Foreign Relations of the United States, 1955–1957, Foreign Aid and Economic Defense Policy, Volume X

23. Memorandum From the Director of the International Cooperation Administration (Hollister) to the Secretary of State ¹

Washington , August 29, 1956 .

1. This is an informal and personal report of one year’s operations as Director of the International Cooperation Administration. While it is marked for your eyes only, because of some frank personal allusions, I have given Hoover a copy.

Although I received my appointment on May 2, 1955, I did not take charge until July 1.

In the early weeks of my work although I had a number of meetings with Stassen, they were not particularly helpful from the point of view of assisting me to learn my work rapidly. Stassen had given a great deal of time to public appearances and activities and had left active management to Dr. FitzGerald, except for the short time when William Rand was Stassen’s Chief Deputy. I decided to assume active management and, since I wished to understand the whole operation from the bottom up, I spent the entire summer in intensive study. I soon decided that it would be necessary to make a number of visits, and during the year I have taken the following trips:

a. September—To Istanbul as one of the delegates to the World Bank meeting,² returning via Cairo and Paris where I held regional meetings of the Near East-Africa and European regions respectively.

b. October—All the Far Eastern countries—Japan, Korea, Taiwan, the Philippines, Indonesia, Thailand, Laos, Cambodia and Viet-Nam. (Hoover was with me for the first four countries.) This trip involved also four days at Singapore as Chief Delegate at the Colombo Powers Conference.³

c. December—NATO Ministerial Meeting⁴ with you.

d. February—South America. First to Rio de Janeiro as a Delegate at the Kubitschek inauguration,⁵ then Bolivia, Peru, Colombia and Guatemala, holding a regional meeting of Latin American mission heads in Lima.

e. March—OEEC meeting in Paris.

f. July—Italy, OEEC meeting in Paris, and Spain.

On the Far Eastern and South American trips I was accompanied by a top USIA officer, and on most of the South American trip by Cecil Lyon, Deputy Assistant Secretary for ARA. The trip to the Far East was with a joint staff of Mr. Hoover’s and mine.

I have done no speaking outside of routine appearances in Washington, and have had only four press conferences, generally on return from the important trips. I have felt that all publicity on matters of policy should come from the President or you.

2. I have found the work extremely complicated, although not far from what I had imagined. We have something over fifty missions and are operating in some seventy countries with over two thousand different projects. There is a momentum in an operation of this kind which cannot be stopped quickly nor be easily deflected. I had no part in the presentation of the 1956 program, so for the past year I have been operating a program which I had not planned. Some of the prejudices engendered in the Congress during last year’s presentation have plagued us throughout the year, and in this year’s presentation. Even the 1957 program, which has just been presented, had been roughly planned before I took over, just as we have now the 1958 program in the rough planning stage. However, as soon as I took over, I made a point of personally reviewing all 1956 programs before approval, even though, naturally, approval was foreordained in many cases.

3. Next to the Department of Defense, this agency has the most difficult operating job in the Government, and it should be conducted by a top executive. Dr. FitzGerald, while his knowledge of the work is extraordinary, and whose energy is indefatigable and abilities high, is not, in my opinion, an executive. I have been trying from the beginning to find a Chief Deputy of high executive caliber. It is very difficult to get businessmen into this work, which requires a special sort of knowledge. There is, therefore, a tendency to use the same people who have been used in the past, irrespective of their real abilities, simply in the absence of those better qualified to succeed them.

4. This organization is a hard working and devoted group of people, and, in general, loyal. The inability to discharge is unfortunate, but this is a familiar government affliction, and on the whole, I have had little trouble. This organization suffers particularly from the fact that the future is uncertain. The work, if it is to continue for any length of time and be at all efficient, should be on a career basis. It is surprising that it goes as well as it does. I believe that we should attempt next year to get Congress to approve legislation setting up a career service in the ICA modeled after the Foreign Service. Ultimately, I believe, they should be integrated, or so arranged that transfer from one to the other would be simple. For the time being, we have worked out with the Department a consistent standardized pattern governing the salaries of ICA Chiefs of Mission in different countries abroad, and their titles and ranks. Prior to this, there had been a hodge-podge of different salaries and titles which had grown up over the years. We now have a complete and sympathetic understanding with the Department on a worldwide basis so that we can avoid reopening these questions each time a Mission Chief is appointed.

