Lot 60–D 137, Box 8

Memorandum by the Staff Committee of the National Advisory Council on International Monetary and Financial Problems to the National Advisory Council

NAC Doc. 361

Subject: U.S. Post-UNRRA Relief Program for Calendar Year 1947.

1. Problem.

A proposal for appropriation by Congress of $400 million for post-UNRRA relief assistance in 1947 to certain European countries and China has been presented by the State Department to the National Advisory Council for its approval. (See draft bill attached)1 The State Department’s request is based on a series of studies, which the State Department has conducted continuously over the past twelve months, on the total relief deficits of the countries concerned. The Staff Committee has been requested by the NAC to evaluate the State Department’s proposal and to recommend action.

2. Background.

At the fall session of the UN General Assembly, the U.S. committed itself, subject to favorable action by Congress, to the extension of post-UNRRA foreign relief assistance in 1947. The U.S. subscribed to the General Assembly’s unanimous resolution of December 11, 1946, which defined 1947 foreign relief needs as the value of a country’s minimum imports needed to prevent suffering and economic retrogression. The U.S. also participated in the work of the UN Special Technical Committee on Relief Needs after Termination of UNRRA.

At the same time, the U.S. insisted upon its right to administer its 1947 relief program on a national rather than on a UN basis. This decision was largely prompted by the need for flexibility in the administration of the program.2

[Page 1032]

3. Relief Needs.

The State Department’s request for an appropriation of approximately $400 million* is derived primarily from two studies on the total minimum relief deficits of the countries requiring relief assistance in 1947: (1) an economic analysis of the relief deficits of Austria, Greece, Hungary, Italy, Poland, the Free Territory of Trieste and China, prepared by the State Department; (2) the report of the UN Special Technical Committee on Relief Needs after Termination of UNRRA, which covers relief needs of Austria, Greece, Hungary, Italy, Poland, and Yugoslavia.

The State Department estimate of the total relief deficit of the five European countries and Trieste yielded a total of $576 million, made up as follows:

1947 Relief Deficit (millions of $)
Austria 148
Greece 56
Hungary 57
Italy 158
Poland 137
Trieste 20
Total 576

The State Department did not estimate China’s total 1947 relief requirements, but indicated that China should receive some relief assistance in 1947. The UN Special Technical Committee established a total relief need for the six European countries (including Yugoslavia but not including Trieste) of $583 million. Such discrepancies as exist [Page 1033] between the results of these two studies are explained by differences in the countries covered, adjustments for certain miscalculations in the UN report, changes in the carry-over of UNRRA programs in 1947 which have occurred since the completion of the UN report, and minor differences in the standards used in computing minimum import requirements.

The State Department’s criteria for minimum import requirements were based on the resolution of the General Assembly referred to above. They may be briefly summarized as follows:

(a)
Sufficient food imports to provide, together with domestic supplies, a minimum daily caloric intake between 2,000 and 2,200 calories per capita for the non-farm population, except where supply conditions clearly preclude the maintenance of this level. The determination between 2,000 and 2,200 calories was made taking into consideration customary differences between the countries considered;
(b)
Imports of materials for production of textiles and footwear at minimum per capita levels sufficient to provide between 70 and 100 percent of prewar consumption, depending on traditional differences in the per capita consumption and in the severity of the cumulative wartime shortage of these commodities among the various countries;
(c)
Raw material imports needed (1) to permit production of minimum quantities of essential consumers goods other than textiles and footwear, (2) to permit exports of manufactured goods, (to earn foreign exchange for payment of necessary imports) and (3) to permit minimum maintenance and repair of industry, and transport and other essential services;
(d)
Minimum imports of machinery and equipment necessary for repair and replacement of plant and equipment, excluding rehabilitation, reconstruction or development projects. A minimum of imports of agricultural supplies is also provided, as required by the General Assembly’s resolution of December 11, 1946, to make possible some recovery of domestic food production in 1947.

