800.00–FA/2–2751

Memorandum of Conversation, by the Secretary of the Foreign Aid Steering Group (Toner)

confidential

Subject: Foreign Aid Legislation

Participants: Messrs. James E. Webb
John Howard1
Leroy Stinebower2
Robert Barnes3
Albert Toner

Mr. Webb explained that he intends to participate more closely in the preparations for the legislation. At the moment he was interested [Page 281]in the principal issues being considered interdepartmentally and how the Department stands on its obligations to coordinate the preparations and get the bill to the Congress.

Funds for Europe

Mr. Webb said that the Bureau of the Budget is inclined at the moment to prefer a one-figure appropriation, subject to retreat to an alternative, if necessary, in the hearings. Mr. Webb said he would mention this problem, among other things, when he saw Mr. Lawton4 later in the afternoon. His feeling was that the issue was not vital to us; but he thought it would be very important to ECA in view of the difficulty of defining the different kinds of aid. If he were the Director of the Budget, however, he would be inclined, like Defense, to favor the two-figure arrangement.

Mr. Webb then telephoned Mr. Lovett5 of Defense, who personally gave strong support to the two-figure approach, commenting that the planning of military end items must be developed on a solid basis. He pointed out that these items will have to be justified from a sound program supported by their basic planning. He also believed that this alternative would be better received by the Congress.

After the telephone call, Mr. Webb said that the Budget Bureau evidently prefers the one-figure for reasons of flexibility and because of some feeling that the end items may be soft.

Mr. Howard reviewed the various agency positions on this problem.

Mr. Webb said that in his informal meeting with Mr. Lawton he would present the State view but felt obligated to explain Mr. Lovett’s position as well.

Mr. Howard mentioned the possibility of an interdepartmental meeting at the Under Secretary level, but the Under Secretary expressed doubts that Mr. Lovett would want such a meeting.

Mr. Howard made it plain that there would be plenty of separate figures in the justification but that the European problem is one of what to put into the bill. He felt personally that the issue is not really a major one and that the Under Secretaries should not be bothered with meeting on it. He believed that the Budget Bureau should decide the question and Mr. Webb appeared to agree.

Form of Budget Presentation

Mr. Howard explained that the Budget Bureau has asked us to present the programs not only on the basis of our judgment of European [Page 282]requirements but also to show what the Europeans will commit themselves to do. Mr. Howard felt that this proposal did not make sense and that to adopt it would cost us another month. Mr. Webb agreed, commenting that our intention is to provide the Europeans with incentives to greater effort.

Mr. Howard said that Mr. Lawton wants the President to decide this question but that we should present our own views.

Mr. Webb said that he would discuss this problem at a later time with Mr. Lawton, if he were requested to do so by Mr. Thorp.

State–ECA Relations

Mr. Howard said that he understood that consideration of organizational relations between the two agencies is not progressing as it should, which could result in a delay on our final deadlines. He commented that it is still possible to go to the Hill early in April but that we are estimating a presentation date of April 15, assuming that the Budget proposal on European commitments does not prevail.

Point IV

Mr. Stinebower reviewed, at Mr. Webb’s request, the grant aid projections for the Near East, South Asia and Latin America.

Mr. Webb asked what the effect would be if Point IV were separated out. He said he would like to see Point IV separate from ECA because of the forthcoming dispute over ECA’s future. He felt reluctant to throw a going program into that struggle, now that we have appointed an Administrator and have gone through much hard work to get the program under way. He asked how our programs would be affected if Point IV were removed.

Mr. Howard said we have tried for an integrated economic program in each country.

Mr. Stinebower said that the most difficult question is whether Point IV is a regional program or whether Point IV would also have programs in areas in which ECA operates. He said that it would have to be presented to the Congress along with the others, in any case.

Mr. Webb expressed the opinion that the commercial treaty program is the principal element in the long range economic future and that Point IV is essential to it. Removing Point IV from the Department would threaten that program.

Mr. Howard explained that we have tried not to prejudge the administration of Point IV and ECA in planning the programs. He mentioned that we have different programs now operating in the same country, which the Congress does not like.

[Page 283]

Mr. Stinebower reviewed the existing and proposed STEM missions6 for Mr. Webb. Answering Mr. Webb, he said that the relationship between UN technical assistance and the STEM’s would be worked out mainly at the country-level through our embassies.

After some discussion of State–ECA relations in the field, Mr. Stinebower felt that the biggest problem in the presentation would be in defining what to separate off as Point IV. It would be better, he felt, to allocate all of the funds to the President and let him make this decision.

Mr. Webb wondered whether it would be undesirable to limit Point IV to countries not receiving military aid, except for certain “border” countries.

In a discussion of the private investment possibilities of underdeveloped areas, Mr. Webb felt that all that is needed is a restoration of confidence and world stability, although it was agreed that the problem now is the high rate of return within the US on private capital.

Breakdown of Figures

Mr. Howard reviewed briefly the dollar breakdowns in the justification by area and major programs.

Mr. Webb said that in a similar meeting next week he would like to go over the programs and figures more closely. He also expressed an interest in studying the Point IV question further.

  1. Director of the Executive Staff, Foreign Aid Steering Group.
  2. Chairman of Task Force II (concerned with non-European areas), Foreign Aid Steering Group.
  3. Assistant Chief of the Policy Reports Staff, Executive Secretariat.
  4. Frederick J. Lawton, Director of the Bureau of the Budget.
  5. Robert A. Lovett, Deputy Secretary of Defense.
  6. Reference is to the Special Technical and Economic Missions operated by the Economic Cooperation Administration in Southeast Asia.