Attached is a rather drastic memorandum which the “Executive Group” is
submitting to you. I should tell you that it represents a good deal of soul
searching and is in no way motivated by “Departmental” attitudes on the part
of any of the three of us.
We had in mind that, if you agree to this memorandum as a basis for
discussion, it should be given Messrs. Foster, Lovett, Harriman, and Lawton,
and that they should then meet with you, within the next few days, to agree
on concerted recommendations to the President.2
Could we see you on this matter at your earliest convenience—preferably
before 4 p. m. today, when we must meet with the White House offices4 to review draft of the
President’s Message, which includes statements on organization.
[Annex]
Memorandum by the Executive Group on Foreign Aid
Presentation to the Under Secretary of State (Webb)
confidential
[Washington,] April 23, 1951.
Subject: Organization for Administering the Mutual
Security Program
The Problem
1. It is the considered opinion of our group that a clear exposition of a
sensible organizational arrangement for implementing MSP is
[Page 301]
essential to an adequate and
successful presentation of the program to Congress. This has been
confirmed from many sources, including informal contacts on the
Hill.
2. A revision of the proposed chapter on organization for the
presentation document has been prepared by a group working under the
chairmanship of Mr. Burton of the Bureau of the Budget. This document is
confused, unclear, and would only emphasize to Congress that within the
Executive Branch there is not a comprehensive and effective
organizational concept for implementing MSP.
3. The President’s letter of April 5 on organization has not clarified
the basic issues involved in establishing an effective organizational
arrangement.
4. The President’s letter has reached the press and has evoked critical
comment, not only from the press, but also from public and private
organizations and individuals.
5. The time remaining before presentation of the President’s message to
Congress on MSP is so short that it will take extraordinary action to
improve the present situation.
Facts and Discussion
6. There is no basic issue taken by any of those concerned with the
organizational problem to the fundamental premise that the State
Department should exercise leadership, guidance, and in the final
instance, control—subject only to Presidential determination if other
interested Cabinet officers object—over all elements of the foreign
policy of the United States and over the policies and principles to
govern the operations of other agencies involved in overseas activities
insofar as they affect Foreign Policy considerations.
7. Confusion and conflicting ideas exist, however, as to arrangements for
policy coordination and the assignment of operational responsibilities
under established policies and principles.
8. There are two principles which, we believe, should govern
organizational arrangements for carrying out the MSP. They are:
-
a)
- The arrangements should be so designed as to assure that all
U.S. operative agencies abroad carry on their activities in
accordance with U.S. foreign policies and objectives common to
all. This means effective coordination and genuine agreement by
all concerned on these policies, and a system for general review
of operations to see that they are, in fact, conforming to such
policies.
-
b)
- The organizational arrangements should be as simple as
possible and lead to the best and most rapid furtherance of U.S.
objectives, with least expenditure of American resources in
either money, manpower, or physical materials.
9. These principles should be applied to the present confused
organizational picture. There are seven principal problem areas which
need clarification. These are listed hereafter; first, the questions
arising
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from the President’s
letter of April 5, and, second, the remaining issues.
The President’s Letter
10. The question of one “Overseas Economic Aid
Agency”. Both the Gordon Gray Report5 and the
Rockefeller Report have specific recommendations to the effect that a
single Overseas Economic Administration should be established. We are
not yet aware of the recommendations of the Brookings Institution.6
However, in our view, the whole concept of a global foreign aid program
makes it imperative that the question be faced now. We believe there is
need for a comprehensive Overseas Economic Aid Agency to carry out the
operations of administering such aid abroad. It seems to us, further,
that there are not sufficient reasons to justify continuing duplicative
separate organizations involved in foreign aid and assistance such as
TCA and the ECA’s organization for technical assistance, particularly
in light of the need for better U.S. organization to develop the
increased production by foreign countries of strategic materials. We
recommend that ECA be made the sole
agency administering foreign economic aid and that urgent consideration
be given to the transfer of TCA and
IIAA to the ECA, taking care to preserve appropriate authority and
prestige for Dr. Bennett7 and his staff within the ECA. We believe this can be done.
11. The question of the Allocation of Aid Funds.
The President’s letter states: “. . . the Secretary of State, after
recommendation from ISAC where
appropriate, should make the broad decisions concerning the use of funds
as between (a) military end-item assistance and
economic support and (b) major political areas”.
It is understood that this decision, although its scope and intent has
been much misunderstood, was reached without consultation with the
Department of Defense and has raised objections there. We do not believe
this question is substantively of major importance, but as it seems to
be interpreted by the public and by Congress it may be difficult to
handle. If it would be interpreted, as we believe it must, to mean
allocations only within the legislatively permitted flexibility between
programs and between Titles of the Act, it becomes less important. If
further it is recognized that it does not prohibit either the Secretary
of Defense or the Administrator
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of the ECA from protesting to the
President a decision made by the Secretary of State to which they do not
agree, it is even less important. It does not, therefore, seem to us to
warrant the political fight it will evoke on the Hill. We recommend,
therefore, that in the President’s message, it be explicitly stated that
there is no intent to alter the status and authority of the Secretary of
Defense and the ECA Administrator, a
fact evidenced by their continued responsibility to appeal to the
President in any case in which they find themselves unable to accept the
allocations of funds made by the Secretary of State.
