not yet overcome all problems of structural failure, engine malfunctioning, and lack of stability and control at high speeds. A more intensive effort in these fields is needed in order that the great improvements in performance now known to be possible can be realized in the actual produc- tion of military aircraft, engines, and missiles, which represent such an important and costly part of our defense program. For these reasons, I am recommending additional appropriations for both 1955 ^^d 1956 to increase the Committee's research effort in fields of critical military importance. Postal service. — Considerable progress is being made in provid- ing better postal service to the American people at lower cost to the taxpayer. Movement of first-class mail has been expedited. Substantial investments have been made in capital improvements and in skilled personnel which are just beginning to pay dividends. Long-term leases are being negotiated which will permit acqui- sition of needed modem postal facilities. Promising experiments in new equipment are underway which, if successful, will revo- lutionize mail-handling techniques. 170 Dwight D. Eisenhower^ ig^^ ^ 17 Largely because of these savings, the net expenditures of the Post Office under existing laws have been reduced to the lowest level in the last 8 years. The increased postal rates which I rec- ommended in my special message to the Congress would add 400 million dollars to postal revenues. This would be enough to cover the recommended pay adjustments of 130 million dollars and re- duce net expenditures to 24 million dollars in the fiscal year 1956. These steps, together with further major economies now in proc- ess, should cause the postal system to become self-supporting in the near future. As a long-run solution, an independent coromis- sion should be created to review future rate changes proposed by the Postmaster General in accordance with a basic formula laid down by the Congress. Urban development and redevelopment. — Under the new ur- ban renewal program authorized by the Housing Act of 1954, local public agencies, jointly with forward-looking private inves- tors, are developing and executing plans to rebuild our major cities and prevent the decay which is making large urban areas unfit for sound economic investment or family life. The act strengthens the previous slum clearance program by (a) requir- ing localities as a condition of Federal aid to have a workable plan to eliminate substandard housing and neighborhood decay; (6) providing Federal grants and loans for neighborhood rehabil- itation, as well as redevelopment projects; and (c) authorizing the Federal Housing Administration to insure mortgages on homes in blighted areas and to help finance new homes for families displaced by slum clearance. By the end of the fiscal year 1956, an estimated 22 slum clear- ance projects will be completed, and 364 other slum clearance and urban renewal projects will be underway. Net expenditures will increase from 56 million dollars in 1955 to 94 million dollars in 1956, largely for capital grants to pay the Federal share of project costs. On the basis of experience thus far, private investment and local government expenditures for slvim clearance and urban re- 171 ^ 17 Public Papers of the Presidents newal projects will be about four to five times as great as the Federal capital grants. Before the end of the current fiscal year, the present 500 million dollars in contract authority for capital grants will be committed. Accordingly, to permit the program to go forward without delay, I am recommending legislation to provide an additional 100 million dollars in capital grant authority in the fiscal year 1955, and 200 million dollars in each of the two subsequent fiscal years. Federal Housing Administration, — The Federal Housing Ad- ministration is now authorized to insure larger loans with longer maturities, as well as loans to support the urban renewal program and to help servicemen buy homes. Thus, more of our people can buy their own homes. Because of the more liberal terms provided and the increased availability of mortgage credit, applications for mortgage insurance have risen substantially in recent months. On the basis of the present outlook, construction or purchase of almost 800,000 homes and improvement or repair of 1,500,000 other homes will be financed during the fiscal year 1956 by private lenders backed by Government insurance commitments. The total private investment in both new and existing homes by homeowners and builders, underwritten by the Federal Hous- ing Administration, in the fiscal year 1956 will amount to an estimated 8.3 billion dollars. To meet the expanding needs for mortgage insurance for the remainder of the fiscal year 1955 and through 1956, approximately 5 billion dollars in additional insurance authority will be required. In recent months both legislative and administrative measures have been taken to eliminate abuses in insurance programs. The budget also includes additional funds to assure more adequate supervision. The increase in premium collections and other income