A/MS Files, Lot 54 D 2911

Draft National Security Council Staff Study2


Proposed Transfer of the Point IV Program From the Department of State to the Economic Cooperation Administration3

the problem

1. To make recommendations as to whether the Point IV program as defined in the Act for International Development (1950) should [Page 1653] continue to be administered in the Department of State or should be transferred to the Economic Cooperation Administration.


2. As the “fourth point” relating to foreign policy in his inaugural address of January, 1949, the President proposed that the United States should embark on a cooperative program to extend technical assistance to the underdeveloped areas of the world. The Act for International Development (1950) provided the legislative basis for the Point IV program, the administration of which was established within the Department of State (in the Technical Cooperation Administration and the Institute of Inter-American Affairs). Recently the possibility has been suggested (NSC 110) that the President might recommend to the Congress the transfer of the present Point IV program from the Department of State to the Economic Cooperation Administration.

3. Any decision as to the future administrative location of the Point IV program must take into account the basic concept and purposes of the program as well as considerations of administrative efficiency. The Point IV program was intended “to aid the efforts of the peoples of economically underdeveloped areas to develop their resources and improve their working and living conditions by encouraging the exchange of technical knowledge and skills and the flow of investment capital to countries which provide conditions under which such technical assistance and capital can effectively and constructively contribute to raising standards of living, creating new sources of wealth, increasing productivity and expanding purchasing power,” (Act for International Development, sec 403 (a)). In seeking to achieve these aims, Point IV is not only a significant economic program, but must also be regarded as an important political and psychological measure on the theory that economic progress and better living conditions, as well as the cooperative methods of technical assistance at the “village level” by which these results are sought, will promote political stability and popular morale, create attitudes favorable to the United States and render the people of the underdeveloped countries less susceptible to communist subversion. The Point IV program is thus an integral part of United States long-range foreign policy as well as a valuable support for current national security objectives.

4. Adherence to the original concept of Point IV would preclude close identification of that program with the defense and mobilization programs, or with large-scale overall programs of economic recovery [Page 1654] and industrial development. It is of course recognized that the Point IV program can and should contribute to national defense in a variety of ways. For example, Point IV activities could be expected to aid in exploration for new sources of strategic materials, to strengthen the economies of underdeveloped countries important to the United States defense effort, and to elicit cooperation and good will toward the United States from the governments and peoples of such countries. However, if Point IV should come to be regarded by foreign governments and peoples as primarily an adjunct to the United States defense program, designed to stimulate the development and production of strategic materials abroad, it would lose much of its political and psychological effectiveness and be looked upon with suspicion as a cloak for colonialism. Further, the Point IV concept of helping communities in underdeveloped nations to help themselves through technical assistance over a relatively long period of time is essentially different from programs of rapid large-scale industrial development or economic recovery through temporary grants of assistance. It is therefore important to avoid any risk of subordinating Point IV purposes to the objectives of other foreign aid programs, as well as to avoid as far as possible any overt implication of a direct connection between Point IV programs and programs for military or strategic materials production.

5. Administration of the Point IV program within the Department of State would appear to be consistent with the concept of the program as a permanent element of foreign policy distinct from other assistance programs of limited duration and distinct from the defense effort. On the other hand, a transfer of Point IV to the Economic Cooperation Administration could be regarded as not entirely consistent with the concept and purposes of the program. Legislation to carry out the President’s Point IV program is permanent legislation, whereas the Economic Cooperation Administration program has been regarded as being on a temporary or emergency basis and is now scheduled by law to terminate June 30, 1952. Although the President has decided to request revocation of this date, it is not now proposed to make the ECA a permanent agency. For the next several years ECA will be undertaking a major operating program in support of military assistance, particularly in Europe; and these defense-supporting activities have been publicly recognized as the major preoccupation of ECA. Hence, ECA, although it carries on technical assistance activities in connection with its economic development programs in many areas, is known at home and abroad as a temporary emergency agency focused on European recovery and increasingly identified with stimulating foreign military production in support of mutual defense efforts. There is therefore a risk that Point IV, if transferred to ECA, would tend to become identified in the minds of peoples and governments [Page 1655] abroad with these characteristics of ECA, to the ultimate detriment of Point IV objectives. Conversely, continuance of Point IV administration in the Department of State would facilitate identification of the program as a peaceful and constructive long-term foreign policy activity.

