Foreign Relations of the United States, 1952–1954, General: Economic and Political Matters, Volume I, Part 1

A/MS files, lot 54 D 291, “Foreign Operations Administration”

Memorandum by the Under Secretary of State (Smith) to the Secretary of State¹

confidential

[Washington,] September 23, 1954.

I discussed the substance of the attached memorandum from Mr. Nolting² with Secretary Humphrey privately. We both agree that:

(a) The 84th Congress is very likely to terminate FOA as an operating organization. Secretary Humphrey goes further and says that in his opinion even vigorous representations by the President will not prevent this.

(b) Planning for the orderly dissolution of FOA and the transfer of functions and needed personnel should be done as soon as possible.

(c) This planning must be done on a highly restricted basis because of the effect on FOA’s present operations and personnel.

Secretary Humphrey feels, and I agree, that it is essential for Director of the Budget Hughes to participate, and that little progress would be made in his absence. We do not think we should discuss this with the Deputy Director. Mr. Hughes will return on October 5, and I suggest that immediately thereafter you or Mr. Hoover ask him to call a meeting on his own initiative of Secretary Humphrey, Secretary Wilson, and yourself or Mr. Hoover, together with Mr. Stassen, in order to discuss the problems presented by the possibility that, regardless of any effort to persuade the 84th Congress to the contrary, FOA may be discontinued. I think it is better to initiate the action this way than for you to go to the President about it, as organizational planning of this kind is one of the functions of the Budget Bureau. Secretary Humphrey is at present acting as a “non-partisan” chairman or arbitrator to iron out the dispute between the Defense Department and FOA regarding the extent of coordination. He said that a solution written by him could not remain effective because of the different interpretations of coordination, and he would prefer this matter of organizational planning to be done by other than those who participated in the unsuccessful exercise.

W.B.S.

1. Also addressed to Under Secretary of State-designate Hoover.
2. Reference is presumably to the memorandum by Nolting to the Secretary of State, dated Sept. 9, 1954, which is printed as Attachment 1 to the memorandum by Assistant Secretary Morton to Under Secretary-designate Hoover, dated Sept. 20, 1954, supra.