Foreign Relations of the United States, 1951, National Security Affairs; Foreign Economic Policy, Volume I

740.5 MAP/10–2551

The Director of International Security Affairs (Cabot) to the Director-Designate for Mutual Security (Harriman)¹

confidential

[Washington,] October 25, 1951.

Dear Averell: You and your staff have such a complete knowledge of the Mutual Security Program that it is unnecessary for me to give you any report on the state of the affairs for which I have had responsibility as I turn them over to you, and it would certainly be presumptuous for me to offer you advice. Nevertheless, I would like to record my views on a few of the major current problems.

Size, of the 1953 Program. The question of how large an MSP for FY 1953 should be presented is so intimately connected with your TOC² decisions and with political considerations that my views are perhaps of no consequence; yet this so largely affects everything else that I must at least comment. I feel that our ISAC estimates of aid requirements for FY 1953 are too low because the assumptions were overoptimistic. Lead time will require that most of the material needed to complete the MTDP in FY 1954 will have to be ordered in FY 1953. I do not feel that there is yet evidence that a limiting factor will be ability effectively to obligate (or need to finance continuous production). The MSP program should not be held down on this account unless the evidence is very good, for the losses from underobligation far outweigh those from overobligation; on the one hand, munitions’ capacity is idled and manufacturers are given no inducement to attain maximum productivity; on the other, the principal danger is the possibility of making something which is outmoded before it is needed. The real limiting factor is what can the Administration prudently ask for and what will the Congress and the people support in an election year. Personally, I have confidence that the American people recognize the MSP as an economy measure and will support a large appropriation on the ground that this is the cheapest way we can defend ourselves.

MDAP Deliveries. I should have done something sooner to attract attention to the munitions’ allocation problem. I think the Administration is now well aware of the dangers we face if after having asked allies to take great risks to raise forces we then fail to make good on promises or implied promises with respect to delivery of arms. However, this will be a continuing problem requiring constant attention, for it will undoubtedly be difficult to get the officers who handle requisitions in our services to resist the blandishments of their own brethren in military operations.

Congressional Presentation. I think everyone agrees that the preparation of the 1951 MSP Bill needed better coordination. My feeling is that this requires strong leadership. Ted Tannenwald is thoroughly familiar with the problems and I believe Charlie Coolidge can be very helpful in the preparation as well as the presentation of the 1952 Bill. I think we erred on the side of too much testimony, much of it too general to be very effective.

Offshore Procurement. Getting a policy of offshore procurement adopted was a frustrating experience. Now that we have it you will face many difficult problems of implementation. However, the groundwork has been well prepared. I think one of your greatest opportunities will be in getting together programs for procurement within a country and using the economic effects as a lever for increased military effort. I am convinced that a leverage is possible with ratio approaching that obtainable from straight economic aid, provided the offshore procurement is presented as a package. The problem of getting the dollars received by offshore munitions’ producers actually used to buy in the dollar area, so that the effect is the same as an equivalent amount of economic aid, the counterpart from which is used for munitions, is one which you are especially competent to attack.

Minesweepers. The evidence is strong that we can get substantially more minesweepers for less money by buying in Europe and at the same time help the economies of both Europe and the United States. This is a particularly favorable area for offshore procurement (ranking with ammunition in this respect), but one in which we have met substantial opposition in the Navy which wants to favor domestic shipyards which might be idle.

Interdepartmental Coordination. I now think I made a mistake in not limiting the attendance in ISAC and in not exerting more personal leadership (despite my inexperience). I am not sure that any formal committee is really useful. The major decisions were usually made in informal conferences and I am sure you will be most effective on major problems working at the Cabinet level.

Backstopping the ECC.³ I also made a mistake in not insisting that the Washington agencies pay greater heed to regional recommendations. I hope you can succeed in building up the regional team so that our leadership will be more effective. The way we handled infrastructure is a good example of what to avoid. I should have got early high level authority on infrastructures instead of letting dissension in Washington, and especially in the Pentagon, weaken our whole negotiating position as well as our presentation to Congress.

Economic Aid in Asia. In my opinion, it is unthinkable that we should abandon aid programs in that part of the world most susceptible of subversion. I can’t believe the Congress intended that we should. I do believe Congress has shown preference for technical assistance, rather than straight economic aid, in the areas where there is little useful military effort. However, I think we should ask for greater latitude in next year’s Bill so that we will not be in the position of stretching the law to cover what is clearly desirable.

Military Aid to Latin America. It seems to me we should hold to an absolute minimum aid to a region which is remote from Soviet attack and has a favorable balance of payments vs. the United States.

Termination. Clearly, we should continue to emphasize that aid in the European area is expected to taper off rapidly after 1954. Equally, I think we should make clear that Point IV aid is a long-term enterprise which must be continued if we are to achieve our objectives.

East-West Trade. I don’t envy you the responsibilities imposed by the Battle Act. Harold Linder⁴ and Miriam Camp⁵ can be very helpful on problems of East-West Trade. I have a feeling that the American public would be less unhappy if they had more information on why trade with the East helps the West. I hope there is more we can properly make public before the shipments are made and come to public attention.

Productivity. This is a project in which I am deeply interested although not really my responsibility. In my view, we have been remiss in not giving productivity greater emphasis. Especially useful are the visits back and forth of labor and industry representatives. If we can sell Europe on the fundamental advantages of a competitive and reasonably free system of enterprise, I have no doubt the standard of living there will advance soon to a level where there is no danger whatever of its being subverted.

And with these comments, I turn the reins over to you with great confidence in your ability to carry this difficult assignment well, as you have so many before. The job has been a great education for me. I don’t regret a moment of the time it has taken, but I am happy for the freedom I shall now enjoy. Good luck! I am sorry that on account of the Foreign Trade Conference in New York, I won’t be here Wednesday⁶ to wish you this in person.

Yours very sincerely,

Thomas D. Cabot

1. W. Averell Harriman was nominated as Director for Mutual Security on October 11. He was confirmed on October 19 and sworn in on October 31. Thomas D. Cabot resigned as Director, International Security Affairs, on October 30.

   Copies of this letter were transmitted to the Secretary of State; Frank C. Nash, Assistant to the Secretary of Defense (International Security Affairs); William C. Foster, Deputy Secretary of Defense; Najeeb E. Halaby, Assistant to the Administrator for International Security Affairs, Economic Cooperation Administration; Richard M. Bissell, Jr., Administrator, ECA; Theodore T. Tannenwald, Jr., of the Executive Office of the President; Under Secretary of State Webb; Messrs. Coolidge and Only of the Office of International Security Affairs; Charles M. Spofford, Deputy U.S. Representative on the North Atlantic Council and Chairman of the European Coordinating Committee; and William L. Hebbard, Assistant Director, Office of International Finance, Department of the Treasury.

2. The Temporary Council Committee was established by the North Atlantic Council at its session in Ottawa during September. The mission of the TCC, of which Harriman was the United States member, was the reexamination of NATO rearmament plans and capabilities. For documentation on the TCC, see vol. iii, pp. 1 ff.
3. For documentation on the European Coordinating Committee, the United States body located in London which was charged with coordinating responsibility for the Mutual Defense Assistance Program in Europe, see vol. iii, pp. 1 ff.
4. Deputy Assistant Secretary of State for Economic Affairs.
5. Officer in Charge, Economic Organization Affairs, Office of European Regional Affairs.
6. October 31.