800.51/4–1047
Memorandum by Mr. C. Tyler Wood, Special Assistant to the Assistant Secretary of State for Economic Affairs (Thorp), to the Under Secretary of State (Acheson)
A. A reply to the questions raised in the third paragraph of the memorandum attached to Mr. Webb’s letter of April 10, 1947 (attached hereto) may be made along the lines indicated below.1
1. United States Participation in the International Children’s Fund
The Department’s justification for a $40 million contribution to the International Children’s Fund will be sent to the Bureau of the Budget by April 18.
2. The Use for China of Funds Earmarked in Export-Import Bank
It is anticipated that, if developments in China are regarded as satisfactory in accordance with the President’s statements of December 15, 1945 and December 18, 1946, the Department will support consideration of Chinese credit applications for well defined projects which show possibilities of assisting in an early improvement of China’s foreign exchange position. It is unlikely that credits for such projects during fiscal 1948 would represent more than a small fraction of the $500 million earmarked by the Export-Import Bank for possible credits to China.
3. Further Aid for Austria in fiscal 1948
The pending post-UNRRA relief appropriation together with the deficiency appropriation for occupied areas and a possible Export-Import Bank loan would probably be adequate to cover Austria’s anticipated balance of payments deficit in calendar 1947. During the last half of fiscal 1948, it may be necessary to obtain a further appropriation; whether this will be required depends on (a) whether funds for this period can be made available from the post-UNRRA appropriation, and (b) whether a substantial Eximbank credit on suitable terms can be obtained for Austria.
For fiscal 1949 it is anticipated that a further appropriation will be needed.
4. Financial Requirements in Connection with Palestine
No program of financial assistance to Palestine is at present under consideration in the Department. It is anticipated that the Special Session of the General Assembly of the United Nations to be held beginning [Page 203] April 28, 1947 to consider the Palestine problem will set, up a committee to report to the next regular General Assemby of the United Nations in September 1947. Whether any United Nations decisions in this respect will result in any financial requirements for Palestine which the United States would be expected to meet can not be determined at present.
5. Further Loans to France or Other Countries
I do not assume that you will choose to disclose to Mr. Webb that a Special Ad Hoc Committee of SWNCC is now considering whether there are other countries for which aid programs analogous to the Greek-Turkish program may have to be initiated during the next few months. This Committee is now drafting an interim report.1 While I do not want to anticipate its findings or the outcome of their consideration by SWNCC, I understand the possibility of a new aid program for Italy and possibly Hungary and Austria is being seriously considered at the working level. Iran, also in this category, will not require special assistance beyond present programs (surplus credit and World Bank loan).
As far as France specifically is concerned, it is at present anticipated that existing financial institutions, particularly the International Bank, will be able to take care of France’s financial needs through fiscal 1948. This assumes that the Bank will grant France the full $500 million which she has requested before the end of calendar 1947 or early 1948. It also assumes that adequate coal supplies will be available to France and that control of inflation in France can be maintained. If adverse conditions turn out to belie this latter assumption France may need further financial assistance in fiscal 1948 which would not be likely to be forthcoming from the International Bank or the Export-Import Bank. (Further, there are military and political considerations which have led the SWNCC working group on France to classify it as a critical area which may need assistance in the next several months.)
The financial needs of other countries through fiscal 1948 can probably be met from existing commitments, programs or lending institutions, to the extent that it is now considered in the United States interest to meet such needs.
While it would probably not be desirable at this stage to mention the work now going on in SWNCC, I should think the general outlines of the above could be indicated to Mr. Webb.
I have not attempted to indicate what I think is implicit in Mr. Webb’s query regarding priorities, namely how would we reallocate any cut in an “overall program” among the several programs now pending.
[Page 204]B. The fourth [fifth] paragraph of the memorandum attached to Mr. Webb’s letter, requests the Department’s judgment as to the legislative priority to be assigned to each item in the overall pattern. The Department has, of course, indicated that urgent action is required on the Greek-Turkish Aid Bill. Almost equally pressing for economic and political reasons is the post-UNRRA Bill. Other legislation now pending has less priority but action is needed before the beginning of fiscal 1948.