Following is a transcript of remarks by Rep. Lee H. Hamilton (D-Ind.), at the close of testimony by Lt. Col. Oliver L. North. Hamilton is chairman of the House select committee investigating the Iran-contra affair.

Mr. Chairman, may I express to you my personal appreciation for the manner in which you have presided over these committees these last several days. You've had some rather difficult moments. I think you have been firm and fair, and you have kept these proceedings moving along, and all of us are most grateful to you. Now Col. North, let me join with others in expressing my appreciation to you for your testimony. And as the chairman has indicated, I will use my time just to give you some of my impressions.

I recognize that a president and those carrying out his policies sometimes face agonizing choices, and you've had more than your share of them. I've never for a moment, over the years that I have known you, doubted your good intentions to free hostages, to seek democracy in Nicaragua, to fight communism and to advance the best interests of the nation. And for many in this country, I think the pursuit of such worthy objectives is enough in itself, or in themselves, and exonerate you and any others from all mistakes. Yet what strikes me is that despite your very good intentions, you were a participant in actions which catapulted a president into the most serious crisis of his presidency, drove the Congress of the United States to launch an unprecedented investigation, and I think probably damaged the cause, or the causes that you sought to promote. It is not my task, and it is not the task of these committees, to judge you. As others have said, we're here to learn what went wrong, what caused the mistakes, and what we can do to correct them. And the appropriate standard for these committees is whether we understand the facts better because of your testimony, and I think we do, and we're grateful to you.

In your opening statement you said that these hearings have caused serious damage to our national interests. But I wonder whether the damage has been caused by these hearings or by the acts which prompted these hearings. I wonder whether you would have the Congress do nothing after it has been lied to and misled and ignored. Would we in the Congress then be true to our constitutional responsibilities? Is it better under our system to ignore misdeeds or to investigate them behind closed doors, as some have suggested? Or is it better to bring them into the open and try to learn from them? I submit that we are truer to our Constitution if we choose the latter course.

These committees, of course, build on the work of other committees, and I think that work is part of our constitutional system of checks and balances. There are many parts of your testimony that I agree with. I agree with you that these committees must be careful not to cripple the president. I agree with you that our government needs the capability to carry out covert actions.

During my six years on the Intelligence Committee, over 90 percent of the covert actions that were recommended to us by the president were supported and approved. And only the large-scale paramilitary operations, which really could not be kept secret, were challenged. I agree with you, when you said in your opening statement, that you're caught in a struggle between the Congress and the president over the direction of American foreign policy, and that most certainly is not your fault. And I agree with you, that the Congress, whose record in all of this is certainly not unblemished, also must be accountable for its actions.

Now let me tell you what bothers me. I want to talk about two things, first policy, and then process. Chairman Inouye has correctly said that the business of these Select Committees is not policy, and I agree with him, but you made such an eloquent and impassioned statement about policy, that I wanted to comment. I am very troubled by your defense of secret arms sales to Iran. There's no disagreement about the strategic importance of Iran or the desirability of an opening to Iran. My concern is with the means employed to achieve those objectives.

The president has acknowledged that his policy, as implemented, was an arms-for-hostage policy. And selling arms to Iran in secret was, to put it simply, bad policy. The policy contradicted and undermined long-held, often articulated, widely supported public policies in the United States. It repudiated U.S. policy to make no concessions to terrorists, to remain in the {Persian} Gulf war, and to stop arms sales to Iran. We sold arms to a nation officially designated by our government as a terrorist state. This secret policy of selling arms to Iran damaged U.S. credibility.

A great power cannot base its policy on an untruth without a loss of credibility. Friendly governments were deceived about what we were doing. You spoke about the credibility of U.S. policy in Central America, and you were right about that, but in the Middle East, mutual trust with some friends was damaged, even shattered.

The policy of arms for hostages sent a clear message to the states of the Persian Gulf, and that message was that the United States is helping Iran in its war effort, and making an accommodation with the Iranian revolution, and Iran's neighbors should do the same. The policy provided the Soviets an opportunity they have now grasped, with which we are struggling to deal. The policy achieved none of the goals it sought. The ayatollah {Ruhollah Khomeini} got his arms, more Americans are held hostage today than when this policy began, subversion of U.S. interests throughout the region by Iran continues. Moderates in Iran, if any there were, did not come forward . . . . Today, those moderates are showing fidelity to the Iranian revolution by leading the charge against the United States in the Persian Gulf. In brief, the policy of selling arms to Iran, in my view at least, simply cannot be defended as in the interests of the United States. There were and there are other means to achieve that opening which should have been used.

Now let me comment on process as well, first with regard to covert actions. You and I agree that covert actions pose very special problems for a democracy. It is, as you said, a dangerous world, and we must be able to conduct covert actions, as every member of this panel has said. But it is contrary to all that we know about democracy to have no checks and balances on them. We've established a lawful procedure to handle covert actions. It's not perfect by any means, but it works reasonably well. In this instance, those procedures were ignored. There was no presidential finding in one case, and a retroactive finding in another. The intelligence committees of the Congress were not informed, and they were lied to. Foreign policies were created and carried out by a tiny circle of persons, apparently without the involvement of even some of the highest officials of our government.

The administration tried to do secretly what the Congress sought to prevent it from doing. The administration did secretly what it claimed to all the world it was not doing. Covert action should always be used to supplement, not to contradict, our foreign policy. It should be consistent with our public policies. It should not be used to impose a foreign policy on the American people which they do not support.

Mr. McFarlane was right. He told these committees it was clearly unwise to rely on covert action as the core of our policy. And as you noted in your testimony, and I agree with you, it would have been a better course to continue to seek contra funding through open debate. You have spoken with compelling eloquence about the Reagan Doctrine. And laudable as that doctrine may be, it will not succeed unless it has the support of the Congress and the American people.