6. From the point of view of administrative efficiency, it is possible that a transfer of the Point IV program to ECA would result in certain gains over a period of time. The ECA is now responsible for technical assistance as well as economic development with grant assistance in Southeast Asia and colonial Africa; current plans would extend like responsibility to South Asia and Iran. Under this arrangement, both ECA and the Department of State are carrying on technical assistance work, in some cases in the same region although never in the same country. While this does not necessarily result in direct duplication, transfer of Point IV to the ECA would establish a unified approach to the problem of technical assistance, focus in one agency responsibility for recruitment of technical aid missions, and place in one agency world-wide responsibility for the administration of U.S. foreign economic development and assistance programs. Moreover, expansion of ECA responsibilities to world-wide scope, including direct administration of all technical assistance and economic development grant aid, would constitute a step in the direction of the recommendations made by the Rockefeller Committee, the Brookings Institution, the Public Advisory Board of ECA and the International Chamber of Commerce, that the major foreign economic activities of the government be centralized in a single overseas economic administration. It has been argued that such a step would reduce administrative overhead and might make it easier to obtain Congressional support for overseas economic programs.

7. However, it is not certain that these possible administrative gains could be realized in practice; and in any event it is probable that they would become effective only after a considerable lapse of time. The administration of the Point IV program in the Department of State is a “going concern” with a well-established identity as a result of a year’s activity in acquainting foreign governments and U.S. missions abroad with the potentialities of the program and in developing inter-departmental procedures in Washington. The initial result of a transfer would be a period of readjustment and possible confusion. In any case the Department of State could not be wholly divorced from critical responsibilities in connection with the Point IV program. Even if the program were transferred, the Department of State would need to continue to furnish policy guidance to Point IV planning, to provide essential services through its diplomatic missions abroad, and to see that a close relationship was maintained between Point IV and the United Nations technical assistance program. The [Page 1656] transfer of Point IV to ECA would not solve the problem of coordinating U.S. activities in a foreign country; U.S. foreign policy, defense activity and economic interests, and the foreign operations of all government agencies, would still require a measure of coordination.

8. In addition, the substantive operations required in carrying out the Point IV program must for the most part be performed by technical experts in the fields of soil conservation and utilization; plant and animal husbandry; forest and fisheries management; water control and use, including water supply, irrigation and reclamation, waterways, and power development; mining and fuels; health and welfare, including sanitation and nutrition; education, particularly fundamental, rural and vocational; man power training and utilization; industrial technology, facilities, and equipment; organization of business and finance; transportation; marketing and distribution. Technical competence in these fields is made available through the appropriate departments and agencies of the United States government, i.e., the Departments of Interior, Agriculture, Commerce, and the Federal Security Administration, and through the cooperation of private institutions and organizations. Regardless of the agency—whether the Department of State or ECA—in which the overall administration and coordination of Point IV is lodged, effective implementation of the program depends on continued contributions from these government departments and agencies and from private institutions.

9. If present arrangements were continued, there would be no duplication in the countries in which the Department of State and the Economic Cooperation Administration would operate. The Department of State would be responsible for administering the Act for International Development (Point IV), whereas the Economic Cooperation Administration would be responsible for administering economic aid programs in support of military programs and relatively large-scale foreign economic development programs, together with technical assistance in the countries where such programs apply. The State Department would not carry on technical assistance programs in Economic Cooperation Administration countries.

10. The above considerations on balance would appear to lead to the conclusion that the Point IV program should not be transferred from the Department of State to the Economic Cooperation Administration at this time. These considerations, however, are intended to apply only to the current proposal to transfer Point IV to ECA. In the event it were decided, as recommended in the Rockefeller and other reports, to establish an Overseas Economic Administration, headed by an administrator reporting directly to the President, for the unified and centralized conduct of all major foreign economic activities of the United States Government, a different problem would [Page 1657] be presented and it would be essential to review the administrative location of the Point IV program in the light of the status and functions of the new agency. It would also be necessary to review the administrative location of Point IV in the event the Congress, in connection with the pending Mutual Security Program, should take action pointing toward a change in existing arrangements for the administration of Point IV.


11. The Point IV program should not be transferred from the Department of State to the Economic Cooperation Administration at this time.

12. The administrative location of the Point IV program should be reviewed:

In the event it is decided to recommend the establishment of a new agency, such as an Overseas Economic Administration, for centralization and unification of the major foreign economic activities of the Government.
In the event action by the Congress on the pending Mutual Security Program renders such a review desirable.

  1. Drawer 49, Folder “Programs, Point IV.”
  2. Circulated by the Office of the Counselor of the Department of State to the Under Secretary of State (Webb), the Deputy Under Secretary of State (Matthews), the Technical Cooperation Administrator (Bennett), the Deputy Under Secretary of State for Administration (Humelsine), and the Assistant Secretary of State for Inter-American Affairs (Miller).
  3. According to a covering memorandum of July 20, by W. W. Walmsley, Jr., of the Office of the Counselor, this NSC staff study was drafted by the Coordinator of the National Security Council Staff Assistants (Boggs), for consideration by the NSC staff assistants “in the near future”, pursuant to an agreement of the Senior Staff of the NSC on June 28 at which time the Department of State was represented by the Under Secretary of State. The project was subsequently cancelled by President Truman on November 6 in view of enactment by the Congress of the Mutual Security Act of 1951.