The Director of the Bureau of the Budget (Lawton) to the Secretary of Defense (Marshall)1

My Dear Mr. Secretary: On April 5, 1951 the President addressed a letter to the Secretary of State and the Economic Cooperation Administrator defining the relationship of these agencies in the administration of foreign aid programs.2

Representatives of the Department of Defense have informally raised the question with members of the Budget Bureau staff as to whether language in paragraph 4, outlining a procedure for allocation of funds, had the effect of modifying the provisions of Executive Order 100993 dealing with the administration of the Mutal Defense [Page 306] Assistance Act of 1949. The language in question reads as follows:

“First, foreign assistance funds should be appropriated to the President as has been the practice in past years. Second, foreign assistance funds should be allocated to the operating agencies in a manner which will give the operating agencies maximum flexibility in carrying out their responsibilities. At the same time, arrangements should insure maximum coordination of programs at the departmental level, but, in the event any issues are not resolved at that level, they should be presented to the President through the Bureau of the Budget. Accordingly, the Secretary of State, after recommendation from the International Security Affairs Committee 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. The Secretary of State should make allocations of funds to the operating agencies under procedures to be approved by the Bureau of the Budget. There should be an initial allocation early in each fiscal year of the bulk of the available funds, a moderate balance being reserved for adjustments later in the year to preserve flexibility. Allocations to participating agencies for administrative expenses will be determined by the President.”

The specific question which has arisen is whether the phrase “where appropriate” in the foregoing paragraph relieves the Secretary of State of the responsibility placed upon him by Executive Order 10099 for consultation with the Secretary of Defense in making allocation of funds under the provisions of that Order. The President’s letter does not revise the requirements outlined in the Executive order, but describes in detail the procedures and working relationships of the agencies in the day-to-day administration of foreign aid programs. There well may be cases where the Secretary of State would prefer-to carry out his responsibilities under that order in direct consultation with the Secretary of Defense and the Economic Cooperation Administrator; however, I think there is general agreement that this: consultation should take place insofar as practicable through the International Security Affairs Committee established with the President’s approval on December 19, 19504 and reaffirmed in paragraph 5 of the President’s letter of April 5.

I hope that this letter will serve to clarify the President’s position with respect to the questions which have been raised. I am sending you a copy of the full letter for your information.

Sincerely yours,

F. J. Lawton
  1. Copy transmitted to the Secretary of State.
  2. For text, see circular airgram of April 12, p. 290.
  3. For text of Executive Order 10099, January 27, 1950, Administering Authority under the Mutual Defense Assistance Act of 1949 (63 Stat. 714), see American Foreign Policy, 1950–1955: Basic Documents, vol. II, pp. 3038–3039.
  4. See editorial note, p. 265.