5. Perhaps this is the time to discuss the present organization, which is the fourth or fifth method of carrying on the foreign aid program which has been adopted. I believe that this operation should be an integral part of the State Department. It is obvious that the enormous influence of the economic program in the political area makes it essential that it should be directed as to policy by the Secretary of State. It failed to work properly under Stassen because he was not a team player. Under the new arrangement, as a “semi-autonomous unit,” I do not believe it would work much better unless conducted with the idea of complete team work. As you know, Hoover and I have consulted regularly, and have ironed out many things at the top before they got mixed up below. The result is that it was very seldom that you were placed in the position of over-ruling a decision of mine. If there had not been this cooperation, you would continually have had to issue orders to me, and busy as you are, this would have meant relying on recommendations of others with little chance for your careful consideration. I think you have been seldom disturbed during the year, but I do believe the present arrangement is organizationally anomalous and, in the long run, impractical.

I think the ICA should be a branch of the State Department, headed by an Under Secretary for Economic Affairs, who would also have responsibility for all the E area in the Department. Operations proper should be conducted by one Deputy Under Secretary, and other economic matters—perhaps with line authority over all economic officers—should be under another Deputy Under Secretary. I know you dislike taking such operating activities into the State Department, and I am not, of course, urging another early change in an organization which has had so many, but I feel I should tell you what I think is a sound organizational approach.

6. I have tried to make certain reforms in organization and in concept, but I need not tell you that such things move slowly in Government. I have closed the missions in France, Germany, Norway, Denmark, Holland, Belgium, Austria and Portugal, and I am planning to do the same in England and Italy within the current fiscal year. I met with substantial opposition in this action, and at the earnest request of some of my people, I attempted for a short time to operate with “ICA Representatives” in some of these missions; but, as I had predicted, this did not work, and we have closed the indicated missions completely. In France, Germany and Austria I have left a few people under the Ambassador to liquidate the fiscal work. I have had fine cooperation from the Ambassadors in taking on the residual ICA activities in the countries where the missions have been closed, for, of course, there are some unfinished programs from previous years, and we have the problem of programming accumulated local currency. Our new operations in Europe are, therefore, now confined to Spain, Yugoslavia and Berlin, assistance to the European Productivity Organization,⁶ and a very minor labor program in France and Italy. However, substantial PL 480 future programs⁷ may well complicate our activities.

Shortly after I took over, I asked John Stambaugh, who was working for Clarence Randall and had been an assistant to Stassen, to review several major parts of the organization, and I put into effect a good many of his recommendations, chiefly:

a. The establishment of coordinated evaluation, inspection and audit functions on a systematized basis.

b. A complete revision of our organization and method for handling contractual matters.

c. The continuing development of reporting techniques to assist top management in controlling the program.

d. Better timing and coordination in our program development process.

I have established a system for communicating operational policy to all employees. Among other things I have used this system to direct the concentration of our country programs into fewer but more meaningful projects, a greater decentralization of responsibility to the field, etc.

Earlier I reported to you I planned a survey of the labor activities of ICA. This was made by Dr. James A. Morris, a labor economist on the faculty of the University of South Carolina, and I approved most of the recommendations. I believe that by certain changes in emphasis, and by cooperative efforts with the Department, we can greatly strengthen our labor program at less cost and with complete Government control of its operations. Incidentally, Dr. Morris has now gone to Turkey, as economist of the USOM.