will, however, more than offset the increased supervisory expenditures, and receipts are estimated to exceed expenditures by 67 million dollars in the fiscal year 1956, compared with 42 million dollars in 1955. Federal National Mortgage Association, — Under the Housing 172 Dwight D. Eisenhower^ igs^ ^ 17 Act of 1954, the Federal National Mortgage Association was re- constituted to comprise financially separate activities for the sec- ondary market, special assistance, and management and liquidat- ing functions. Except for the initial transfer of the Government capital investment of 92 million dollars from the earlier associa- tion, the secondary market activity will be financed entirely from private funds and its operations are, therefore, not reflected in this budget. The purpose of this activity is to make sure that mort- gage funds are available to meet normal needs in all parts of the Nation at market rates of interest. Private capital will be gradu- ally substituted for the Government investment until the Govern- ment funds are fully repaid and the private owners take over responsibility for the program. Expenditures and receipts for the other two activities are in- cluded in the budget totals. Under the special assistance pro- gram, the President can authorize limited purchases of mortgages (a) to meet acute housing needs of groups or areas unable to obtain private financing, or (&) to prevent a decline in housing activity. In the fiscal years 1955 and 1956, the Association ex- pects to support the financing of about 90,000 housing units, pri- marily for the urban renewal program. This support will be mainly through commitments to purchase participations in pri- vate mortgages. Under the management and liquidating func- tion, the Association will administer the 3.1 billion dollars of mortgages and imdisbursed commitments outstanding at the beginning of the fiscal year 1955. Primarily because of large purchases imder previous commit- ments, expenditures by the Association will exceed receipts by 243 million dollars in the fiscal year 1955. In 1956, however, net receipts of 193 million dollars are anticipated. Veterans^ housing loans. — ^The Veterans Administration pro- gram of direct housing loans expires on June 30, 1955. These loans are made only where guaranteed private mortgages are not available or cannot be secured through the voluntary home mortgage credit program. I recommend legislation continuing 173 ^ 17 Public Papers of the Presidents this program until expiration of the veterans' loan guaranty pro- gram for World War II veterans on July 25, 1957. If permis- sion is granted to use receipts from repayments, as well as from sales, new obligational authority of 100 million dollars should be adequate for the fiscal year 1956. Public housing. — ^The aids contained in the Housing Act of 1954, and especially the aids to low-cost housing, will provide the opportunity for the private housing industry to satisfy, eventually, the housing requirements of families of all income groups. In the meantime, it is essential to continue a minimimi amount of low-rent public housing construction to meet the critical needs of the lowest income families and to help provide a new place to live for families displaced by urban renewal and slum clearance operations. I recommend a 2 -year authorization for contracts with local housing authorities to pay contributions for an additional 35,000 low-rent units each year. Funds neces- sary for this purpose have been included in this budget. Liquidation of the emergency World War II public housing program is accelerating. By June 30, 1956, two-thirds of the 195,000 units owned by the Government at the end of 1954 ^^ have been sold, transferred, or demolished. Meanwhile expendi- tures for the defense housing program started during the Korean emergency will be almost completed. Gross expenditures for public housing programs, chiefly tempo- rary construction loans to local authorities and annual contribu- tions for completed projects, are estimated at 604 million dollars in 1956. Receipts, mostly from private refinancing of these Federal loans and rental and sale of emergency housing, will total an estimated 570 million dollars, leaving net expenditures of 34 million dollars. Other housing and community facilities, — ^By the end of 1956, the Housing and Home Finance Agency will have approved 297 loans to finance construction of dormitory rooms for about 63,800 students and homes for 1,500 faculty and student families at col- leges and universities throughout the Nation. In the past 2 years 174 Dwight D. Eisenhower^ ig^^ ^ 17 the Agency has helped to develop a private market for long-term dormitory revenue bonds, formerly rarely bought by private investors. The increasing success in attracting private funds is a major reason for the decline in net expenditures from 41 million dollars to 28 million dollars. Civil defense and disaster relief. — Expenditures for civil de- fense are classified with expenditures for dealing with peacetime disasters in the commerce and manpower section, but the program is discussed in the major