Department of State Administrative Files, Lot 54 D 291

Memorandum by the Director of the Management Staff (Heneman) to the Deputy Under Secretary of State for Administration (Humelsine)


Subject: Summary of Administrative Aspects of the Mutual Security Program

I. Summary of Proposed Mutual Security Act of 1951.

A. Scheme of Legislation—The MSA provides for appropriation of funds to the President to be administered under the provisions of the following existing legislation:1

  • The Mutual Defense Assistance Act of 1949, as amended, (MDAA).
  • The Economic Cooperation Act of 1948, as amended, (ECA).
  • The Act for International Development, (AID).

B. Contemplated Programs—Program authorization is on a regional basis—Europe, Near East and Africa, Asia and Pacific, and the American Republics. Within each of these four areas separate authorizations are contemplated for military and economic assistance as follows:

Title I—Europe—Separate appropriation proposed for military and economic assistance with limited transferability (present consideration is 5 per cent of total for both programs) between them to be administered under the MDAA and ECA legislation, respectively.

Title II—Near East and Africa—provides for separate appropriation for military assistance to Greece, Turkey and Iran, and permits the President to utilize up to 10 per cent of this amount for military assistance to any other country of the Near East if he deems it necessary for the security of the United States, to be administered under the MDAA. A separate appropriation is provided for economic and technical assistance in Africa and the Near East to be administered, as the President shall direct, under the provisions of the ECA or AID. Contribution up to a certain amount may be made to the United Nations for its Palestine Refugee Program from this authorization.

Title III—Asia and Pacific—Separate authorization for military assistance is provided for the “general area of China” to be administered under Section 303 (a) of the MDAA. Separate provision is made for economic and technical assistance to be administered, as the President shall direct, under the ECA or AID. In addition, provision will be made for contribution to the United Nations Program for Korean Relief (UNKRA).

Title IV—American Republics—Separate provision is made for military assistance to be administered under the provisions of the [Page 314] MDAA and for technical assistance to be administered under the provisions of the AID and IIAA legislation.

Title V—General Provisions—Among others, the MSA contains the following important general provisions:

A power of limited transferability (10 per cent of the funds in any one title presently contemplated) between titles is granted to the President.
The President is authorized to contribute up to a certain amount of the funds authorized for economic and technical assistance under Titles I-III to the United Nations for its technical assistance program.
Provision for a $20,000 per annum job for the Director of S/ISA, which is in addition to the $16,000 and three $15,000 positions provided for by Section 406 (c) of MDAA. Provision is also made for super grades to carry out the purposes of the MSA.

II. Proposed Administrative Arrangements.

Operation of Programs.

European Programs—The military assistance program under Title I will be operated by the Department of Defense and the Economic Assistance Program (including programs in DOT’s) by ECA.

Non-European Programs—The military assistance programs contained in Titles II-IV will be operated by the Department of Defense and the operation of the economic and technical assistance programs will be divided between State (TCA and IIAA) and ECA as follows:

State will have responsibility for the programs in the countries of Latin America, Near East (with the exception of Greece, Turkey, Iran and Israel), Egypt, Ethiopia, Libya, and Liberia, where the programs consist primarily of technical cooperation—and ECA will have responsibility in all other countries, where the programs consist primarily of direct aid for consumers needs and capital development. There may be Point Four programs in these ECA countries, but Point Four will be operated in the field through the STEM or other ECA mission.

B. Organization for Program Review and Coordination.

European Programs—The International Security Affairs Committee (ISAC) will continue as the Inter-Agency policy, program and coordination arrangement for the European Programs.

Non-European Programs—The ISAC coordinating mechanism will be extended to include all military and economic programs outside of Europe. Considerations are under way at present for the reorganization of ISAC to include these programs.

C. Procedure for Program Review and Funds Control.

The President’s letter of April 5, 1951,2 states that the Secretary of State, after recommendation from ISAC where appropriate, should [Page 315] make the broad decisions concerning the use of funds as between (a) military end-item assistance and economic support and (b) major political areas and that he should make these allocations to the operating agencies under procedure to be approved by the Bureau of the Budget. The MSA appropriates all funds to the President according to Titles with limited transferability among the Titles and in certain instances within each Title. Pursuant to this it is proposed that the following procedure for the review of programs and control of funds will be followed:

The operating agencies will prepare country economic and military aid programs for submission to ISAC for “review and coordination.”
On the basis of the agreements reached in ISAC the operating agencies will prepare a financial plan and a supporting funding request for the accomplishment of the program.
ISAC shall recommend to the Secretary of State the approved programs together with supporting financial plans.
In accordance with existing procedures (Budget-Treasury Regulation No. 1) the Secretary of State shall consolidate such financial plans and submit to the Bureau of the Budget a request for apportionment of funds (Standard Form No. 131) for each appropriation.
A request for apportionment shall be justified by the appropriate operating agency with assistance from the Department of State.
The Bureau of the Budget shall make apportionments for each appropriation to the Secretary of State.
The Secretary of State shall allocate funds on the basis of apportionment made by the Budget Bureau and in accordance with funding requests submitted by the operating agency.
Each operating agency shall submit financial reports required by Budget-Treasury Regulation No. 1 to the State Department which shall prepare the necessary consolidation for submission to the Budget Bureau.

The above summary is based largely on the following documents which are attached for your further edification:

The President’s letter of April 5, 1951, setting forth the general pattern of State-ECA relations for the program.
Mr. Foster’s letter to the President of April 18.3
A letter from the Bureau of the Budget to the Secretary of Defense of April 24, 1951, clarifying the meaning of the part of the President’s letter dealing with allocation of funds.4
An A/MS staff memorandum of April 27, outlining steps contemplated for program review and funds control.5
An A/MS staff memorandum of April 23, outlining formula for division of responsibility between State and ECA for economic assistance to underdeveloped areas.6 This proposal is substantially the one agreed to by Mr. Webb after talking to Dr. Bennett.

  1. For information on existing foreign aid legislation, see footnote 3, p. 267.
  2. For text, see circular airgram of April 12, p. 290.
  3. Ante, p. 298.
  4. Ante, p. 305.
  5. Not printed.
  6. Not printed, but for documentation on the Point Four Program, see pp. 1641 ff.