700.5 MSP/12–754

Memorandum by the Special Assistant to the Secretary of State for Mutual Security Affairs (Nolting) to the Secretary of State1

top secret

eyes only

  • Subject:
  • Organization Plans for the Mutual Security Program.

The Under Secretary gave me an outline yesterday evening of the tentative conclusions reached with Secretary Humphrey at your meeting yesterday afternoon.2 I believe you would want me to give you my considered reaction to these proposals, even though my view may run counter to what has already been tentatively agreed.

[Page 799]

I should say first that I fully appreciate the difficulties, both substantive and of a personal nature, involved in a decision on this subject and I am very happy that an initiative has been taken to face the issue and to resolve it. However, if I understand correctly the nature of the proposed solution, I must state my conviction that it moves us in the wrong direction. I think those most closely connected with the foreign economic field, including the foreign aid field, are unanimous in their opinion that what is needed is more consolidation, not less. Certainly this is my own conviction. The purpose of all of our actions in the foreign economic field, including the Mutual Security Program with its military segment, is to provide a tool to help fulfill our foreign policy objectives as determined by the President and the Secretary of State. The Mutual Security Program, in particular, is a single tool and can best be utilized to promote our foreign policy when it is regarded and administered as a single tool. To divide this tool among various agencies of government is to diminish its effectiveness, however much cooperation and agreement is achieved among the heads of the departments involved. It has been my experience that the inevitable workings of departmental bureaucracies tend to segment and compartmentalize the activities for which the various departments are responsible, and that no amount of topside coordination can bring about a truly unified effort where the various functional parts are distributed among a number of different agencies and departments. My conclusion on this point, I think, is validated by the history of the Mutual Security Program. Experience and trial-and-error over the past five years has led to the conclusion that the administration of these programs should be consolidated, rather than proliferated. It is not enough, I think, to attempt to consolidate them on a policy level. It is necessary also, in so far as possible, to consolidate them on an operational level.

I believe it is in the United States interest to continue for an indefinite period the major activities of the Mutual Security Program. Changes in the form of assistance, different and better techniques, longer range planning, perhaps a different and better distribution of U.S. resources by area, are doubtless needed and should be under constant consideration. Some of the peripheral activities of the FOA (several of which are imposed by legislation) should be dropped. But the major components of this activity, I believe, are in the interest of the United States so long as the cold war continues, and perhaps thereafter.

I think the decision to acquiesce in the “Mansfield Amendment”3 is a wise one, since to buck this amendment would result in the [Page 800]alienation of support for the programs themselves, to an extent that would jeopardize their authorization and the appropriation of necessary funds to conduct them. I am quite clear, however, that what the proponents of this amendment had in mind was not the scattering of these functions throughout the government, but rather the consolidation of the essential ones into two old-line departments of the government—namely, the Departments of State and Defense.

I understand your reluctance to take back into the State Department a large operating branch. It was, however, the clear desire of the Congress that the non-military parts of the Mutual Security Program should be conceived, formulated, presented, and administered by the Department of State. This was for two reasons: to assure the Congress that these programs are in fact a necessary tool of our foreign policy, and to bring about a unified administration of them, both at home and abroad. It was also the clear intention of the Congress that the military parts of the program should be conducted by the Department of Defense, under the policy guidance of the Secretary of State.

I do not believe the tentative decisions of yesterday, as I understand them, accomplish the objectives of the Congress, nor do I think they are administratively sound. Those proposals, as I understand them, envisage the introduction of at least two and perhaps more operating agencies, and the elimination of one. The two additions would be the Treasury Department and the Commerce Department (for the Battle Act) and perhaps some other agency or agencies for the Technical Cooperation Program, besides the Department of Defense for military programs and for economic “defense support” grant assistance. This would presumably leave the responsibility for the coordination of the various programs with the Secretary of State, who could not, in my judgment, exercise adequate control over their operation. I think Mr. Saltzman could give you a first-hand account of the difficulty he experienced in giving policy guidance to the “Occupied Areas Branch” of the Defense Department, which was engaged in the economic aid business after World War II, and I feel that such experience is relevant to your consideration of this problem.

As stated in my memorandum to you of yesterday,4 I think that unless the decision is made to take back into the State Department the major non-military programs, the only sensible alternative is to try to persuade the Congress to continue some such central coordinating and operating agency as the FOA.

F. E. Nolting, Jr.
  1. Addressed also to the Under Secretary of State. Another copy of this memorandum is in the Eisenhower Library, John Foster Dulles papers, 1951–1959, “ICA Matters”.
  2. Attached to the memorandum of this conversation found in the Dulles papers cited in footnote 1 above is a brief “Memorandum of Conversation With Mr. Humphrey, Secretary of the Treasury (Mr. Hoover present)”, Dec. 6, 1954, on the subject “Reorganization of FOA Functions”, drafted and signed by Secretary Dulles. It reads as follows:

    “There was discussion of the possibility of reorganizing the present functions of FOA along the following lines:

    “1. Military assistance programs and Defense support programs to be administered by the Department of Defense once the policy and amount had been decided on with the concurrence of State.

    “2. Economic assistance to take primarily the form of ‘soft’ loans and to be made by the Treasury Department under the direction of the Department of State. Treasury would be authorized to advance funds under these circumstances up to some agreed amount, say $500,000,000 to $1,000,000,000, and when this amount was exhausted then the matter would go back again to the Congress for further authorizations if deemed desirable.

    “3. Policing of the Battle Act to be turned over to the Department of Commerce.

    “4. Handling of Technical Cooperation programs recognized as requiring further study.”

  3. See the memorandum by Nolting to the Secretary of State, July 12, 1954, p. 739.
  4. Supra .