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

Secretary’s Memoranda, lot 53 D 444, “January–June 1952”

Notes of the Secretary’s Staff Meeting, Held at the Department of State, 9:30 a.m., May 13, 1952¹

secret
SM N–31

May 13, 1952, 9:30 a.m.

[Here follows discussion of the Korean military situation, Communist propaganda activities, the Koje-do incident, Brazil, Bolivia, Panama, Peruvian tuna, and Chilean copper.]

Position Paper on General Assembly Resolution to Establish Grant Fund for Economic Development (SM D–2)²

11. Mr. Linder reviewed the background of the General Assembly Resolution to establish a grant fund for economic development. He indicated how this Resolution was passed over our opposition in the General Assembly. The question now is the degree to which we should participate on work of the Economic Committee or a working party which might be charged with developing a blueprint for such a fund. He pointed out that the Resolution probably would go to the Economic Committee, which is a Committee-of-the-Whole, and, if it goes there, there probably would be no question than that we would participate unless we walked out of the session. If the matter is referred to a special committee, the question is whether we should participate. Mr. Linder reviewed the arguments on both sides of this question. He emphasized that if we refuse to participate, this will provide enrollment propaganda for those who oppose the U.S. In any event, we would make our position clear that even if we do participate in the drafting of a blueprint, we could not contribute money for the establishment of this special fund. E and UNA have agreed that this should be our position. If the Secretary agrees, it is planned that the Department would consult with Senators Sparkman and Lodge, and Congressmen Vorys and Mansfield. Mr. Linder also recommended that this problem be mentioned to the President and the reasons given for our decision. It is likely that the Treasury Department will resist any participation on our part. Mr. Linder reviewed the main arguments for the Secretary in favor of participation: propaganda value for our opponents, holding the UN together, and preventing a division between developed and underdeveloped countries.

12. The Secretary asked what would happen after such a blueprint was drawn up and reported by the committee. Mr. Linder stated that we would make it clear throughout the development of this plan that, if and when it is reported to ECOSOC, we would not provide money for such a fund.

13. Mr. Miller suggested that we, in effect, have made a basic Government decision that we should participate in grant aid programs. If this is the case, would it not be wise to regularize such programs through the establishment of such a fund? Mr. Miller also noted that Mr. Rockefeller’s report, “Partners in Progress”, proposed such a fund and this proposal has been picked up recently by Congressman Javits. Mr. Miller felt that there was danger in our position if we participated in the development of a blueprint when, at the same time, we deny that we are going to support the establishment of such a fund. Mr. Linder stated that we can always change our mind on the establishment of such a fund. He felt that we could not get agreement in the Government or get the money granted from the Congress to assist in establishing this fund. Mr. Miller felt that if this were true, we should not participate in any way in the establishment of a blueprint. He asked for a report on the status of the Rockefeller Report. Mr. Linder stated that recommendations in the report have apparently died, and Mr. Johnston’s approach now is that he wants demonstration programs in two “typical countries”.³ Mr. Andrews added that the IDAB, in effect, rejected the Rockefeller Report at its last meeting.

14. Mr. McFall stated that it is extremely important to have consultations with appropriate Senators and Congressmen on this question. He felt that it might be possible at some stage to have a small program along the lines suggested for such a grant fund.

15. Mr. Linder gave further arguments in opposition to the establishment of a grant fund for economic development. He pointed out that grant aid should be given bilaterally and should not be given on the basis of equal shares for all. It is only natural to assume that we would want to control the granting of money to individual countries and the other developed countries would want the same. The Secretary felt that if our basic position is not to participate in the establishment of a fund, we should make every effort to prevent the establishment of this fund. It was pointed out that we made such efforts in the General Assembly and we were defeated. We have made our position clear and would continue to do so when this proposed fund is under consideration by the committee. In response to a question by the Secretary, Mr. Linder stated that Mr. Lubin could continue to advise the committee of our hopes for a sensible plan. Mr. Hickerson restated the problem. He pointed out that the basic question is whether we should decline if asked to serve on a committee for the drafting of a blueprint for a grant fund. If we served, Mr. Lubin would have a very minor role. It is assumed that the committee would find that the establishment of a fund without US participation would be unrealistic.

16. Dr. Compton reviewed some of his background on this problem. He pointed out that Santa Cruz⁴ wanted to establish a technical assistance program coupled with a capital fund. He reviewed our position in connection with this proposal. With respect to the problem at hand, Dr. Compton felt that it would be very difficult for Mr. Lubin to participate in the drafting of the blueprint if we oppose the establishment of a fund. He pointed out that at one time, Mr. Vorys was sympathetic to a one-third contribution for such a fund probably realizing that such a fund could not be established if the US only contributed one-third. In conclusion, Dr. Compton felt that if we participate in the drafting of a plan, it would take on the color of a “U.S. plan”.

17. Mr. Andrews suggested that we might switch the attack toward the establishment of an International Bank and Development Fund. He felt that if we are going to give away money through grant aid programs, we should do it ourselves. He believed that we were in an impossible position on this problem. He had some question on whether we should participate in the blueprinting of a fund when we were in opposition to the establishment of such a fund. Mr. Linder commented on Mr. Andrews’ statement on the International Bank and Development Fund. He pointed out that the Bank was asked by ECOSOC for its comments on a sister institution which would make loans with no guarantee. The Bank has prepared a report, and it is possible that Mutual Security money will be available for a contribution to the Bank for such purposes. However, before this is done, we will ask the Bank to draw up specific plans for such an institution. He felt that the problems between the General Assembly Resolution for a grant fund and the sister institution referred to by Mr. Andrews were different and should be handled separately.

18. In response to a comment by the Secretary, Mr. Linder pointed out that we would make clear at every step that we would not contribute money to such a fund. He stated that the UN may never get to the point of asking for contributions since the proposal may die in committee or in ECOSOC. Mr. Andrews felt that if we are going to drag our feet on the establishment of a fund, we might just as well do so at this time. The Secretary was not prepared to make a decision as the result of this discussion, especially in view of some differences of opinion. Mr. Bruce felt that we could probably get by with the position recommended by E and UNA. The Secretary believed that we should have free consultation with the Hill before any decision is made. Mr. Nitze stated that this is only a tactical question, and we are not asking Congress for money. He felt that if we go to Congress for consultation, we should have a definite opinion on what we believe we should do.

19. The Secretary concluded that our representatives should discuss the problem with appropriate Senators and Congressmen, and tell them of the recommendation which has been made to the Secretary. They should note the differences of opinion in the Department and that at the present moment the Secretary is thinking about the problem and would like to have the views of these Senators and Congressmen.⁵

1. The Secretary of State’s Staff Meetings, held two or more times a week, were generally attended by the Under Secretary, the Assistant Secretaries, and members of the Secretary’s staff. Topics discussed included a wide range of policy issues.
2. Dated May 2, 1952, p. 230.
3. Eric Johnston, Chairman of the International Development Advisory Board, presented his ideas in an address before the National Conference on International and Social Development in Washington on Apr. 9, 1952. Excerpts of the speech are printed in the Department of State Bulletin., May 12, 1952, pp. 747–751.
4. Dr. Hernán Santa Cruz (Chile), President of the U.N. Economic and Social Council, Feb. 20, 1951–May 20, 1952.
5. At the Secretary’s Staff Meeting of May 20, 1952, Assistant Secretary McFall stated that Lubin and other members of the Department had met with Congressional representatives who had agreed that the United States should participate in the discussions on the establishment of the fund but should make it clear that it could not contribute to the fund if it were established. (Secretary’s Staff Meetings, lot 63 D 75)