103 FOA/9–2054
Memorandum by the Assistant Secretary of State for
Congressional Relations (Morton) to the
Under Secretary of State-designate (Hoover)1
confidential
Washington, September 20, 1954.
- Subject:
- Planning for Assumption of Administration and Congressional
Presentation of Foreign Economic Assistance Programs and for
Coordination of Foreign Military Assistance Programs.
[Page 748]
In connection with our discussion this morning2 of the Congressional directive that FOA go out of existence next June 30 and the
State Department take over the administration of the economic programs, I
think you should see the attached memorandum to the Secretary, prepared
jointly by Fritz Nolting and my office after consultation with Charlie
Saltzman.3
There are two very important problems involved:
The first is the takeover of administration. The attached memorandum
deals primarily with this and concludes with the points I mentioned
to you this morning, namely, that regardless of whether the
Executive Branch may persuade the Congress next spring to allow
FOA to continue, this is so
uncertain and the planning for an assumption of administrative
responsibility is so great that prudence requires us to start making
the necessary plans at once.
The second is the presentation to the next Congress of the economic
and military assistance programs for fiscal year 1956. In recent
years during the existence of MSA
and FOA, the preparation and
presentation of these programs to the Congress, an extremely large
and complex mass of legislation, has been coordinated by FOA. It was plainly indicated during
the hearings this summer that the Congress expects next year’s
programs to be presented by State and Defense. Although it will, of
course, be necessary (and acceptable to the Congress) to use many of
the existing FOA experts as
witnesses, this Department will have to be responsible for the
presentation of the economic programs and for coordinating the
presentation by Defense of the military programs. This also requires
early preparation.
I believe the Secretary agrees that we cannot delay in getting started to
make plans, even though we may still hope to avoid the necessity of putting
them into effect. However, I believe it is essential that, before going
ahead on this basis, understanding to this effect be reached with the
President, Mr. Stassen and Secretary Wilson, and Director Hughes. I do not
believe that the Secretary or General Smith have yet had an opportunity to
deal with this.
[Page 749]
[Attachment 1]
Memorandum by the Special
Assistant to the Secretary of State for Mutual Security
Affairs (Nolting) to the Secretary of
State4
confidential
[Washington,] September 9, 1954.
Subject: Planning for Assumption of Administration of
Foreign Economic Assistance Programs and Coordination of Foreign
Military Assistance Programs.
Problem
An early decision is needed on arrangements to be made in connection with
the Congressional directive to transfer FOA’s administration of foreign economic and military aid
programs to State and Defense.
Background
The Mutual Security Act of 1954 contains the following provisions
regarding administration and termination of functions of foreign
economic and military assistance programs:
- 1.
- Section 503(c): “Unless sooner abolished under Section 525,
the Foreign Operations Administration shall cease to exist at
the close of June 30, 1955.”
- 2.
- Section 525 states: “The President may transfer to any agency
or officer of the United States, and may modify or abolish, any
function, office or entity of the Foreign Operations
Administration or any officer or employee thereof, and may
transfer such personnel, property, records, and functions as may
be necessary incident thereto.”
- 3.
- Section 503(b) provides that “after June 30, 1955 none of the
authority conferred by this Act may be exercised for the purpose
of carrying out any function authorized by Title II” (relating
to development assistance) and allows a twelve-month liquidation
period authorizing the President to transfer the functions
authorized by Title II to another agency for the purpose of
liquidation. (The provision of the Mansfield amendment
terminating the military assistance program was deleted in the
Senate-House Conference.)
- 4.
- Section 521(b) says: “After June 30, 1955 the President shall
exercise the powers conferred upon him under Title III of this
Act through the Secretary of State.” (This refers to the
Technical Assistance Program.)
Although no provision is contained in the Act for the future
administration of the Military Assistance Program, it was repeatedly
[Page 750]
indicated by the Congress that
it should be administered by the Department of Defense.
The Congress also strongly indicated its intention that the presentation
of any future request for additional foreign aid should be presented by
the appropriate regular agency of the Government.