Although the Staff Committee based its conclusions on studies of the United Nations and the State Department rather than on any independent study of its own, the Staff Committee believes that the figure for the deficit derived on the basis of the criteria used appears to be a reasonable estimate of the total amount of the relief assistance which it is desirable for this group of countries to receive in post-UNRRA assistance in 1947.

Because of war damage and administrative and economic disorganization inherited from the war and enemy occupation, complicated by postwar adjustment difficulties, these countries have not had enough of a breathing space to get on their feet. Failure to receive such estimated relief assistance will have varying adverse effects on the individual countries. In certain cases, such failure would have very serious economic repercussions and cause retrogression while in other countries this would be true to a lesser degree. In some instances, it might [Page 1034] force adjustments which, owing to the extent and rapidity with which they would have to be made, might have very disturbing social and political consequences.

The State Department’s request for $400 million to cover the U.S. share of the 1947 relief needs of the five European countries, Trieste, and China leaves a residual of $150 million plus whatever may be provided to China, to be met by other potential relief contributing countries. In view of the relative resources of the U.S. and its stake in the success of this program, the State Department’s figure for the U.S. share, therefore, appears to be a minimum contribution.3

[Here follows discussion relating to administration of the program.]

  1. Not attached to file copy.
  2. The Under Secretary of State (Acheson) had said in a nation-wide radio broadcast on December 8, 1946, that “The people of the United States and the Congress of the United States have made up their minds that the relief problems of the near future are not of a character which would warrant grants of enormous sums of money from the United States Treasury under conditions which would leave little or no effective control by the grantor of these funds.

    “The people of the United States are determined that they will not send free shipments of great quantities of food, trucks, tractors, and other supplies of all kinds, many of which they desperately need themselves, to countries which are diverting their manpower and facilities away from the production of the necessities of life which they are asking others to supply….” Earlier in the broadcast the Under Secretary had stated that with relief being administered by means of a national program the “nations receiving free relief must prove their need for it, and they can be held to a much closer and fairer accountability of the use of food and other free supplies. Those in power will be compelled to distribute relief food on the basis of need. They will not be allowed to feed their political supporters and starve their political opponents.” (Excerpts from Department of State Bulletin, December 15, 1946, p. 1108.)

  3. In the budget message sent to the Congress by the President on January 10, 1947, it was estimated that $350 million would be required for post-UNRRA relief-expenditures by the U.S., $100 million in fiscal 1947 and $250 million in fiscal 1948. [Footnote in the source text.]
  4. The estimated deficits for Austria, Greece, and Poland allow for the most recent changes in UNRRA programs in favor of these countries. Of the 1947 Austrian deficit of $148 million, $22.5 million will be met by U.S. Army funds. This $22.5 million is in addition to the State Department’s request for an appropriation of $400 million. [Footnote in the source text.]
  5. The estimated deficits for Austria, Greece, and Poland allow for the most recent changes in UNRRA programs in favor of these countries. Of the 1947 Austrian deficit of $148 million, $22.5 million will be met by U.S. Army funds. This $22.5 million is in addition to the State Department’s request for an appropriation of $400 million. [Footnote in the source text.]
  6. The estimated deficits for Austria, Greece, and Poland allow for the most recent changes in UNRRA programs in favor of these countries. Of the 1947 Austrian deficit of $148 million, $22.5 million will be met by U.S. Army funds. This $22.5 million is in addition to the State Department’s request for an appropriation of $400 million. [Footnote in the source text.]
  7. The following was recorded in the minutes of the National Advisory Council for February 18, as action having been taken by the Council in its meeting of that date: “The National Advisory Council, on the basis of studies of post-UNRRA relief needs made by the United Nations and by the State Department, is of the opinion that the State Department’s request for an appropriation of $400 million as the United States contribution to post-UNRRA relief in the calendar year 1947 is appropriate and is consistent with the foreign financial policy of the United States Government.” The Council was also recorded as requesting the State Department to report to it “periodically” on the allocation of funds appropriated for the program and on the agreements reached with the receiving countries. (State Dept. Lot 60–D137, Box 1)