1954: United States

A summary of United States foreign affairs, political events, and legislative and judicial developments in 1954 is presented below.

FOREIGN AFFAIRS

Korea.

The Korean situation continued to cause considerable uneasiness in the United States throughout 1954. Early in the year the Neutral Nations Repatriation Commission, headed by India, was charged with the responsibility of explaining to the prisoners of war their rights with regard to repatriation. All prisoners not repatriated at the end of 120 days were to be freed. Just before the deadline on January 22, India took independent 'compromise' action by suggesting that she would hand back the prisoners to their former detaining sides but warned that the prisoners must not be freed without the consent of both sides.

In the meantime members of the General Assembly of the United Nations were polled on whether they favored reconvening the Assembly on February 9 to discuss Korea. The United States and other nations indicated that they could not decide that question by the January 22 deadline but wished the prisoner-of-war issue settled first.

At the same time it was feared that South Korea might take independent action to upset the truce. Syngman Rhee announced that his government would feel free to take independent action on April 23, but the United States made it clear that such a step would not be supported. President Eisenhower then sent the U.S.-Korean Mutual Defense Treaty to the Senate for ratification. This treaty did not commit the United States to support Korea in any independent action. It was approved by a vote of 81-6, with the understanding that it would be applied only in accordance with U.S. constitutional process.

Meanwhile India carried out her threat of releasing the prisoners, including 21 Americans who had refused repatriation and against whom the U.S. Army announced it was preparing discharges as 'undesirables.'

New Foreign Policy Concept.

Early in 1954 the United States began to develop the outlines of a new world strategic concept. Secretary of State John Foster Dulles gave the basic elements in this new policy as follows: (1) more reliance would be placed on community deterrent power; (2) only in situations which definitely contribute to our own military strength will foreign aid be granted; (3) the 'long haul' will be the major consideration so as to preserve and not exhaust the economic strength of our allies and ourselves; and (4) the 'policy carries with it the need to abstain from diplomatic moves that would seem to endorse captivity.'

Berlin Conference.

In January the United States, along with England and France, sent a note to Moscow indicating a willingness to meet with Russia in Berlin on the 25th in an effort to work out a plan for relieving East-West tensions, but there was little expectation of producing anything in the way of settlement.

This was the first Big Four Foreign Ministers' meeting since 1949. When the conference opened there was no fixed agenda, and the talks ranged over the whole subject of East-West differences. The main specific issue, however, seemed to be the unification of Germany. British Foreign Secretary Anthony Eden presented a detailed plan for such unification which called for free elections throughout Germany, the adoption of a constitution, and the formation of an all-German government responsible for negotiating a peace with the Big Four. But Soviet Foreign Minister Molotov bitterly opposed the plan, charging that the West was moving 'to drag a unified Germany ... into the European army,' which would in turn 'promote the resurgence of German militarism.'

Another significant issue which faced the conference was Communist China. Russia had long demanded that Red China be accepted into the world community as a major power. The United States had objected on the ground that China was an aggressor in Korea, and there was still tremendous pressure in the United States for continuing the ban. Both France and England favored the Russian viewpoint.

As the conference got under way, Molotov called anew for a Big Five conference, including Communist China, to discuss the situation in Indochina. He also suggested a world-wide disarmament conference, also including the Red Chinese. The United States eventually agreed to this proposal.

The question of atomic disarmament was an important issue at the Berlin Conference, as an outgrowth of President Eisenhower's plan for an international pool of atomic material for industrial uses which did not include atomic weapons. The Russians insisted on some system for 'prohibition' of atomic weapons, but obviously this was not acceptable to the United States.

Another important issue in the conference was the matter of East-West trade. Molotov attempted to drive a wedge between the Western powers by offering to trade with them along certain lines. This suggestion put the Western ministers on the defensive.

Then Molotov made a plea for a general European treaty, which would pledge the signatories to refrain from any attack against one another. Membership would be open to all European states including democratic West Germany and Communist East Germany 'as parties enjoying equal rights.' Members could not enter any alliance against collective security in Europe. For obvious reasons the Western powers refused to consider this proposal.

