152. Summary of Discussion Between the President’s Citizen Advisers on the Mutual Security Program and the Representative at the United Nations (Lodge), November 30, 19561

The session began with a reading by Mr. Lodge of his prepared statement,2 copies of which were distributed to the Advisers. During the reading, Mr. Fairless asked whether the initial sum of $250 million argued for by strong advocates of “SUNFED” was to be contributed by the United States. Mr. Lodge replied that $250 million represented the total amount to be given by all the contributors. Mr. Fairless wanted to know over how many nations that grant fund would be spread. Mr. Lodge replied that there would be some 30 or 40. Mr. Fairless commented that with such a small sum there would not be very much for any particular country; he wondered what could be accomplished with so little money. Mr. Lodge agreed that economically the amount was not very impressive, but tactically it was important. If such a program were successful on a small scale, it could be expanded, and from the very beginning it could be controlled by the United States.

After Mr. Lodge had finished reading his speech, Mr. Deupree wanted to know whether “approve” was the correct word in the sentence, “The easiest way to accomplish this would be to require that the IBRD approve all requests for allocations.”, of paragraph 6 on page 4, or whether the Ambassador had intended to use the word “review”. Mr. Lodge replied that “approve” was the word he had meant. Mr. Lewis then asked why the World Bank couldn’t implement the projects, since it would be approving allocations for them. Mr. Lodge said that those particular projects which it would be approving were ones of which the Bank could not take care.

Mr. Reid wanted to know when it would be advisable for the President to make his appearance advocating our participation in a [Page 396]program of the type which Mr. Lodge had outlined. Mr. Lodge said that if the President were to make his recommendation now or in his State of the Union message, it would be most helpful, particularly since Shepilov3 had made his declaration last week advocating the establishment of SUNFED.

Mr. Deupree wanted to know whether the organization Mr. Lodge had proposed would not be just another agency giving out aid. Mr. Lodge replied that it would not, that it would be doing something no other organization was doing.

Mr. Reid wanted to know whether the bitterness in Egypt wouldn’t prevent us from doing anything there. Mr. Lodge answered that Egypt would have to be judged against the proviso that aid should not be given to a country which had seriously violated international standards of behavior.

Mr. Deupree asked who would coordinate the proposed program with existing aid programs. Mr. Lodge replied that the man who ran it would be responsible for carrying out the necessary coordination. It would be under the aegis of the United Nations without being under the control of the United Nations. Mr. Deupree commented that he couldn’t see that it would be under any control.

Mr. Reid asked to what countries in the Near East Mr. Lodge anticipated aid would be given under a multilateral aid program. Mr. Lodge replied that all countries in the Near East which had honored their obligations would be eligible. They would need aid as soon as the troops moved out and negotiations concerning the Canal were begun. Mr. Reid said the situation offered the United States a wonderful opportunity.

Mr. Lewis remarked that some countries didn’t like to accept bilateral aid for political reasons. Mr. Lodge said that that statement was correct, that the newly independent nations were afraid of being dominated or taken over when aid was proffered under bilateral arrangements. Mr. Lewis asked what the United States would get out of a multilateral aid program. Mr. Lodge replied that we would have helped countries to get on their feet and to be in a position to fight for themselves, if there were a war.

Mr. Lewis wanted to know whether under Mr. Lodge’s proposal the amount specified for the United States to contribute would be increased if a clamor to do so were raised. Mr. Lodge said that the specified amount would not be raised, that the contribution of each country was on a percentage basis and all contributions would be in convertible currency.

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Mr. Lewis said that he could see a strategic value for Mr. Lodge’s plan but not an economic one. Mr. Lodge replied that, of course, its strategic value was the fact that it would get us out of a defensive position. Economically the plan was not going to do big things, but it would give us a modus operandi which would be useful, and it would be a good method to use in the Near East. Mr. Lewis said that he was sure it would superinduce a clamor for more funds. Mr. Lodge said that the system had a built-in brake which had worked very well in the technical assistance program.

Mr. Deupree asked why it had been suggested that the United States’ contribution be 40 per cent instead of the usual 331/3 per cent. It seemed to him that it would be a more open way of handling things to keep it at the regular per cent. Mr. Lodge said he also preferred the lower figure.

Mr. Reid asked what size fund Mr. Lodge thought would be needed since he felt that $250 million was too large. Would he consider $100 million to be sufficiently large? Mr. Lodge answered that he felt $50 to $60 million contributed by the United States would be a realistic amount. Mr. Fairless said that if that were on an annual basis, he wanted to know for how long the commitment would be. Mr. Lodge replied that the commitment would be continuing, that the length for which it would run would be decided by a resolution of the General Assembly, that he hadn’t thought in terms of a particular period, but that certainly it ought to be at least five years.