I have made great attempts to speed things up and reduce the backlog of work in some countries, which is far too great, partly due to cumbersome procedure and lack of adequate pressure in this organization, but in many cases it is due to the difficulty of getting action in countries where businesslike methods are not understood. We have reduced paper work substantially, and I am pushing hard to get the 1957 program under way this summer instead of waiting until the fall, as happened last year. In fiscal 1956, only 15 percent of the year’s program was obligated by December 31, which meant that under existing law, 65 percent had to be obligated within the next four months. This was accomplished, but it puts a strain on the organization just at the time the presentation is going forward, and means hasty and ill-considered decisions. You will remember that we tried unsuccessfully to persuade the Congress this year to allow us to postpone 25 percent of the program obligations until October 1, following the close of the fiscal year. I am hoping to get a substantial amount of the FY 1957 program obligated this fall, and obviate last year’s “bunching up” in the spring. I am also hoping to go forward with the 1958 planning so that the legislation can reach the Congress earlier. Notwithstanding all my efforts, I could not get it started this year before the end of March. This coming year, it will be complicated by the fact that various study groups will be prosecuting their activities, but we should not let this delay us in our own planning, for otherwise, we would never get through.

I have become convinced that we have not had adequate technical surveillance over the capital projects which absorb such a large share of our total program funds. I have established a special unit, staffed with competent engineers, who will be able, with the help of private engineering consultation on a contract basis, to maintain technical review and supervision over these projects. Such a unit should insure that major projects are economically and technically sound before large investments of U.S. funds are committed to them. I am sure this action will net us significant savings of program funds. I have also established a contracting office to supervise our vast contracting activities.

7. I have tried to eliminate proliferation, and have issued instructions to try to reduce the number of projects by about 20 percent. This is particularly applicable to technical assistance where there is a tendency to develop new projects without completing the old. I feel that a few well-planned and executed programs are a great deal better than a number of less effective ones. In this connection, we must realize that many of our projects going forward today were committed from FY 1955 and even earlier funds, so my efforts will not be effective for some time. This is why the cuts made in our requests for administration funds are unfortunate, for it needs good administration to taper off and close out the less valuable programs.

I think you know of my attempt to reduce the activities in the dependent overseas territories, knowing that our funds are limited. Unless we stop somewhere, we cannot take on the newer obligations which the changing world requires.

You will recall that in my last report I told you I was considering whether our procurement should be world-wide, or, in certain cases, limited to U.S. sources. A draft policy on this subject was presented to the Council on Foreign Economic Policy, which approved my recommendation that all procurement be on a free-world basis. This has been made a part of our operating policy. In this connection, as soon as I took charge I terminated the special coal buying program which Stassen had started, as it seemed unsound in theory and the coal situation had substantially eased.

8. One of our major working and administrative problems, little understood outside of this organization, lies in the requirements to be met in planning and negotiating a country program. A whole year’s program must generally be planned with a country as a “package” deal. This makes it difficult to set aside adequate reserves for emergencies, the total of which, for proper administration, should be substantially in excess of the emergency funds granted by the Congress. When the presentation is made to the Congress, the country involved knows what is programmed for it, and although conditions in the world may change materially, it is hard to take anything away from what a country considers belongs to it. It would be much easier if we could make a base deal with a country for a smaller amount than what we really expect ultimately to give it, and then step this amount up later in the year if funds are available. Additional requirements lie in the fact that we must reach a certain total of agricultural commodities, must consider the problems of loans against grants, the problem of PL 480 sales, the problem of commodity shipments, direct budget support, the engendering of local currency for defense activities, and so forth.

9. This brings me to the question of cooperative planning with the State Department. Unfortunately, with the exception of you and Hoover, there is no one in the Department with an over-all view of the world’s requirements. Neither of you has the time to study the whole operating scene. I am, therefore, subject to the most extraordinary pressures from the regional heads and desk men at the State Department, often pushed by the ambassadors, to undertake new projects or speed old ones. While my own organization is equally inclined to support such requests, I am in a position to regulate them, which I cannot do in the State Department. I am therefore continually fighting a battle to hold down the individual country requests so that I can keep within the available totals and retain funds for last minute emergencies. Almost all projects have merit, but there must obviously be relative priority, and I am in the difficult position of having to settle this without much help.