The question of an Austrian treaty was also discussed at the conference. It had already been decided that the Allied occupation troops should be withdrawn from Austria, but now Molotov proposed that such a treaty should not go into effect until Germany had been unified and until Trieste had been demilitarized. This suggestion was unanimously rejected by the Western ministers.

On February 18, the 25-day conference adjourned. The ministers had held 27 sessions totaling 91 hours and 20 minutes, but without any concrete achievements except the agreement to meet again on April 26 in Geneva, with Communist China and other Far Eastern states whose armed forces had participated in the Korean hostilities. The purpose of the meeting was to reach a peaceful settlement of the Korean question and to discuss the problem of restoring peace in Indochina.

Policies on Indochina and China.

In the meantime the United States was faced with a dilemma in regard to Indochina, where the Vietminh Communists were making disastrous military gains. The United States seemed to have three choices: (1) encourage the French to negotiate a settlement with the Reds; (2) continue to give military aid to the French without becoming directly involved ourselves; or (3) send military forces into Indochina.

Already some 250 U.S. Air Force technicians had landed in Indochina from U.S. air bases in Japan, and more were promised. President Eisenhower appointed Under Secretary of State Walter Bedell Smith and Deputy Defense Secretary Roger Kyes as a subcommittee of the National Security Council to draw up a plan of action with the Joint Chiefs of Staff. The President emphatically assured Congress, however, that he had no intention of involving the United States in the hot war of Indochina.

At the same time there was considerable speculation in the United States as to the question of diplomatic recognition of Communist China. There was great fear in some quarters that the proposed Geneva Conference, if attended by the Communists, would be a prelude to diplomatic recognition. It was thought that such a step would be appeasement. Others felt that the United States could not afford a too-rigid policy, especially in view of the attitude of France and England.

As to Indochina, Secretary Dulles announced in a speech to the Overseas Press Club of America in New York, early in April, that the United States did not intend to accept a Communist victory there, and such a threat should be met with united action, even if this involved serious risks. He further stated that the United States had no intention of recognizing Communist China, and he opposed its admission into the United Nations because it was a 'regime which is a convicted aggressor, which continues to promote the use of force in violation of the principles of the United Nations.' He further declared that he intended to discuss only Korea and Indochina at the Geneva conference.

While the United States was engaged in examining what was called the 'New Look' in our foreign policy, Secretary Dulles flew to London and Paris for four days of diplomatic dealings to try to iron out the many differences of opinion which had developed among the Allies. His efforts appeared to be generally successful. Both France and England agreed to consider 'united action' with the United States and seven anti-Communist Asian states to prevent Communist absorption of Indochina. Both the United States and England pledged to remain in Europe, and France seemed to be nearer acceptance of the European Defense Community (EDC).

Nevertheless, Vice President Richard Nixon, in a speech before the American Society of Newspaper Editors, declared that if necessary the United States was prepared to put American troops into Indochina to avoid further Communist expansion in Asia. This was the first such statement from an Administration figure and it touched off a furor of comments, mostly in opposition to this view.

Geneva Conference.

In the midst of this controversy the foreign ministers from 19 countries, including Communist China, convened in Geneva at the invitation of the Big Four to consider the question of Korea and Indochina. But the latter overshadowed the former, and on this issue there was a wide breach among the Western powers. Under Secretary of State Smith represented Secretary Dulles during most of the conference.

While the conference was in session, the French stronghold of Dienbienphu fell to the Vietminh forces, and the war-weary French government expressed a willingness to come to a truce with the enemy, even at the cost of concessions. To this Secretary Dulles objected, but he was overruled by France and England who favored negotiations. Thus the way was paved for an Indochinese conference, to include the Western Big Three, the three Associated States of Indochina, and the three Communist states of Russia, China, and Vietminh.

Friction Among the Allies.