Mr. Deupree wanted to know whether the whole idea wasn’t merely a political gesture. Mr. Lodge replied that he didn’t think so, that it was a means for starting a needed program of economic development. Mr. Deupree said that it was so small that he couldn’t see it as more than a political gesture. Mr. Lodge replied that only $15 million had been spent annually by the United States on the United Nations technical assistance program, but the program had economic merit.

Governor Darden asked what protection the fund would have against subscribers dropping out. Mr. Lodge replied that there was the proviso that the fund wouldn’t operate unless the contributions by the large countries were convertible. Mr. Fairless said that as he saw it, the purpose of the program would be to establish a principle. Mr. Lodge said that that was right, that they were trying to develop a method that was not only useful but would also put the United States in a generous light.

Mr. Lewis asked what the arguments would be in favor of maintaining both multilateral aid as Mr. Lodge proposed and bilateral aid as it was dispensed by ICA. Mr. Lodge replied that there was a definite need for both kinds. There was a limit to what could be [Page 398]done multilaterally because of the convertibility clause. On the other hand, there were also limits to what could be done bilaterally because of touchy political situations such as that in the Near East. Mr. Reid asked in what other areas multilateral aid would be useful. Mr. Lodge said that it would be a valuable approach in weak countries along the Russian border. Mr. Deupree asked whether Russia wouldn’t be able to use her veto. Mr. Lodge replied that it would not, since the matter wouldn’t go before the Security Council. Mr. Reid commented that the suggested program certainly gave a necessary flexibility of approach.

Commander Johnston asked whether Mr. Lodge had in mind doing away with bilateral aid. Mr. Lodge replied that he did not. Mr. Tapp asked how much had been spent for technical assistance by the United Nations. Mr. Lodge said that the amount in the 1957 budget to be contributed by the United States was $15.5 million. Mr. Tapp asked whether there were any specific projects which would engender the need for grants. Governor Darden commented that the proposed multilateral aid program would probably lighten the United States load.

Mr. Woodward asked Mr. Lodge to give his views on bilateral aid, since he had said that he felt there was a strong need for it. Mr. Lodge replied that there were situations in which the United States needed to take decisive action without waiting for the agreement of others. There were cases in which the United States would want to have sole control of the purse strings. Mr. Woodward asked Mr. Lodge whether he was satisfied that we were getting value for the money that we were spending on aid programs. Mr. Lodge replied that he felt that the aid we were giving was very beneficial but that not even we had enough money to remake the world.

Mr. Bennett wanted to know whether there were contained in Mr. Lodge’s proposal sufficient safeguards to make the results of the program different from those of previous multilateral aid programs, such as the one sponsored by the United Nations in Korea and UNRRA. Mr. Lodge replied that the United Nations had only recommendatory powers and couldn’t force us to accept a program which we didn’t like. We could make our offer and say that that was it. If it were accepted, it would be impossible for the terms to be changed without our consent. The weakness of the program was that it would never be able to become very big. As far as other multilateral aid programs were concerned, it should be remembered that the Palestine relief program had been under the administration of capable Americans, and so had the Korean program, though the foreign contributions to the programs hadn’t been convertible. Mr. Bennett asked what would happen if Russia made a proposal concerning a multilateral aid program before we did. Mr. Lodge answered [Page 399]that we would then be on the defensive and would have to take a rearguard action.

Mr. Reid asked what backing the President needed in order to approve the program. Mr. Lodge replied that the President needed the approval of Congress, but before they would give their approval he would have to recommend that they give it.

Mr. Mullin asked whether the major powers would buy and contribute to the proposed program. Mr. Lodge replied that Russia would be bothered by it. Before the Suez situation had arisen, both the British and the French had said that they liked it. There had been no comments from them recently.

Mr. Bennett asked whether the program could be started in selected countries. Mr. Lodge replied that it might well be begun in the countries of the Near East.

  1. Source: Eisenhower Library, Fairless Committee Records, 1956–1957, Summaries of Testimony and Briefings. Confidential. No drafting information is given on the source text.

    The members of the committee were as follows: Benjamin F. Fairless (chairman), former President and Chairman of the Board of U.S. Steel Corp.; Colgate W. Darden, Jr., President of the University of Virginia; Richard R. Deupree, Chairman of the Board of Proctor and Gamble Co.; John L. Lewis, President of the United Mine Workers of America; Whitelaw Reid, Chairman of the Board of the New York Herald Tribune; Walter Bedell Smith, former Director of Central Intelligence and Under Secretary of State, currently Vice Chairman of the American Machine and Foundry Co.; and Jesse W. Tapp, Vice Chairman of the Board of the Bank of America. The committee staff included the following: Howard J. Mullin, Executive Director; Donald B. Woodward, Staff Director; Jack F. Bennett, Staff Economist; Commander Means Johnston, Jr., Military Adviser; and Edward B. Hall, Consultant.

  2. A copy of the statement is ibid.
  3. Dmitri T. Shepilov replaced Vyacheslav Molotov as Soviet Foreign Minister on June 1, 1956.