10. I would suggest that on the State Department side there be a greater recognition of the machinery necessary to put a program into operation. There is a tendency on the political or “idea” side to feel that a decision can be implemented immediately. This brings about, frequently, a demand for action that results in hasty and ill-timed programs. Perhaps I should set up a special emergency relief fund to cover these calls for aid. We do not get enough advance notice of the intentions of the State Department. A programming study should be made before a tentative approach is made to a country. Instead, a round figure is often picked out of the air by the State Department on the basis of what surrounding countries are getting, or what it might take to make said country politically happy, without consideration of exactly what the country’s most important economic needs are or its ability to assimilate such dollar aid. We should not say, “We will give you xxx million dollars,” but, “We will help you in the following program.” Ceylon and Burma are perhaps examples of this. It would seem that the Policy Planning Staff should call us in from the very beginning.

The problem of advance planning is also applicable to certain international agency operations. For instance, we were asked suddenly last spring to send a high-ranking man to Tehran just prior to the Baghdad Pact meeting.⁸ I sent my head of operations for that region out on twenty-four hours’ notice, and since George Allen had not yet arrived, Seager had to hold the fort for several days in difficult discussions for which, of course, he was inadequately briefed. It would seem that a situation of this kind could be anticipated and planned for. My own experience in taking over as chief of the delegation at the Colombo Meeting last fall was something the same. While the advance work of our representatives there had been done intelligently, the United States’ position had not been well-developed, and the whole meeting evidenced inadequate planning on the part of the United States. It would seem that wherever economic matters are involved in international affairs, the ICA should be called in early in the game for whatever contribution it may make in the way of information, study or personnel. This is recognized in the OEEC, where ICA takes the leading part, but it would seem applicable to a lesser degree with respect to the Colombo group, the Baghdad Pact, and even for organizations such as NATO and SEATO.

Disaster aid is another area which needs organizational study. It cost the United States a million and a half dollars for emergency action in Italy last winter because the Ambassador called for help, the Administration responded, and the Army was called into action—all without advance checking with this organization, which was expected to foot the bill. We could have acted just as quickly at considerably less cost. I believe some machinery should be set up to clear all emergency requests, and that certain criteria should be established. Otherwise, we become a kind of International Red Cross, and the aid given is somewhat hit or miss.

11. The whole question of the function of the head of ICA requires further study. He is supposed to coordinate the whole Mutual Security Program, but how can he coordinate adequately unless his office assists in planning from the very beginning? Otherwise, he is nothing but an operator, subject to orders. My experience at NSC meetings has indicated the need for further review of this question. At present, I go to NSC meetings whenever I believe matters may come up which affect the ICA. However, particularly in the last few months, matters affecting ICA very importantly have come up and have been fully discussed and decisions made when I was not present simply because the agenda did not indicate what might develop. You, or your representative, are, of course, always there, but it is almost impossible to keep you or him fully informed of all the matters of operations in the seventy countries which are vitally affected by NSC discussions and conclusions. Here again, proper organization should require regular representation of the ICA if its head is to be more than one who executes orders. I say all this impersonally, to help out whoever may be my successor. My connections and my year’s experience are such that I can keep pretty well abreast of what is going on. It would be extraordinarily difficult for a successor to me to step immediately into a corresponding position without having at least a year of experience, unless there is a change organizationally.