12. Functions of ISAC. The President’s letter leaves it unclear as to
whether ISAC will continue to operate
under its existing charter, which limits its activities to “Security
Affairs”, or whether it should be the over-all interdepartmental
coordinating mechanism on all assistance programs of whatever nature. In
the formulation of proposed programs for MSP we have found, for
instance, that the military and economic programs for Asia were not
adequately related. Specifically, in the Formosa program we found that
the end-item program was based on the assumption that certain items
essential to make the military program effective would be covered in the
economic programs. They were not—to the tune of many millions of
dollars. We recommend that ISAC clearly
and explicitly be given comprehensive responsibility for the
coordination of foreign assistance programs, both military and economic
including technical cooperation programs, for all regions of the
world.
The Other Urgent Issues
13. The question of “primary operating
responsibilities” for operating agencies. In the past there has
been considerable duplication of effort and much jurisdictional argument
arising from the Department of State and other agencies screening in
detail the technical work of agencies charged with primary
responsibilities for operating programs. The Interdepartmental agreement
establishing ISAC, approved by the
President on December 19, 1950, established in its paragraph 7 the
primary responsibilities of the operating agencies. When ISAC is considering the allocations of
funds for carrying out programs or is approving programs, we recommend
that the State and Treasury Departments should accept, with a minimum of
double-checking, the technical statistics and recommendations provided
by the agencies with operating responsibility and should confine their
reviews to broad judgments on major issues. The pre-occupation of the
Chairman and State member of ISAC
should be to expedite the evolution of clear basic policies and
principles, related to our overall Foreign Policy objectives, to govern
operations under the MSP, and to achieve proper balance in the
allocation of funds. He should not require his State Department staff to
duplicate the detailed technical work performed by agencies with
operating responsibility, nor to
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clear, in advance, technical operating instructions to the field
within the framework of established policy. He should, however, be given
for information copies of all such instructions when dispatched and his
staff should review them to see that they do not diverge from
established policy. If any instructions should so diverge, he should
initiate immediate and appropriate remedial action.
14. The question of the proper relating of technical
and grant economic assistance programs with the making of
Export-Import Bank, International Bank and other loans. The
implementation by the U.S. of a program for technical assistance and
economic development grant aid in an underdeveloped country without
there being the closest relationship between the implementing agency and
the U.S. agency (and international agency) responsible for making
governmental loans to the same country makes little or no sense. This is
especially true in countries—and there are many—whose credit position is
good and which are accruing gold and dollar reserves. We believe that in
each underdeveloped country, the effort should be made, principally by
the country government but with technical assistance from U.S. personnel
(or International Bank personnel) if needed or justified by the U.S.
national interest (or United Nations interest), to work out an overall
development program for the country. This slowly evolving program would
give proper and specific account of the varying sources of funds—the
government’s, private capital, Bank loans and U.S. technical assistance
and grant aid. In cases where U.S. political interests necessitate grant
aid to “spark-plug” needed action, this should be taken into account. We
believe Congress will wish to be assured that we are in fact moving to
establish such procedures. This has not been true, to any substantial
extent, in the formulation of country programs in the proposed MSP. We
recommend, therefore, that the current consideration by the N.A.C. of
this question be expedited and be aimed at effecting in the near future
satisfactory working relationships between and among the Export-Import
Bank, the International Bank, the ECA,
the Department of State and the Treasury.
15. The question of a consolidated U.S. organizational
arrangement for increasing the development and production of
strategic raw materials in foreign countries.8 At the present there are a great many U.S.
agencies involved in this area of activity, but there is no clear
assignment of responsibility for the foreign operations in any one
agency. In view of the vital importance of this subject to our national
security and the obvious importance of relating our foreign assistance
programs, particularly in underdeveloped areas, to the attainment of
U.S. objectives in this regard, we believe Congress will wish to be
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assured that necessary
reorganization to this end is under way. Accordingly, we recommend that
urgent attention be given this question by the Executive Branch, that
appropriate action be taken to expedite the necessary studies and that a
recommendation, including the designation of one agency, possibly the
ECA, to be responsible in this
field, be made to the President on this matter at the earliest feasible
date.
16. The question of the organizational arrangements
necessary to assure that “claims” by foreign countries for
allocations of scarce materials and goods from the U.S. are
presented and acted upon by agencies of the U.S. Government in the
way best designed to promote the U.S. national interest. This
is a most complicated question and will require a considerable time to
work out adequately in all of its ramifications. We mention it because
we believe the success of the whole concept of the MSP will depend more
on the availability for transfer to other countries of actual goods and
materials from the U.S. at the times they are needed than upon the mere
appropriation of funds for the program. The problem encompasses more
than the availability just of the materials to be shipped under grant
aid and includes those essential items needed by countries no matter how
paid for. The obtaining for the U.S. of requisite amounts of strategic
raw materials is implicitly involved. We recommend that continued
attention be paid this question by the Executive Branch to the end that
arrangements adequate to cope with the problem can be effected as
rapidly as feasible.