In preparing for the conference the United States seemed to be making another adjustment of its defense policy, which Secretary of Defense Wilson called a 'second New Look.' Dulles, in a news conference, said that Indochina was extremely important, but even if it should fall the United States would not give up in despair. In some quarters this was interpreted to mean that the United States was preparing to write off Indochina, but President Eisenhower attempted to allay these fears.

Differences of opinion on the handling of the Southeast Asian problems brought the United States and England very close to an open split. President Eisenhower even proposed a multilateral pact with the Southeast Asian countries, without Britain if necessary, for the protection of all against Communism.

At this point the French presented a plan for an immediate Indochina truce. This was branded by the United States as akin to surrender, while Britain took the position that there could be no action without broad popular support, especially in Asia, and that such support would not be forthcoming until the possibilities for truce had been fully explored at Geneva.

These differences of view increased the friction between the two allies, which both British Foreign Secretary Eden and Secretary Dulles attempted to reconcile. Finally the State Department announced that the United States, Britain, France, Australia, and New Zealand had agreed to staff talks in Washington to survey the military situation in the Far East. The talks were largely exploratory and secret, and no firm decisions were made public.

When it ultimately became clear that the United States had no intention of bailing France out of Indochina, and when French Foreign Minister Georges Bidault was unable to bring about an early cease-fire there, the government of Premier Laniel was forced out of office on a vote of confidence. The vote was an unmistakable setback for the Western effort to check Communist aggression, and it added urgency and uncertainty to the problem of organizing the defense of Southeast Asia. As for the United States, the Administration was virtually prepared to write off Indochina by this time but was uncertain about defending the rest of Southeast Asia. At least for the time being, there seemed to be little chance for any early action by the United States or the allies against the Communists there. The United States acknowledged that united action was a project for the future.

Churchill-Eisenhower Meeting.

In an effort to reduce the friction between England and the United States, Prime Minister Sir Winston Churchill and Foreign Secretary Eden spent a weekend in Washington in informal talks with President Eisenhower and Secretary Dulles. According to Churchill, the meeting was for the purpose of talking over a few 'family matters' and to make sure there were no misunderstandings.

At the end of the four and a half days of conversations, two papers were issued setting forth the results. One was to the effect that the President and the Prime Minister were determined that West Germany should become an equal partner in the Western community and part of the common defense, and this could best be achieved through the European Defense Community Treaty. The two governments also agreed on the maximum technical co-operation on atomic energy permitted by U.S. law.

There was also the declaration that both countries were searching for world peace and offered the hand of friendship to any and all nations. They further declared that they would never formally accept the subjugation of sovereign states now in bondage or the division of others. They favored a drastic and general reduction of armaments.

Views on China.

It was later revealed that Churchill had told the President that it was inevitable that China be brought into the United Nations, and this set off heated arguments in the United States. In the Senate, Majority Leader William F. Knowland declared that 'on the day that Communist China is voted into membership in the United Nations, I shall resign my majority leadership ... and devote my full efforts ... to terminate United States membership in that organization.' He was supported in this view by Senate Democratic Leader Johnson and others.

President Eisenhower said he was completely and unalterably opposed to admitting China to the United Nations under the circumstances which existed at that time. He also said, however, that he had not reached any decision on the United States withdrawing from the United Nations if that nation were admitted. House Speaker Martin agreed with the President that the United States should not say in advance what it would do if admission were granted. Senator George, ranking minority member of the Senate Foreign Relations Committee, took a similar position.

Peace in Indochina.

While this debate was in progress the Laniel government in France fell, and a new premier, Pierre Mendès-France, took office on the strength of a pledge to get peace in Indochina or resign in 33 days (by June 20).

There was increasing feeling in the United States that Indochina was lost. Secretary Dulles declared that he would consent to U.S. military intervention if certain conditions were met, but it was obvious that the United States had little intention of going into Indochina.

In the meantime, the new French Premier, acting as his own Foreign Minister, met Chou En-lai of Communist China at Berne and attempted to work out an agreement for a truce and cease-fire in Indochina. Chou also met Indian Premier Nehru at New Delhi, and apparently the two came to an understanding regarding Southeast Asian problems.

