Memorandum by the Acting Secretary of State to the President
- Appointment with Israel Foreign Minister, Mr. Moshe Sharett.
The Israel Minister for Foreign Affairs, Mr. Moshe Sharett, and Ambassador Eban have an appointment with you Tuesday, July 1, at 12:15. While the ostensible purpose of the call is one of courtesy prior to his return to Israel, it is possible that the Foreign Minister may take the opportunity to mention Israel’s, present financial difficulties.
In this connection, Mr. Sharett has already requested United States Government assistance in refunding Israel’s short term debt, stated to amount to $124 million. Possibilities suggested by the Foreign Minister included an Export Import Bank loan or use of the United States Treasury Stabilization fund. The need for such aid has not yet been proven, nor has it yet been possible to evaluate its effect upon our policy of impartiality in the Near East.
The difficulties are such that Dr. Raymond F. Mikesell, Professor of Economics at the University of Virginia and consultant to various government agencies, is being sent to Israel, with the cooperation of the Israel Government, in an endeavor to obtain sufficient information about Israel’s financial and economic problems to recommend methods and policies for solving them.
The important points made by the Secretary in his conversation with Foreign Minister Sharett and Ambassador Eban were: (1) He would have the matter gone into urgently; (2) Mr. Mikesell is being sent to Israel to try to find an answer to Israel’s financial troubles; and (3) we must determine whether Israel’s financial policy will be effective or whether Israel will continue policies “which would recreate the present situation.”
The Foreign Minister and the Ambassador were informed along the same lines in interviews with Assistant Secretaries Byroade and Thorp and, it is understood, with Secretary Snyder of the Treasury, as well as with Mutual Security and Technical Cooperation Administration officials.
There are attached in the event you wish to review them:
- A memorandum on the background of Israel’s financial problem, including the factors which have precipitated the present crisis. (Tab A)1
- A summary of United States Government aid to Israel. (Tab B)
- A summary of basic Israel financial statistics. (Tab C)
- A memorandum of the conversation of June 18 between the Secretary, Foreign Minister Sharett, and Ambassador Eban. (Tab D)2
In the event that Mr. Sharett raises the question of further financial assistance for a refunding operation, it is recommended you advise Mr. Sharett
- that the subject is now under study by Dr. Mikesell, who is on his way to Israel;
- that any action will depend in part on the nature of his findings; and
- that Israel should by no means assume that a favorable reply is a foregone conclusion.
- The tabs, not found attached to the source text, are supplied here from the ribbon copy of the memorandum in the Truman Library, Truman papers, President’s Secretary’s file. Tabs A, B, and C are the same as correspondingly designated attachments to a memorandum of June 17 from Byroade to Dulles (not printed) which discussed the Israeli financial emergency in anticipation of Sharett’s visit to the Department on June 18. (884A.10/6–1752)↩
- Document 446.↩