national security section of this message in view of its close relation to continental defense. Promotion of defense production. — Gross expenditures for pro- motion of defense production are expected to decline from 1,061 million dollars in 1955 ^^ 638 million dollars in 1956. Most of this reduction is in the synthetic rubber and tin programs. In accordance with the terms of the Rubber Producing Facilities Disposal Act, the estimates assume that these plants will be sold or leased before June 30, 1955. Most of these facilities have al- ready been sold, subject to congressional approval. Moreover, since purchases of tin for the national stockpile have now been completed and world supplies are ample to meet current needs, no provision is made for continued operation of the Government tin smelter. Gross expenditures under the Defense Production Act will con- tinue at relatively high levels, primarily to meet previous commit- ments made to provide guaranteed markets, loans, or grants to producers of critical defense materials. Net expenditures will amount to only a fraction of gross disbursements, since most of the materials purchased are being sold to the stockpile of strategic and critical materials to meet its objectives, and to industry. The stockpile program is discussed in the major national security section of this message. Under present law, the Defense Production Act expires on June 30, 1955. Since important gaps in our mobilization pre- paredness require continued Govemment encouragement, I rec- ommend extension of the act with modifications for 2 years. No 175 ^ 17 Public Papers of the Presidents increase in the present borrowing authority of 2.1 biUion dollars is anticipated at this time. Business loans and guaranties. — Liquidation of business loans made by the Reconstruction Finance Corporation is well ad- vanced. During the 3-year period from June 30, 1953, to June 3<^5 19565 business loans and commitments will have been reduced from 458 million dollars to about 53 million dollars through re- payments, refinancing, and sales to private financial institutions. Loans to small businesses by the Small Business Administra- tion have been expanding substantially during the last year. Loans are made only if private credit on reasonable terms is not available, and more than two-thirds of the loans so far extended have been made jointly with private banks. The present author- ity expires on June 30, 1955, and I recommend its extension. Assuming continuance of the 1955 level of operations, about 1,200 new loans would be authorized in the fiscal year 1956, and additional appropriations of 67 million dollars would be required. Labor placement and unemployment compensation adminis- tration.— ^Budget expenditures under existing law for administer- ing the joint Federal-State program of employment services and unemployment insurance are estimated at 253 million dollars for the fiscal year 1956, 50 million dollars higher than in the current year. About 29 million dollars of this increase is nonrecurring and results from a change in the timing of funds advanced to the States; this does not affect the level of operations. The rest is largely for State-approved increases in salaries paid to the State employees who administer the program, and for improvements in the placement service. Legislation enacted last year provides for transferring annually to the imemployment trust fund the excess of receipts from the Federal unemployment tax over operating costs of the program. The excess received during 1955, to be transferred in the fiscal year 1956, is estimated at 87 million dollars, an increase of 23 million dollars over the amount transferred this year. These funds are to be used to set up a reserve of 200 miUion dollars 176 Dwight D. Eisenhower^ ^955 ^ ^7 from which loans can be made to those States which deplete their own reserves for benefit payments. The present law authorizing the recruiting of qualified work- ers from Mexico for seasonal farm employment in the United States expires December 31, 1955. However, the need for this service will continue and I shall recommend its extension. Ac- cordingly, my budget reconmiendations, including proposed legis- lation, provide funds for the entire fiscal year 1956. Other labor and manpower programs. — Industrial injuries have been significantly reduced through the efforts of both labor and management, but these injuries still cost us 40 million man- days every year. This is a heavy tax on our economic progress, as well as on the individual employees and employers. Work- men's compensation programs — an important facet of the indus- trial safety problem — ^have lagged behind other social insurance programs in recent years. Although workmen's compensation is predominantly a State program, the Federal Government can and should stimulate improvement — especially through studies and clearing house activities. The budget for the fiscal year 1956 provides for studies which will enable the Department of Labor to promote more effective safety programs and assist States in improving their workmen's compensation standards. In