840.20/12–140
Memorandum for the Files, by the Deputy Director of the Mutual Defense Assistance Program (Ohly)
Subject: Conference on the 1951 Budget Message
At a meeting attended by Under Secretary Webb, Mr. Perkins1 and Mr. Martin2 from EUR, Mr. Merchant3 from FE, a representative from NEA, Mr. Schaub4 and Mr. Finan5 of Budget, and Mr. Bell and myself from this office, the figures to be included in the President’s budget message for military assistance were discussed. The Bureau of the Budget presented a paper6 which provided that there should be no new obligational authority under Title I for 1951, reasoning, first, that the money for 1950 could not be expended before the end of the fiscal year and the unexpended portion could be re-appropriated and would be sufficient for fiscal 1951; second, that, because there was a difference of concept concerning the purpose and objectives of the military assistance program as between State and Defense, no decision as to continuing program should be reached at this time; and third, that planning under the North Atlantic Pact would be so slow that no program could be ready in time for submission to the coming Congress. The effect of their suggestion was to stretch the 1950 program to cover 1950 and 1951 and to concentrate on resolving basic policy questions with a view to a firm program for 1952. The same paper provided, based on a series of assumptions (one of which was to the effect that ECA would handle all items of common supply) that new obligational authority for Greece should be $75 million. Funds for Turkey were listed as $25 million, but the figure assumed that $20 [Page 412] million previously borrowed by the Greek program from the Turkish program would be returned. Korea was omitted except to the extent that unexpended balances in 1950 might be re-appropriated and made available in 1951. $8 million was provided for Iran and $6 million for the Philippines. As to China, if any provision were to be made, it would be a re-appropriation of the amount unexpended from the $75 million made available pursuant to Section 303 of the 1949 law. The Budget paper estimated that this sum might be as large as $60 million.
Mr. Webb expressed his deep concern over the proposals concerning Title I and more particularly with respect to the attitude of mind which it indicated. He stated that the U.S. for the first time, having halted Communist progress, was about to go on the offensive and that the North Atlantic Pact, together with the ECA and other similar programs, were the keystones in such offensive. Failure to provide aid, and substantial aid, in support of the North Atlantic Pact would have a profound and disastrous psychological effect and would for all intents and purposes knock the props from under the Treaty. He felt it was essential that a minimum figure of $1 billion be included, realizing that this could be only an estimate at this time. Budget representatives agreed to present this proposal to the Director of the Bureau if the Director was unwilling to leave the sum undetermined in the Budget message. Budget representatives similarly requested that the Department of State submit suggested language for the budget message covering an assumption that a $1 billion dollar figure would be included and indicating why this figure must of necessity be merely an estimate.7
After Messrs. Webb, Perkins, Schaub and Martin left the meeting, the amount of money for aid to other countries was discussed. Informal [Page 413] approval was given to the proposed Greek figure of $75 million if, but only if, the Budget Bureau succeeded in requiring ECA to assume responsibility for items of common supply. Mr. Finan stated categorically that ECA would handle this burden. As to Turkey, we pointed out that it was unrealistic to expect that more than a nominal portion of the amount borrowed for the Greek program would be repaid to the Turkish program. The view was further expressed that with this and other circumstances in mind, the Turkish program could not be scheduled for less than $70 million.
With respect to Iran, Mr. Finan asked whether there had been any commitment on the part of the President or Secretary of State concerning additional aid. He was assured by the representative of NEA that no commitment had been made beyond a statement that requests for further aid would be sympathetically reviewed. He went on to state, however, that the Secretary of State believed that we had been somewhat too low in our 1950 assistance, considering the general situation existing in that country. As it stands now, we can’t meet the modest requests from that country for this year by more than one-third. The NEA representative stated that $20 million for Iran appeared to be a minimum. As to Korea, Mr. Bell promised to furnish Mr. Finan with an estimate later in the same day.
There was no objection to the proposed Budget treatment with respect to China, but it was recommended that the Philippine allotment be raised from $6 million to $10 or $12 million.
- George W. Perkins, Assistant Secretary of State for European Affairs.↩
- Edward M. Martin, Director of the Office of European Regional Affairs.↩
- Livingston T. Merchant, Deputy Assistant Secretary of State for Far Eastern Affairs.↩
- William F. Schaub, Deputy Chief of the Division of Estimates, Bureau of the Budget.↩
- William F. Finan, Assistant Director for Administrative Management, Bureau of the Budget.↩
- Not printed.↩
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The summary of the Secretary of State’s daily staff meeting of December 1 indicates that Webb raised this budgetary question with Acheson. The latter stated that he agreed with Webb’s position that a military assistance program of roughly $1,000,000,000 for FY 1051 was essential and that he, Acheson, would go to the President on the matter if necessary. (840.20/12–149) In a memorandum to Webb dated December 2, Ohly indicated that Finan had informed him that the Bureau of the Budget would probably recommend leaving the amount for MDAP funds for FY 1951 indefinite in the President’s budget message. If the President insisted on a firm figure, the Bureau was not prepared to accept $1,000,000,000. Ohly replied that S/MDA, EUR, and the Department of Defense would urge that any lesser figure be appealed to the President. (840.20/12–249)
In a letter of December 15, Ohly informed James Bruce, Director of the Mutual Defense Assistance Program (then in Paris as part of a visit to Europe for consultations with United States representatives and officials of North Atlantic Treaty nations), that the Bureau of the Budget and the President had decided to include a specific figure for military assistance in the budget message. It had been feared that failure to provide an estimate might result in the elimination of the program. The President had approved an estimate which was only slightly less than that requested by S/MDA. (840.20/12–1549)
In his annual message to Congress on January 9, 1950, President Truman proposed new obligational authority of $1,100,000,000 for military assistance in FY 1951; for the text of the message, see Public Papers of the Presidents of the United States: Harry S. Truman, 1950 (Washington: Government Printing Office, 1965), pp. 44–106.
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