As for the Korean question, the Geneva Conference gave it hardly a notice, so concerned were the delegates with the Indochina issue. As a matter of fact the Korean talks had been paralyzed for weeks, and finally in the middle of June the 16 Korean war allies issued a statement to the effect that no agreement could be reached. The result was not unexpected. Early in July the Geneva talks were resumed, although the United States was not represented by a top-level diplomat.

When it began to appear that Mendès-France would fail to achieve a peace in Indochina, largely because of U.S. opposition to the French truce terms as too favorable to the Communists, Secretary Dulles was induced to journey to Paris for talks with the French Premier and Anthony Eden. With the blessing of Dulles, Under Secretary Smith went back to Geneva soon afterward.

Meanwhile it was announced that a truce had been reached for the complete cessation of hostilities in Vietnam, and within two days similar agreements were made for the states of Laos and Cambodia. Official statements were drawn up binding the Great Powers to respect the truce. Immediately Russia asked the Western Big Three for new Big Power talks on Germany. The United States, however, in a unilateral declaration said that it would refrain from the threat or use of force to disturb the cease-fire agreement and would view any renewal of aggression as seriously threatening international peace and security.

Southeast Asia Conference.

While these actions were taking place, the United States was pressing its plans for a Southeast Asia Treaty Organization along the lines of NATO. Two sets of informal diplomatic proposals were suggested. The United States asked that a meeting of representatives of the United States, Britain, France, Australia, New Zealand, the Philippines, and Thailand be held in Baguio, the Philippines, on September 6, to establish SEATO. Britain asked that India, Burma, Pakistan, Indonesia, and Ceylon attend a conference in September in Singapore in which they could be associated with SEATO. The U.S. suggestion was accepted, but there was a difference of opinion as to the time and place, and it was questionable whether any success would result in the absence of the main Asian countries, who refused to participate in the American proposal.

It was finally agreed to hold the conference in Manila. Eight nations were represented — the United States, Britain, France, Australia, New Zealand, the Philippines, Thailand, and Pakistan. India, Burma, Ceylon, and Indonesia refused to attend. They feared that a military partnership with the West might aggravate their already delicate relations with Communist China and Russia. The meeting was hailed by Dulles as 'one of the most important international conferences of our time.'

Manila Pact.

The Manila Pact drawn up by the eight countries applied to their territories, plus Laos, Cambodia, and free Vietnam, but excluded the Pacific area north of 20° 20' N. lat. Thus Taiwan was not included. Each member state pledged to resist Communist aggression against any one of them in accordance with its constitutional processes, and all would consult immediately on measures for the common defense. They pledged to strive for self-government and independence.

The U.S. and the Latin American Republics.

The tenth Inter-American Conference convened in Caracas, Venezuela, early in March 1954. More than 1,000 delegates came from the 20 American republics. From the beginning it was plain that the central question of the conference would be relations between the United States and Latin America, with specific issues being trade and Communism.

There was a strong feeling among most of the delegates that the United States should provide more economic aid to the other states, but Secretary Dulles, while indicating willingness to encourage such aid through private investments, insisted that it was necessary for the Latin American states to adopt a policy of cost-cutting rather than pegging raw materials through a system of production quotas and price fixing.

Secretary Dulles then called on the member nations to unite in a warning to Moscow to keep hands off the Western nations. He presented a proposal for emergency consultation in the event of Communist control in any American state. But this suggestion was interpreted by Guatemalan Foreign Minister Guillermo Toriello as a pretext for intervention in Guatemala in a return to what he called 'the policy of the big stick and dollar diplomacy.'

To implement the views of Secretary Dulles, his Assistant for Economic Relations, Samuel Waugh, proposed that a special economic conference on hemisphere problems be held in Washington (later changed to Rio). The suggestion met with almost universal agreement, and by a vote of 17 to 1, with Guatemala opposing and Mexico and Argentina abstaining, the resolution was accepted.

A resolution was also adopted which called for an end to British, French, and Dutch possessions in the Caribbean and Central and South American areas. The United States opposed the resolution, however, on grounds that it was an issue for the United Nations to decide.