addi- tion, I shall recommend legislation which, over the next few years, should aid the States in further developing induistrial safety programs. Two million dollars are included for this pur- pose in 1956. At present all workmen's compensation payments to Federal employees are provided from a single appropriation. To encourage better safety practices, I shall recommend legislation to shift the financing of some of these benefit payments to the employing Federal agency. Legislation will also be recom- mended to liberalize workmen's compensation benefits paid to longshoremen and harbor workers under laws administered by the Federal Government. The apprentice training program of the Department of Labor 177 tj 17 Public Papers of the Presidents has contributed to improvement of the skill and versatility of thousands of workers. As our economy continues to expand, many more skilled workers are needed. Accordingly, the budget proposals provide for redirecting and improving Federal partici- pation in these training activities. As part of a governmentwide program to improve our economic statistics, this budget includes 1.5 million dollars for additional work during the fiscal year 1956 in the labor and manpower field, covering primarily statistics on employment and unemploy- ment, and for basic data for mobilization and civil defense. Unemployment trust fund. — ^The following table shows receipts and expenditures of the unemployment trust fund. Unemployment Trust Fund [Fiscal years. In millionsl 1954 1955 1956 Item actual estimated estimated Balance in fund at start of year $9, 246 $8, 993 $8, 785 Receipts: Deposits by States and railroad unemployment taxes 1,268 1,219 1,421 Interest 224 220 204 Transfer from general fund 64 87 Payments : State and railroad withdrawals for benefits . — i , 745 — 1,712 — i , 594 Net accumulation (+) or withdrawal (— ) —253 —209 -j- 1 18 Balance in fund at close of the year 8, 993 8, 785 8, 903 GENERAL GOVERNMENT Net expenditures for general government activities are esti- mated at 1.6 billion dollars for the fiscal year 1956, an increase of 344 million dollars from the fiscal year 1955. The higher level of expenditures in 1956 reflects primarily [a) the proposed resump- tion of payments to the Civil Service Retirement Fund for the Government's share of the cost of current benefits for retired Federal civilian personnel and (&) substantially higher payments arising from claims against the Government. Other expenditures 178 Dwight D. Eisenhower, 1Q55 ^ 17 for general government cover in the main the costs of such basic Government services as making and enforcing laws, collecting taxes and customs, managing the public debt, and safeguarding and maintaining public buildings and records. Special allowances are made in the reserves for proposed legis- lation of this budget for adjustments in the pay and benefits of civilian employees of the Government which I recommended recently in a special message to the Congress. The proposed bene- fits include a new system of contributory hospitalization and health insurance. Legislative functions. — Expenditures for legislative activities are estimated to increase from 51 million dollars in 1955 to 63 million dollars in 1956, primarily because of construction of the new Senate Office Building. Federal financial management. — To enable the Internal Rev- enue Service to make still more progress in equitable and effective enforcement of the revenue laws, I am recommending increased appropriations of 12 million dollars to extend the audit of tax re- turns. The improved enforcement should result in increased tax receipts from those who have not been paying their fair share. In addition, I am reconmiending legislation to reduce the fre- quency of information returns submitted by employers withhold- ing income and social security taxes and to strengthen enforce- ment of these taxes. These amendments will not only cut down the reporting burden on private business, but will also increase budget receipts, especially in later years. Total expenditures for collection of taxes and customs, for administration of the public debt and for other Federal financial management are estimated at 450 million dollars for the fiscal year 1956. Central property and records management. — ^The General Services Administration is making substantial and continuing economies in the govemmentwide management of property and records. Central motor pools are planned for 15 cities, with important savings anticipated. Substantial reductions in office and warehouse space are continuing. As a result of examination 179 § 17 Public Papers of the Presidents General Government [Fiscal years. In millions] Program or agency Legislative functions Judicial functions Executive direction Federal financial management: Tax collection Customs collection, debt management and other Other central services: Central property and records management .... Civil Service Commission Other Retirement for Federal civilian employees: Present programs Proposed legislation Unemployment compensation for Federal civilian employees Protective services and alien