Foreign Relations of the United States, 1952–1954, General: Economic and Political Matters, Volume I, Part 1

MSA–FOA Director’s files, FRC 56 A 632, Box 1, “Bureau of Budget, 1954”

Minutes of the Meeting of the Special Committee on Foreign Operations Administration, April 6, 1954¹

confidential

April 6, 1954

• Present: Secretary George H. Humphrey and Deputy Secretary W. Randolph Burgess of Treasury; Under Secretary Walter Bedell Smith and Mr. Frederick E. Nolting of State; Director Harold E. Stassen and Mr. Morris Wolf of the Foreign Operations Administration; Vice Admiral A. C. Davis, General Stewart, Mr. O’Hara, and Mr. Clive L. DuVal, Defense; and Director Joseph M. Dodge and Deputy Director Rowland R. Hughes, Bureau of the Budget. General Persons and Mr. Bryce Harlow of the White House staff also were present for part of the meeting.

Secretary Humphrey opened the session and pointed out that since a large part of the program had been presented to the Security Council,² the Cabinet, the legislative leaders, and was being presented the next day before a congressional committee, perhaps in practice some of the decisions may have been made already. He emphasized the necessity for direct handling of the MDAP programs, prevention of duplication and unnecessary costs, the lessening of the wasteful revisions in details of the program now often made after the general lines had been established.

Mr. Hughes pointed out that the immediate questions to be resolved, and which were not involved in the presentations by Mr. Stassen to which Secretary Humphrey referred, related to the method of handling appropriations and technical matters, not the amount of the programs. He said there were two matters pending; one, the bill which had to be presented to the substantive committees of the Congress; and the other, a report on action which the Bureau of the Budget and the other interested agencies had been requested to make by the Appropriations Committees concerning the merging of mutual military assistance with Defense Department funds. Mr. Hughes said that all matters had been agreed upon and a draft of the report had been accepted, after revisions, by all parties, except for three points:

1. Whether MDAP appropriations should be made direct to Defense or to the President, and if appropriated to the President, how they should be allocated.

2. The degree of supervision to be exercised by FOA over the programs in either case; the proposal of Defense (as presented in its March 13 revision of the draft letters to Senator Bridges and Representative Taber on the new MDAP financial plan) being that programming and commitments shall be in accordance with “Policies and general program levels determined through coordination with the Department of State and the Foreign Operations Administration”, and the proposal of FOA being that they shall be in accordance with “program approval given by the Foreign Operations Administration”.

3. Whether the transferability authority needed by the President should be 15 percent as recommended by FOA or 10 percent, with a limitation of changes to those due to conditions arising after the original setting of the programs or because of major policy changes.

There was full discussion, and particularly consideration of the absolute necessity of maintaining the President’s authority to make transfers, the advantages and disadvantages of various moves in terms of acceptance by the Congress and the public, and elimination of the many frictions and delays in the operations as now conducted, particularly as between Defense and FOA.

Mr. Dodge brought forth his previously discussed proposal to the effect that the appropriate agency would program the full appropriation for each of the seven budgetary categories but by Executive action 25 percent of the appropriations representing lowest priority items would be retained temporarily. On this basis, there would be funds available to complete the planned programs subject only to reductions to meet emergency considerations as they arise.

After a long discussion it was agreed:

1. That appropriations for military programs will be made to the President and allocated by him directly to Defense.

2. That requests for such appropriations will be prepared for and made to the Congress by FOA under general guidelines and policy including the military aid program, determined by agreement between State, Defense, Treasury and FOA. Thereafter, the function of FOA shall be identified as coordination and will not involve detailed supervision and direction of the military program.

3. To retain the present authority in the President to make transfers up to 10 percent.

4. Director Dodge’s proposal for an informal reserve for emergencies to be retained by the Bureau of the Budget would be worked up subsequently and adopted.

1. These minutes were transmitted by Hughes to Stassen on June 2 for comment. Regarding the origins of the Special Committee, see the memorandum from Dodge to Smith, Humphrey, Kyes, and Stassen, Mar. 24, supra.
2. The memorandum of discussion at the 191st meeting of the National Security Council, Apr. 1, cites, but does not describe, an oral presentation by Stassen and subsequent discussion. (Eisenhower Library, Eisenhower papers, Whitman file) A briefing memorandum of Apr. 1, prepared by Nolting for the use of Secretary Dulles at the Council meeting is in the S/S–NSC files, lot 66 D 148, “Misc. NSC Memos.”