Guatemala.

In Guatemala where Communist influence had been quite apparent for some time, there was considerable anti-United States feeling as reflected in the Guatemalan negative vote at Caracas on the issue of joint action against Communist infiltration and subversion in the Western Hemisphere. As a result, the United States refused to sell military arms to Guatemala.

Huge supplies of arms were secured from other sources, however, particularly from behind the Iron Curtain. This naturally aroused the United States and brought about a sharp cleavage in Guatemala between those friendly to the United States and those who opposed such interference. The official viewpoint was unfriendly to the United States. Secretary Dulles said that one objective of the arms shipment might be to build up a Communist stronghold in the Canal Zone area. It was also feared that the arms might be used to supply guerrilla bands in neighboring countries. All of these charges were denied by Guatemala. The United States announced that it was sending arms to Honduras and Nicaragua to counterbalance Guatemalan strength.

Finally the pro-Communist government of President Arbenz began to deal ruthlessly with its opponents at home, and virtual civil war broke out. According to Secretary Dulles, Guatemala was under a 'reign of terror.' Guatemala appealed to the UN Security Council charging 'foreign aggression,' but the United States discounted the charge and insisted that the problem be handled by the Organization of American States, rather than the United Nations. Russia, of course, at first vetoed this suggestion, but the United States was finally successful in blocking the Security Council discussion of the case. A commission was appointed to investigate the situation in Guatemala.

The civil war in Guatemala grew increasingly severe. Carlos Castillo Armas, an exiled officer in the Guatemalan army, became the anti-Communist leader. After 12 days of internal strife an anti-Communist junta headed by Armas took over the government and forced President Arbenz into exile. The United States announced formal recognition of Armas' government, thereby becoming the twelfth nation to establish formal relations with the new regime.

Atom Bomb Tests.

A serious development occurred in international relations when the Atomic Energy Commission announced that an explosion of a thermonuclear weapon had taken place at Bikini on Mar. 1, 1954, and that 28 U.S. personnel and 236 islanders had been exposed to radiation 'unexpectedly.' The blast was much greater than any previous one. Then two days later a Japanese fishing boat, with 23 members of the crew suffering from burns, put in at its home port. It had been in the prohibited blast area and had been caught in a fall-out of ashes.

These disclosures created general concern both abroad and at home. There was the feeling that the new weapon was too powerful to be used by the United States and her allies except in retaliation. Statesmen hoped that the H-bomb would truly be a deterrent to further aggression and war.

But at the same time there were fears and misgivings in various countries. Japan was angry because it was generally believed that the affected fishermen would soon die (one did die several months later), and the entire tuna-fishing industry of the country was in jeopardy. In some quarters of England there was the demand that an end be put to further testing and that there be rigid control of atomic weapons. In India Prime Minister Nehru called for a 'stand-still agreement' on further tests pending progress toward prohibition.

Just before the Geneva Conference in April a special subcommittee of the UN Disarmament Commission, composed of the United States, Britain, France, Canada, and the Soviet Union, began a series of atomic-control talks. Russia immediately demanded the inclusion of India, Communist China, and Czechoslovakia in the talks, but she did not press the point.

The people of the Marshall Islands filed a petition with the UN Trusteeship Council asking that further bomb testing in the area cease or, if absolutely necessary for the well-being of all the people of the world, that more protection be given the Marshallese.

In the Trusteeship Council Russia introduced a resolution to end the tests. India joined in the protest. U.S. delegate Samuel Sears argued that the United States had the right to make the tests and would stop only if Russia did likewise. Finally the Council approved, 9 to 3, a resolution which expressed confidence that greater protection would be offered the Marshallese in the future. It implied approval of future tests.

West German Sovereignty.

One of the most far-reaching achievements of 1954 was the granting of sovereignty to West Germany and allowing her to rearm under certain restrictions. Secretary Dulles was one of the leaders in the London Conference which brought this about after France had turned down EDC and new problems had developed as to the future of Western Europe.