control: Federal Bureau of Investigation Immigration and Naturalization Service Otiier Territories, possessions, and District of Columbia: District of Columbia Territories, possessions, and other Other general government: Payment of claims and relief acts Weather Bureau Other Total Deduct applicable receipts Expenditures Recom- mended new obliga- 1954 actual 1955 1956 estimated estimated thority for 1956 $45 29 II $51 33 13 $63 34 II $50 33 II 277 273 285 286 171 164 165 164 1 52 16 16 156 15 21 162 17 21 164 17 24 34 32 2 216 2 216 33 40 40 75 40 31 79 44 23 91 45 25 88 45 24 13 43 25 49 34 48 32 45 213 26 20 163 25 23 250 29 32 33 30 1,212 1,225 1,569 4 3 3 * 1*305 Net budget expenditures i, 209 i, 222 i, 566 J Compares with new obligational authority of 1,041 million dollars in 1954 and 1,056 million dollars in 1955. of Government real property holdings, the sales program of sur- plus real property will be accelerated, with the desirable result of returning this property to local tax rolls and increasing budget receipts. In this budget, I recommend added funds for more adequate 180 Dwight D. Eisenhower^ ig^^ ^ 17 repair and improvement of public buildings to protect the Gov- ernment's investment. Estimated expenditures for central prop- erty and records management will therefore rise from 156 million dollars in 1 955 to 1 62 million dollars in 1 956. To help meet the most critical needs for office space, construc- tion of several general-purpose buildings has already been ap- proved imder the long-term lease-purchase contract authority provided by the Eighty-third Congress, and additional buildings will be considered as quickly as determinations of need and cost can be made. These buildings will be purchased through annual appropriations for rental payments. Civil Service Commission. — Under the recent revisions of the Federal civil service rules, a substantially higher proportion of civilian employees will be on a competitive basis. The transition to this system will require additional funds for the Civil Service Commission for administering the necessary examining program, both in the continental United States and overseas. Retirement for Federal civilian employees. — The civil service retirement and disability system should be financed on a more satisfactory basis. Employees now contribute 6 percent of pay, covering about one-half the currently accruing cost, and the Gov- ernment is responsible for the rest of the cost. In the past the Government's share of payments to this fund has not been pro- vided on a consistent basis and in the last 2 years appropriations have been deferred pending the report of the Committee on Re- tirement Policy for Federal Personnel. The Committee's report to the Eighty-third Congress establishes the necessity for a sound and lasting financial basis for the civil service retirement system. Financing of the civil service system is a problem requiring careful consideration because of its importance to the Federal career service. For 1956 I am recommending a Government contribution of 216 million dollars which is estimated to be the difference in that year between the Government's share of cur- rent benefit disbursements and the interest earned on its part of the fund. This will serve to maintain at its present level the 181 ^ 17 Public Papers of the Presidents equity the Government already has built up in the fund through its past contributions. Other budget expenditures for retired Federal civilian em- ployees are estimated to decline from 32 million dollars in the fiscal year 1955 to 2 million dollars in 1956 because payments for cost-of-living increases under the act of July 16, 1952, will be made from the trust fund. Unemployment compensation for Federal civilian em- ployees.— Legislation enacted by the last Congress provides for the payment of unemployment compensation benefits to Federal civilian workers. These payments are similar to those available to most workers in private industry and are being paid through existing State unemployment compensation agencies. Pay- ments reimbursing the States for the cost of this program for the fiscal year 1955 are estimated at 33 million dollars, requiring a supplemental appropriation of 20 million dollars. Expendi- tures are estimated to rise in 1956 to 40 million dollars because for the first time the plan will be in operation for a full fiscal year. Protective services and alien control. — Increased expendi- tures for protective services and alien control are recommended to strengthen the border patrol operations of the Immigration and Naturalization Service and to maintain the Federal Bureau of Investigation at its present effectiveness in the fiscal year 1956. The Bureau's work has been increased by added responsibilities for internal security. At the same time, its costs have risen be- cause of recently enacted legislation providing premium pay for FBI agents for overtime and holiday work. District of Columbia. — ^Under the new public works program authorized by the Congress last spring, Federal expenditures for the District of Columbia will increase to 34 million dollars in