Foreign Relations of the United States, 1951, National Security Affairs; Foreign Economic Policy, Volume I

800.00–FA/4–1451

Memorandum by Colonel Charles H. Bonesteel, III, Special Assistant to the Secretary of State, to the Under Secretary of State (Webb)

top secret

[Washington,] April 14, 1951.

Subject: Status—Preparation Foreign Aid Presentation.

1. Bureau of Budget markings on most of Titles II, III and IV¹ were received Friday² and revisions of programs are under way in accordance with the agreed procedure.

2. On Title I,³ ECA is putting its figures to the Bureau of the Budget Monday or Tuesday. The Bureau hopes to start hearings Wednesday or Thursday and give us markings as soon as possible thereafter, probably about April 24. This will leave a terrible job to try to finalize and reproduce the Presentation documents by April 30.

3. There are still a number of problems which worry us. The most important of these are:

a. We do not have a satisfactory American estimate of the costs of the NATO Medium Term Defense Plan⁴ plus essential non-NATO defense costs of European NATO countries. We have made a rush estimate of these costs which indicate total costs, from now on out, ranging in the order of $66.5 billion to $73.5 billion. The presently projected program—both end-item and ECA aid—do not cover the straight time-phased deficiencies indicated for FY ’52 when realistic European capacity to finance is taken into account. We must have some sound and rational explanation of this for Congress. We are exploring the idea of suggesting a meeting of the State, Defense and ECA top level with Mr. Harriman to rationalize this problem. I will let you know our suggestion very shortly.

b. The proposals on organization and administration are not yet to our mind effective. The President’s letter⁵ leaves many areas fuzzy. The Executive Branch must tell a clear story to Congress on the following points, among other:

(1) The procedures for allocating funds (Defense is likely to protest the President’s letter in this regard);

(2) The jurisdiction of ISAC in regard to all foreign aid programs;

(3) The mechanics for integrating grant and loan projects in countries;

(4) A scheme for integrating activities in foreign nations for development and procurement of strategic raw materials.

I am at a loss to suggest how to whip these organizational problems. The Bureau of the Budget supposedly has them in hand, but, to the best of my belief, are not doing the job required. Our predictions that the completion of studies on physical feasibility of the program and its impact on the U.S. economy would be a final bottleneck are confirmed. Work is actively underway between ECA, Defense, Mr. Harriman’s office, ODM and CEA, but it will be a miracle if we have the answers in time to incorporate them in a Presentation Book⁶ to be printed by April 30. We are, as is Mr. Harriman’s office, “needling” this operation as best we can.

C. H. Bonesteel, III

1. Titles II, III, and IV of the proposed foreign aid legislation dealt with the Near East and Africa; Asia and the Pacific; and the American Republics, respectively.
2. April 13.
3. Title I concerned itself with aid to Europe.
4. For documentation on the Medium Term Defense Plan, see vol. iii, pp. 1 ff.
5. For text of the President’s letter to the Secretary of State and the Administrator of the Economic Cooperation Administration, April 5, see circular airgram of April 12, supra.
6. The documents comprising the presentation book used by the Executive Branch for Congressional hearings are located in FRC Acc. No. 62A613, Boxes 124 and 128.