Foreign Relations of the United States, 1952–1954, East Asia and the Pacific, Volume XII, Part 1

FE files, lot 55 D 480

Memorandum by the Economic Coordinator in the Bureau of Far Eastern Affairs (Baldwin) to the Assistant Secretary of State for Far Eastern Affairs (Robertson)

confidential

[Washington,] August 26, 1954.

FOA Meeting on Asian Economic Program

On August 20 Mr. Stassen called a meeting of members of his staff, including Dr. FitzGerald¹ and General Porter² to discuss “the guidelines developed by the State Department Working Group on the establishment of a Far East Regional Organization.”

The conclusions reached at the meeting were that:

(1) The FOA should give a favorable reply to the guidelines contained in the report³ prepared by the State Department Working Group.

(2) Mr. McDiarmid,⁴ the FOA representative on the Working Group should explore the following recommendations with the Working Group:

(a) That an interagency group (State, Treasury, Commerce, Bureau of the Budget and FOA) visit the area “to survey and discuss with top level officials our present programs in the various countries and explore the receptivity to the idea of Asian initiative to such a program” (Presumably meaning a new economic assistance program).

(b) If the Asian countries should be receptive to the idea they could then call an Asian conference and invite Secretary Dulles to attend the Conference, at which time Mr. Dulles could announce that the “U.S. is willing to be an observer and to put an initial capital of $––– behind the organization, the capital to come from our Indochina and world-wide funds.”

The first conclusion seems a bit premature as the report referred to has not been completed. The second conclusion requires careful consideration.

It was decided some time ago that the Department’s consideration of a new Asian economic program should be initiated within the Department, then broadened to include the FOA, and finally extended to include other government agencies.

The question of how the final report of the Working Group is to be handled (assuming that it receives Departmental approval) has a direct bearing on whether the Working Group should be expanded now. If, for example, a Treasury representative were placed on the Working Group he would almost certainly insist that the final report should be referred to the NAC for inter-agency consideration. I agree with Bob Bowie that this reference would be inadvisable, as it would place the matter in the area of technical financial consideration instead of top-level over-all foreign policy planning. I feel that if the Working Group Report is to go beyond the Department and the FOA it should be referred to the NSC Planning Board, at which time all other agencies which may be concerned will have an opportunity to work on it.

The last paragraph of the attached memorandum of conversation between the Secretary and Mr. Stassen⁵ indicates that the Secretary acquiesced in Stassen’s suggestion that he do some “preliminary studies” with State, Commerce and Treasury during the Secretary’s absence in Manila provided what was done here by Stassen would be highly tentative and preparatory.

I see no reason why this comment by the Secretary should prevent the Department from making the decision that the Working Group report should go direct from the State Department to the NSC Planning Board or necessitate an expansion of the Working Group as Stassen recommended in the FOA meeting.

In the FOA meeting it was mentioned that our Working Group considered that Congressional consultations “would be desirable” before any conferences are held with other countries. Mr. Stassen took the position that it might be possible to start the program with funds already appropriated, possibly with some matching funds from Asian countries. He said that there had already been consultations with Congress on the establishment of an “Asian economic group on a broad basis.” His remarks seem to carry the implication that we could go rather far toward making a commitment without obtaining further approval by Congress.

Stassen also brought up at the meeting the old idea of a clearing arrangement in the Far East which has been popular with him for some time. Some of his assistants apparently do not favor the idea and one or two of them attempted to advance arguments against it at the meeting but did not take a strong stand.

Toward the end of the meeting, Stassen said that the President had indicated at a NSC meeting that “he would like to have this program initiated in Asia without any advance announcement by the United States.” This is news to me.

Finally, Stassen recommended the interagency trip mentioned above. He is reported to have said that “this is a very important matter” and that he would be “willing to accompany the group and spend a month talking through the economic problems of this whole group of countries.” He added that “Secretary Dulles would also consider it important enough to make a personal response to any invitation extended to him.”

(In his August 24 conversation with Stassen, the Secretary’s proposal that Stassen postpone any plans for this trip until the Secretary returns from Manila was accepted by Mr. Stassen.)

Mr. Stassen asked Mr. McDiarmid to discuss the above recommendations with the State Department Working Group. He did so at a meeting this morning. I indicated that I would put the points raised in the proper channels for decision.

I recommend:

1. That the Department take the position that any report from the Department’s Working Group concerning an expanded program for economic assistance for Asia which appears to require high level policy consideration or decision should be referred by the Department, in concert with the FOA if possible, to the NSC Planning Board.

2. That Mr. Stassen be notified of this decision by the Department and told that under the circumstances it would appear to be unnecessary to expand the Working Group by adding representatives of the Treasury and Commerce Departments and the Bureau of the Budget.

3. That Mr. Stassen further be told that in the opinion of the Department, the timing and announcement of any action which the U.S. may decide to take with respect to an economic assistance program for Asia are matters of political importance which the Department has been considering carefully and concerning which the Department wishes to cooperate closely with the FOA. Mr. Stassen should also be told that the Department believes it would be inadvisable to disclose, outside the U.S. Government, that consideration is being given to this matter until all U.S. decisions have been made and the method of announcement determined. Whether the program is large or small its political value could be greatly reduced by premature action.

1. Deputy Director for Operations of FOA.
2. Gen. Robert W. Porter, Jr., Military Adviser, FOA.
3. See the attachment to Baldwin’s memorandum to Bowie dated Aug. 30, p. 809.
4. McDiarmid was Regional Economist in the Office of Far East Operations in FOA.
5. See Dulles’ memorandum of this conversation, Aug. 24, p. 789.