the fiscal year 1956. Of this amount, 22 million dollars repre- sents the Federal Government's share in the costs of District government and public services; loans of 12 million dollars will 182 Dwight D. Eisenhower, ig^^ ^ 17 be made to the District for construction of highways, sewers, and waterworks. Weather Bureau. — ^To increase the effectiveness of the weather service, I am recommending replacement of certain obsolete facilities with modem observational equipment. This budget provides for the Weather Bureau to take over operation of 25 upper-air stations and perform certain other activities basic to civilian weather service which are now carried on by the Depart- ment of Defense. These proposals will carry out recommenda- tions made by an advisory committee of eminent meteorologists. With the improved program, the expenditures of the Weather Bureau for the fiscal year 1956 are estimated at 29 million dol- lars, an increase of 4 million dollars over 1955. Claims and relief acts. — Payments for claims and relief acts are estimated at 250 million dollars for the fiscal year 1956, an increase of 87 million dollars over the 1955 estimate. The in- crease consists entirely of higher payments for certified claims, which represent, in the main, bills presented for payment after the appropriation involved has lapsed. In the fiscal year 1955 certified claims are expected to be lower than in 1956 because claims which would otherwise have been paid from this account are being paid from certain Department of Defense appropria- tions which were extended by the Congress for i year. INTEREST The large interest payments by the Federal Govemment arise primarily from the tremendous increase in the public debt during World War II. In the fiscal year 1956 they accoimt for about 10 percent of total budget expenditures. The size of the public debt and interest rates on the debt determine the general level of interest expenditures; variations may also occur from year to year from changes in interest payment provisions of specific securities. Interest on the public debt. — Interest payments on the public debt in the fiscal year 1956 are estimated at 6.3 billion dollars. 183 ^ 17 Public Papers of the Presidents Interest [Fiscal years. In millions] Recom- mended Budget expenditures {net) new obli- gational 1954 1955 1956 authority Item actual estimated estimated for 1956 Interest on public debt $6, 382 $6, 475 $6, 300 $6, 300 Interest on refunds of receipts 83 78 73 73 Interest on uninvested trust deposits 5 5 5 5 Total 6,470 6,558 6,378 16,378 1 Compares with new obligational authority of 6,470 million dollars in 1 954 and 6,558 million dollars in 1955. Although the debt has increased, interest payments are estimated to be 175 million dollars less than in the current year. This decrease reflects primarily the reduction in the calendar year 1954 in interest rates on the outstanding debt. Another reason for the decrease is the unusual concentration in 1955 of interest payments on part of the public debt refunded this year. As an example of both reasons, in the fall of 1954, 7.5 billion dollars oi 2% percent certificates were refunded into a i]/i^ percent cer- tificate and a 2}/8 percent bond. A full year's interest was paid in the fiscal year 1955 on the maturing 2 5^ percent certificates; in addition, the first interest payment on the new 2J/8 percent bond will be due in 1955. For these reasons interest payments in 1955 on this 7.5 billion dollar segment of the debt will be about 130 million dollars more than in 1956. We have made progress in improving the structure of the pub- lic debt by lengthening the average maturity. Nevertheless, the average interest rate on the debt has declined from 2.41 percent to 2.29 percent during the last 12 months. In this message, we have stated our objectives and our pro- posals for the coming year. In preparing this budget we have weighed the requirements of each element of our strength in order that we may allocate our 184 Dwight D. Eisenhower^ IQ55 ^ 18 resources according to the requirements of the whole. To each is apportioned the full measure required by relative need and permitted by available means. At the same time our awareness of the necessity for efficient, economical, and moral Government and the development of partnerships with State and local gov- ernments and with private enterprise permit reductions in total expenditures. A growing prosperity will result in increasing revenues and should make possible both a balanced budget and lower tax rates in the near future. Dwight D. Eisenhower NOTE : As printed, the following have by function and agency, and budget been deleted: (i) three summary receipts; (2) references to special tables setting forth new obligational analyses appearing in the budget authority and budget expenditures, proper. 1 8 ^ The President's News Conference of January 19, i955, [ This is a complete transcript of the news conference of this date. Those portions of the President's replies which were not released for broadcasting or direct quotation at that time are enclosed in brackets. [Television, newsreel, and