Secretary Dulles at first suggested that the entire problem be dealt with at a special meeting of the NATO Ministerial Council and in consultations with Chancellor Adenaur. However, England proposed a meeting in London of the six EDC powers, — France, West Germany, Italy, and the Benelux countries, plus the United States, Britain, and Canada, and this suggestion was accepted.

London Pact.

The net result of the London conference was to bring a sovereign, rearmed West Germany into the Western Alliance under strict safeguards, but without any of the supranational controls of EDC. Under the London Pact Germany would be brought into NATO as the fifteenth member, and would be allowed to have an army of 12 divisions and a 1,000-plane air force. She pledged to abide by the continental arms control and not to manufacture atomic, biological, or chemical weapons.

LEGISLATION

State of the Union Message.

The second session of the 83rd Congress convened on Jan. 6, 1954. The following day President Eisenhower delivered his 7,000-word State of the Union message, which contained 32 proposals for legislation. Most of the recommendations followed the broad policies of previous administrations, but with differences in emphasis and method.

Continued firm support was urged by the President for the United Nations, for the 'cause of freedom on foreign fronts,' and for the drive for a united Europe, and the President also spoke of readiness to 'meet any renewal of armed aggression in Korea.' He favored continued military assistance to friendly nations, with the Secretary of Defense in charge of the program, and continued economic aid on a reduced scale. He further urged a determined effort to use atomic power 'to serve the usages of peace,' but at the same time preparedness to employ nuclear weapons 'against an aggressor if they are needed to preserve our freedom.'

In his domestic program the President recommended that American citizenship be taken away from persons convicted 'of hereafter conspiring to advocate the overthrow of this government by force or violence.' He also urged a program of 'economic preparedness' to 'develop a climate assuring economic growth.' He suggested a $5-billion cut in spending in the fiscal year, to bring the budget closer to a balance. He asked for further tax cuts, but declared that any tax cuts due April 1 on corporation income, liquor, tobacco, gasoline, and automobiles should be canceled.

Also along domestic lines the President recommended a gradual change to flexible price supports to 'stimulate consumption' of products flooding the markets and to spur production of needed commodities. He asked for a change in the Taft-Hartley (Labor-Management) Act to 'reinforce the basic objectives,' and he favored extending unemployment insurance to 6,500,000 more workers. He insisted that 'socialization of medicine' must be avoided and medical research encouraged. He declared that states unable to afford sufficient schools should be assisted, and he favored calling state and national conferences to study education problems. He called for an expansion and improvement of the housing program, and urged Congress to propose to the states a constitutional amendment permitting citizens to vote when they reached the age of eighteen. He also renewed his request for Hawaiian statehood.

Make-up of Congress.

The Republicans controlled the House of Representatives by a slim margin of votes. There were 219 Republicans and 215 Democrats, with one Independent, Frazier Reams of Ohio, who usually voted with the Democrats. In the Senate there were 47 Republicans and 48 Democrats, plus Wayne Morse of Oregon, who had been a Republican but who almost always voted with the Democrats. He promised, however, that should the Democrats challenge the Republican control of the Senate, he would vote with the Republicans.

During the year, however, four Democratic Senators died. They were Clyde Hoey of North Carolina, Pat McCarran of Nevada, Lester Hunt of Wyoming, and Burnett Maybank of South Carolina. Two of these were succeeded by Republicans. E. D. Crippa, a Republican, was appointed by Governor C. J. Rogers to fill out the six-months' unexpired term of Senator Hunt, and Ernest S. Brown, also a Republican, was appointed by Governor Charles H. Russell of Nevada to serve out the term of Senator McCarran.

The Republicans also lost two Senators by death, both from Nebraska. Dwight Palmer Griswold was succeeded by Mrs. Eva Bowring, owner and operator of an 8,000-acre cattle ranch, and Hugh Butler, chairman of the Senate Interior Committee, was succeeded by Sam Reynolds, an Omaha businessman, appointed by Governor Crosby. Both Mrs. Bowring and Mr. Reynolds are Republicans.

