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

700.5 MSP/7–1254

Memorandum by the Special Assistant to the Secretary of State for Mutual Security Affairs (Nolting) to the Secretary of State

confidential

Washington, July 12, 1954.

• Subject:
• Briefing for your appearance before the Senate Foreign Relations Committee this Afternoon, 3:00 P.M. on the Mutual Security Bill¹

Four points will possibly be up for discussion:

1. Mansfield’s amendment to abolish the FOA January 1, 1955, (discussed in separate memorandum).²

2. EDC amendment. I spoke with Senator Smith this morning who suggested that the way to handle it might be to have no “Richards Amendment”³ at all, since the feeling of the Senate Committee is that the present House amendment does not have sufficient teeth in it and since the Executive Branch has objections to the Senate version for reasons (1) that it opens up an alternative to EDC and thus removes pressure from the French, and (2) that cutting off the pipeline from France and Italy would have disastrous effect upon NATO defenses, as pointed out by General Grunther. Arguments for the Richards Amendment as contained in the House bill are as follows:

a. It keeps pressure on France and Italy to ratify EDC but does not legislate a strict deadline.

b. It clearly demonstrates the preference of the Congress for EDC over an alternative solution.

c. It does not prejudge the question, as the Senate version does, whether the continued buildup of the NATO nations is in the U.S. interest in the event that no method of achieving a German contribution of forces is found by given date. (Marked passages of telegrams which you may wish to read to the Committee off the record, are attached.)⁴

3. Question concerning Set-aside of Counterpart. This involves the question of whether or not a mandatory 10 percent of local currency proceeds of sales of U.S. commodities should be included in the law. Existing agreements require 10 percent set-aside for European countries and varying amounts from approximately 5 to 10 percent, in other countries. There has arisen no shortage of funds for U.S. use as a result of the discretionary power in the Executive Branch to agree with other countries in the amounts to be reserved for our use. We consider it unnecessary to set a mandatory 10 percent provision and feel that it would cause difficulty and perhaps injury to programs in re-negotiating existing agreements, as would be required under the House proposal. Your reassurance on this point, I believe, is all that is necessary to achieve Senate support of our position.

4. Anti-Locarno Amendment.⁵ The question was raised this morning concerning the precise meaning of the language adopted by the House. The matter was passed over in a rather vague fashion and may be brought up again this afternoon. If a question is raised concerning this amendment, it is suggested that you reply along the following lines:

The Department understands that this amendment is limited to the new funds and unexpended balances authorized for Southeast Asia and the western Pacific by Section 121 of the Mutual Security Act as passed by the House (H.R. 9678). (This amounts to a proposed new authorization of $800,000,000 and a carry-over of unexpended balances of approximately $590,000,000.)

The Act is intended to apply in case of treaties of the kind adopted at Locarno in October 1925. These Treaties guaranteed the maintenance of the territorial status quo of the frontier between Germany and Belgium and between Germany and France. The essential feature of the treaties was the manner in which the status quo should be maintained, namely, that if one of the parties violated the treaty by an act of aggression against another, each of the other parties would come immediately to the help of the party against whom the violation was directed.

1. No record of Secretary Dulles’ or Under Secretary Smith’s testimony before the Senate Foreign Relations Committee on July 12, 1954, has been found.
2. Infra.
3. Regarding the amendment to foreign aid legislation first introduced by Representative James Richards (D.–S.C.) in 1953 forbidding aid to those European countries which failed to ratify the treaty establishing a European Defense Community, see the editorial note in vol. v, Part 1, p. 973.
4. The reference telegrams were not found with the source text.
5. For information concerning the proposal by Foreign Secretary Anthony Eden of the United Kingdom for an “Asian Locarno” and the reaction of the U.S. House of Representatives thereto, see the editorial note, under date of June 23, 1954, in volume xii, Part 1.