Office of the Historian

840.00–FA/9–2451

Memorandum by the Deputy Director of Mutual Defense Assistance (Ohly) to the Secretary of State 1

secret
[Washington,] October 13, 1951.

Subject: Attached Reply2 to the President’s Letter of September 24, 1951.3

Discussion:

In a letter to you dated September 24, 1951, the President requested that the International Security Affairs Committee re-examine the estimated dollar assistance needs of the Western European countries, consider various possible means of providing such assistance, and develop a fully coordinated plan for military and economic aid to Western Europe during fiscal 1952. The President requested a reply by October 12. A copy of the President’s letter is attached at Tab A.

The member agencies of ISAC—together with the Bureau of the Budget and other interested agencies—have carefully studied the six specific points to which the President sought answers. However, it has not been possible to respond fully to the President’s letter pending the completion of certain studies now under way in the Department of Defense. A further reply will be made when those studies have been completed.

The studies on which the reply is based conclude that with the provision of economic aid to Title I countries of $968,000,000, the Title I countries will be able to support defense expenditures of $11,209,000,000. On the other hand, if U.S. dollar assistance of $1,836,000,000 is provided, the defense effort of Title I countries can be increased to $12,456,000,000. Thus, an increase in European defense effort of $1,247,000,000 can be obtained by an increase in U.S. aid of $868,000,000. Any increase in dollar assistance over the amount appropriated for economic aid would come from such devices as offshore procurement of military end-items, transfer of funds (up to 10 percent) from end-item authorizations to economic aid authorizations, etc.

The reply to the President also recognizes that in view of the trend of the United Kingdom financial situation it might be necessary to finance—in some fashion—United Kingdom imports in an amount estimated at $300,000,000.

Recommendation:

That you sign the letter to the President at Tab B.

  1. Drafted by William J. Sheppard of S/ISA. Sent through the Executive Secretariat with concurrences by EUR, E, Treasury, Defense, ECA, and Harriman.↩
  2. Not printed; it was approved by Secretary Acheson and sent to the White House on October 16.↩
  3. Ante, p. 284.↩