From Jan. 6 through Aug. 20, 1954, the Senate had been in session 156 days, and the House 123 days. Their labors produced a total of 14,712 pages in the Congressional Record, plus 6,272 pages in the Appendix. A total of 493 public and 775 private bills were enacted into law, out of a total of 5,677 measures introduced. The President vetoed 42 bills, none of which were passed over the veto. The Senate received a total of 35,158 executive nominations, of which 34,450 were confirmed.

Eisenhower Budget.

One of the most important issues of the 1954 Congressional session was that of the budget and tax revision. The first 'all-Eisenhower' budget which the President submitted was a follow-up of the broad philosophy which he had outlined in his earlier State of the Union message. It was the first Federal budget presented by a Republican administration in 21 years. The total figure for the coming fiscal year was 14 times the amount of the last Republican budget in 1932, 21 per cent of the entire national income for 1953, and an average of $410 for every person in the United States. The total estimated income was $62.7 billion: from individual income taxes, $30.3 billion; from corporation taxes, $20.3 billion; from excise taxes, $10.2 billion; and all others, $1.9 billion.

Of the total amount, the President estimated that national security would take 68.4 per cent, veterans' benefits and interest on the debt, etc. another 21.6 per cent, and 10 per cent ($6.6 billion) would be left for all the other operations of the government. There would still be a deficit of $2.9 billion.

The President also recommended that individual income taxes be cut 10 per cent and that corporation excess profits taxes should be allowed to expire as scheduled. He favored the extension of regular corporate profits and excise taxes at the current levels. He strongly urged that the entire tax program should be overhauled to remove 'inequities.' He further recommended that the debt limit be raised from $275 to $290 billion.

Tax Revision.

The bulk of the Administration program was contained in a 900-page omnibus reform bill, the first complete revision of Federal tax legislation in 50 years. This program seemed to incline toward the aid-to-business theory, while the Democrats countered with an aid-to-consumer program.

There was considerable controversy in the House on various features of the tax measure. Chairman Daniel Reed of the House Ways and Means Committee, and others, felt that there should be more tax relief than the President had suggested, especially in regard to income taxes. There were also differences of opinion on the corporation and luxury taxes. But the House passed the final measure 339 to 80. Voting for the bill were 208 Republicans and 131 Democrats, while 5 Republicans, 74 Democrats, and one Independent voted against it. This was accepted as a very important victory for the President.

Meanwhile the Senate took action on a separate tax bill which the White House opposed, but the differences were finally ironed out in conference, and the compromise measure passed the House 391 to 1, and the Senate 72 to 8. Representative Marshall, a Minnesota Republican, was the only House member to give a negative vote. Republicans Cooper, Dirksen, Langer, and Williams, and Democrats Byrd, Daniel, Hill, and Russell voted 'no' in the Senate.

The new tax measure did the following: reduced from 10 to 5 per cent the tax on refrigerators, stoves, and other household appliances; reduced from 20 to 10 per cent the tax on jewelry, handbags, luggage, cosmetics, electric light bulbs, cameras, and film; set a basic tax of 10 per cent on long-distance telephone calls, sports goods, passenger transportation, and mechanical pens, pencils, and lighters; abolished any tax on movie or other admission tickets costing 50 cents or less; retained the present 20 per cent tax on horse and dog race-track admissions, night clubs, and club dues; exempted regular-season college athletic events, government-sponsored museums and exhibits, and amateur civic theatres from the admissions tax; extended for one year the current taxes on automobiles, liquor, gasoline, cigarettes, beer, and wine; and reduced from 20 per cent to 10 per cent the tax on safe-deposit boxes.

The bill also provided for relief from double taxation of corporate dividend income, and allowed a deduction of the first $50 of dividend income and a credit of 4 per cent on the balance after 1954. Under the bill, taxpayers are permitted to deduct medical and dental expenses exceeding three per cent of gross income. People with incomes of less than $4,500 may deduct up to $600 for child-care expenses. The bill also provides for exemption of the first $1,200 of retirement income of persons over 65.

Social Security Revision.