895.50 Recovery/10–148
The Administrator of the Economic Cooperation Administration (Hoffman) to the Secretary of State
My Dear Mr. Secretary: I received your letter of September 17, 1948, in which you set forth the views of the Department of State on the policy which should underlie the preparation of a program for economic assistance to Korea, and for the submission of a budget request to the Congress. I wish to express my appreciation for the prompt response to my request to Mr. Lovett for policy guidance.
This Administration will base its program for Korea on the policy set forth in your letter. The program of economic development which you envisage for Korea should serve to place that area more nearly on a self-supporting basis. This program is similar to the programs [Page 1313] the ECA is carrying out in other parts of the world in accord with its basic legislation.
After thorough analysis of the problem by members of my staff, assisted by officers of the Departments of State and Army, it is the opinion of this Administration that it will not be feasible to initiate a program of economic development until Fiscal Year 1950. I have instructed my staff to assume responsibility for preparing and submitting to the Congress authorizing legislation and requests for funds for the program for the period July 1, 1949 to June 30, 1950. It will be essential, as you have suggested, for this Administration to call upon the Departments of State and Army for assistance in preparing and presenting the program to the Congress. I agree that the Department of State should be responsible for presenting and defending to the President and to the Congress the basic policy on aid to Korea with particular emphasis on the political grounds for the Korean program.
In presenting the program to the Congress it will be made clear that:
- 1)
- it has been prepared on a three-year basis for planning purposes and in order to show the effect of a program of capital investment in reducing Korea’s balance of payments deficit and thereby promoting the economic and political stability of the area,
- 2)
- the full plan should be discussed with the appropriate committees in Executive session and should not be made public in order to avoid the implication of any commitment to Korea,
- 3)
- the Congress is being requested at this time to authorize and appropriate funds for the first year of the three-year program and that additional requests will be made only after further review of the Korean situation,
- 4)
- the Aid Agreement to be signed with Korea1 places the U.S. under no obligation to continue aid and authorizes the U.S. to terminate aid upon its own volition.
The Department of State has been most helpful to the ECA in planning for the time when the transfer of responsibility for administration of the aid program will be made. Your offer of further assistance is greatly appreciated.2
Sincerely yours,
- See footnote 2, p. 1309.↩
- In a letter dated December 7 to the Assistant Director of the Bureau of the Budget (Pace), the Deputy Assistant Secretary of State for Occupied Areas (Wilds) pointed out that the policy stated in the Secretary of State’s letter of September 17 had not been changed; that the Deparment regarded “as essential the continuation during the second half of FY 1949 of a relief and rehabilitation program of the level initiated by the Department of the Army in the first half of FY 1949”; and that “the aid policy is regarded as applicable regardless of the duration of the occupation” in Korea. (895.50 Recovery/12–748)↩