Office of the Historian

117. Memorandum From the Director of the International Cooperation Administration (Hollister) to the Secretary of State1

Washington, May 18, 1956.

SUBJECT

  • ICA Responsibilities for Public Law 480

Problem:

ICA has drafted a message to ICA Missions (Tab A)2 specifying their responsibilities in connection with the surplus agricultural commodity program under Public Law 480. There has been some disagreement within the State Department on the degree of controls proposed by ICA for the use of local currencies acquired under that Act. The field urgently needs guidance to proceed with programming and use of the local currencies.

[Page 300]

Discussion:

ICA proposes to program and control those local currency uses for which it has responsibility under Public Law 480 through a modified version of the regular ICA procedure. This would include, after sales and loan agreements have been negotiated, submission by the country concerned of special projects for ICA analysis and approval, release of funds to the country in accordance with actual expenditure requirements, and provision for audit and financial and progress reports. We feel these control steps are essential to assure conformity with U.S. policy, adequate coordination with regular ICA programs, and proper accountability.

There has been some feeling at the staff level in the Department that the proposed procedures are apt to create frictions with other governments in that they involve more extensive controls than are appropriate considering the nature of surplus sales under Public Law 480. As a counter proposal it has been suggested that control be confined to a general understanding at the time of the sales agreements on the types and kinds of projects to be financed, and provision for subsequent reports and audit. This would omit the stage of specific project advance review and approval which is the heart of our regular procedure.

I believe that to so weaken our controls and accountability would not only be unwise, but is unnecessary to meet the point on creation of friction. The difficulties cited come not from the nature of our procedures, which are generally well understood and accepted under our regular program, but from failure to have these procedures clearly understood at the outset of the Public Law 480 sales transaction. The draft message to the field will assure this.

Recommendations:

That you approve the use of a modified version of the regular ICA program procedures as outlined above for the programming and control of local currencies under Public Law 480.

John B. Hollister3
  1. Source: Washington National Records Center, ICA Director’s Files, FRC 61 A 32, Box 307, Commodities—Agricultural Surplus.↩
  2. No attachment was found with the source text.↩
  3. Printed from a copy which bears this stamped signature.↩