Experience has shown that the massive preparations required for the
formulation and presentation of programs of this size and complexity
must be begun within the next few weeks. Estimates for Fiscal Year 1956
must be ready for the President’s Budget Message in January.
Discussion
It is the view of H and S/MSA that the legislative provisions and
views stated above express the firm decision of the Congress which, in
the absence of some international emergency, will be final. Although it
is conceivable that vigorous representations by the President to the
Eighty-fourth Congress might obtain a continuation of FOA, it is our view that this would be at
the cost of a considerable measure of support for the mutual assistance
programs. Furthermore, it will not be possible to know whether such an
effort could succeed until sometime after Congress convenes. The
preparation of materials needed to develop and present Fiscal Year 1956
programs to the Congress, and the orderly dissolution of FOA and transfer of functions and needed
personnel to the Departments of State and Defense, require planning and
considerable time. If a decision is postponed until Congress convenes in
January, and if it is then determined to be inadvisable or impossible to
obtain a continuation of FOA, the
Executive Branch would be left in an unprepared position both with
respect to the presentation of the Fiscal Year 1956 program to Congress
and with respect to administering the programs after June 30, 1955.
The personnel problems involved are significant. FOA may not be able to carry out its responsibilities
effectively this year unless its personnel have some assurance regarding
their future. State and Defense should make early plans to employ those
skilled officers who may be needed in the future. In addition, absorbing
large numbers of FOA personnel will have
a substantial effect on the Department’s integration program and must be
planned for. Finally, it may be found necessary for the Department to
request legislation for additional statutory offices and for the
organizational structure needed to administer the program. Planning for
any needed legislation should not be delayed.
Recommendation
It is recommended that you meet at an early time with Secretary Wilson,
Secretary Humphrey, Mr. Stassen, and Mr. Hughes on this
[Page 751]
problem, in order to decide upon a
recommendation to the President on a course of action, and that you take
the position that, regardless of any possible effort to persuade the
Eighty-fourth Congress to continue FOA,
planning for a changeover must go forward at once. A draft memorandum to
the President is attached as a suggested instrument for setting such
planning in motion.
Concurrences
H—Mr. Morton
A—Mr. Carpenter
[Attachment 2]
Draft Memorandum for the President Prepared by the
Special Assistant to the Assistant
Secretary of State for Congressional Relations (Claxton)5
officialy use
only
[Washington,] September 9, 1954.
Subject: Planning for Transfer of Administration of
Foreign Economic and Military Assistance Programs
The Congress in enacting the Mutual Security Act of 1954 has directed
that the Foreign Operations Administration shall cease to exist no later
than June 30, 1955. It has directed that the administration of foreign
technical assistance be transferred to the Department of State and has
indicated its intention that military assistance shall be administered
by the Department of Defense. It has also indicated that all requests to
the Congress for future foreign economic or military assistance shall be
made by the appropriate regular agency of the Government. The pertinent
statements are attached.6
As you know, it is my belief—which I stated to the Congressional
Committees—that the Foreign Operations Administration is functioning
effectively and should continue. However, in view of the carefully
considered and determined action of the Congress there seems little
likelihood that the 84th Congress can be persuaded to reverse the
83rd.
In any event, the magnitude of the task of transferring the economic and
military functions now administered by FOA and of preparing the extensive material necessary for
the presentation of
[Page 752]
next
year’s economic and military aid programs is so great and so urgent that
planning for it cannot be safely deferred until a determination can be
made as to the attitude of the 84th Congress. I believe it is necessary
that planning for the transfer and for next year’s programs go forward
at once—if only on a tentative basis and subject to a possible halt. It
is also most important that the skilled and loyal employees of FOA be given some indication of their
future and that early arrangements be made to transfer and retain those
whose services will be needed.
Such planning obviously is of major concern to the Foreign Operations
Administrator, the Department of Defense, and the Department of State,
and of interest to the Bureau of the Budget and a number of other
agencies. In order to get the necessary planning under way at once, I
suggest that you authorize Secretary Wilson, Mr. Stassen, and me (or our
representatives) to begin work at once on the necessary plans,
coordinating with Mr. Hughes and other interested agencies as
necessary.