Secondly, with regard to process, let me talk about accountability. What I find lacking about the events as you have described them is accountability. Who was responsible for these policies, for beginning them, for controlling them, for terminating them? You have said that you assumed you were acting on the authority of the president. I don't doubt your word, sir. But we have no evidence of his approval. The president says he did not know that the National Security Council staff was helping the contras. You thought he knew. And you engaged in such activities with extraordinary energy.

You do not recall what happened to the five documents on the diversion of funds to the contras. Those documents radically changed American policy. They are probably, I would think, the most important documents you have written. Yet you don't recall whether they were returned to you, and you don't recall whether they were destroyed, as I recall your testimony.

There's no accountability for an $8 million account earned from the sale of U.S. government property. There is no accountability for a quarter of a million dollars available to you. You say you never took a penny. I believe you. But we have no records to support or to contradict what you say. Indeed, most of the important records concerning these events have been destroyed.

Your testimony points up confusion throughout the foreign policymaking process. You've testified that {the late CIA} Director {William J.} Casey sought to create an on-the-shelf, self-sustaining, stand-alone entity to carry out covert actions -- apparently without the knowledge of other high officials in government. You've testified there was an unclear commitment to Israel concerning replenishment of missiles to Iran. You've testified that it's never been U.S. policy not to negotiate with terrorists. Yet the president has said the opposite -- that we will never negotiate with terrorists. You have testified that a lot of people were willing to go along with what we were doing, hoping against hope that it would succeed and willing to walk away when it failed. Now my guess is, that's a pretty accurate description of what happened. But it's not the way to run a government. Secret operations should pass a sufficient test of accountability. And these secret operations did not pass that test. There was a lack of accountability for funds and for policy, and responsibility rests with the president. If he did not know of your highly significant activities done in his name, then he should have, and we'll obviously have to ask {former national security adviser} Adm. {John M.} Poindexter some questions.

Now the next point with regard to process relates to your attitude toward the Congress. As you would expect, I'm bothered by your comments about the Congress. You show very little appreciation for its role in the foreign policy process. You acknowledge that you were "erroneous, misleading, evasive and wrong" in your testimony to the Congress. I appreciate, sir, that honesty can be hard in the conduct of government. But I am impressed that policy was driven by a series of lies -- lies to the Iranians, lies to the Central Intelligence Agency, lies to the attorney general, lies to our friends and allies, lies to the Congress, and lies to the American people. So often during these hearings -- not just during your testimony, but others' as well, I have been reminded of President Thomas Jefferson's statement: "The whole art of government consists in the art of being honest."

Your experience has been in the executive branch, and mine has been in the Congress. Inevitably our perspectives will differ . . . . You said on the first day of your testimony, and I quote, "I didn't want to show Congress a single word on this whole thing." I do not see how your attitude can be reconciled with the Constitution of the United States. I often find in the executive branch, in this administration as well as in others, a view that the Congress is not a partner, but an adversary. The Constitution grants foreign policymaking powers to both the president and the Congress, and our foreign policy cannot succeed unless they work together. You blame the Congress as if the restrictions it approved were the cause of mistakes by the administration, yet congressional restrictions in the case of Nicaragua, if the polls are accurate, reflected the majority of the American people. In any case, I think you and I would agree that there is insufficient consensus on policy in Nicaragua. Public opinion is deeply divided. And the task of leadership, it seems to me, is to build public support for policy. If that burden of leadership is not met, secret policies cannot succeed over the long term.

The fourth point with regard to process relates to means and ends. As I understand your testimony, you did what you did because those were your orders and because you believed it was for a good cause . . . . The means employed were a profound threat to the democratic process. A democratic government, as I understand it, is not a solution, but it's a way of seeking solutions. It's not a government devoted to a particular objective, but a form of government which specifies means and methods of achieving objectives. Methods and means are what this country are all about. We subvert our democratic process to bring about a desired end, no matter how strongly we may believe in that end. We've weakened our country and we have not strengthened it.

A few do not know what is better for Americans than Americans know themselves. If I understand our government correctly, no small group of people, no matter how important, no matter how well-intentioned they may be, should be trusted to determine policy. As President {James} Madison said, "Trust should be placed not in a few, but in a number of hands."

Let me conclude. Your opening statement made the analogy to a baseball game. You said the playing field here was uneven and the Congress would declare itself the winner. I understand your sentiments, but may I suggest that we are not engaged in a game with winners and losers. That approach, if I may say so, is self-serving and ultimately self-defeating. We all lost. The interests of the United States have been damaged by what happened. This country cannot be run effectively {when} . . . major foreign policies are formulated by only a few and are made and carried out in secret, and when public officials lie to other nations and to each other. One purpose of these hearings is to change that. The self-cleansing process, the Tower commission and these joint hearings and the report which will follow, are all part, we hope, of a process to reinvigorate and restore our system of government.

I don't have any doubt at all, Col. North, that you are a patriot. There are many patriots, fortunately, and many forms of patriotism. For you, perhaps, patriotism rested in the conduct of deeds, some requiring great personal courage, to free hostages and fight communism. And those of us who pursue public service with less risk to our physical well-being admire such courage. But there's another form of patriotism, which is unique to democracy. It resides in those who have a deep respect for the rule of law and faith in America's democratic traditions. To uphold our Constitution requires not the exceptional efforts of the few, but the confidence and the trust and the work of the many. Democracy has its frustrations. You've experienced some of them, but we, you and I, know of no better system of government. And when that democratic process is subverted, we risk all that we cherish. I thank you, sir, for your testimony, and I wish you and I wish your family well.