12. From the military side, there should be a review of the coordinating functions of the ICA Director. It is true that MDAP programs must have my approval, but in practice this consists largely of a short study and a few discussions when a year’s program is laid down in the rough, and then a check as the work goes forward to see that country programs are followed or variations are justified. There is very little opportunity to influence the establishing of the country programs because these are governed to such an extent by NATO force goals or JCS approved goals. Once established and followed, these goals require economic support at a certain level, even though they may demand efforts beyond what the United States can expect to support indefinitely, given the present temper of the Congress. It is true that the Prochnow Committee⁹ is studying individual countries in order to ascertain what the commitments are and what the cost will be, both on the military and economic side, of different levels of military effort, but there should be some over-all authority to reach conclusions as to the level of economic demands which can be satisfied. Here again, if this is not the function of a coordinator, his office becomes merely a policing operation.

I should state here that my relations with Gordon Gray and Perkins McGuire are of the best. I have received the finest kind of cooperation from them. Although there have been delays in getting information, this is not due to any lack of hard and capable work on their part to eliminate some of the difficulties which have beset the operations of their office in the past.

13. Another function which needs clarification even more is that of the presentation to the Congress. While it has been delegated to the head of the ICA, he cannot exercise it properly under the present setup. I appointed a top man to conduct the presentation, which he did with energy and ability, but on a number of occasions the decision of who should be witnesses and what they should present was taken out of his hands. This was partly the fault of some of the State Department and Defense Department people who had their own theories of the proper approach to the Congressional committees, but one of the most important failures was adequate political liaison, so important in a matter of this kind. Let me mention a few of the incidents which may have materially affected the results:

a. You will remember that in December, 1955, a satisfactory presentation of the proposed Mutual Security Program was made at Camp David. Later, when the same presentation was made at the White House to the Congressional leaders of both parties, I was informed that the military part of the Mutual Security Program would be handled by the Secretary of Defense, rather than as part of a unified picture as presented at Camp David, which the members of Congress had been led by custom to expect. The result was a complete misunderstanding of the increase in size of the military side of the Mutual Security Program, which plagued us throughout the whole Congressional session. It would seem that these informal advance presentations, not only in the Executive Department but also to the political leaders, should have been part of my responsibility.

b. There was, throughout the early days of the hearings, great emphasis on the influence of Senator George to the neglect of Congressman Richards. This the latter resented, and I am certain the action of the Foreign Affairs Committee reflected this pique.

c. Again, when the leaders of both sides of the House were called to the White House just as the bill was coming to the floor, the Speaker, the Majority and the Minority Leaders all stated several times that the meeting should have been called a few days earlier, before the issue was crystallized and the Committee had made its report. Richards himself, you will remember, stated that he could not ask his Committee to go back on the action they had just taken, and when he went on the floor the next day, the issue in the minds of many members of the House was the support of a popular colleague against the steamroller of the leaders. This could have been obviated.

Somebody has to head up matters of this kind. If the Director of the ICA is to have charge of the presentation, it would seem to me that he should direct all activities in connection with it. Perhaps it should be done at the White House, and perhaps it should be done in the State Department, but it ought to be done somewhere.

14. This leads into the whole question of publicity, which is an integral part of the presentation. The Mutual Security Program is a highly complicated subject on which few people have full information. It would seem to me that whenever the subject is to be discussed by a leading Administration figure, there should be proper staffing ahead of time. An example of the neglect of this was the President’s Baylor speech.¹⁰ A number of newspapermen pointed out that the President gave no indication that he had any knowledge of the ICA technical exchange program under which some 52 universities are sending representatives into 38 countries under more than 80 contracts.

15. I have given much thought to the place of atomic energy in our work. This subject is difficult to fit into the Mutual Security Program because of its strong political aspects, its security requirements and its connection with the President’s “Atoms for Peace” policy. Obviously, the power aspects of the problem, which loom larger every day, are of paramount importance in planning the economic future of a country, which is essentially an ICA responsibility. The whole problem is not well understood in most foreign countries, and the liaison and coordination between our procurement departments have been inadequate. I believe that assistance to our friends in developing energy from atomic sources should be handled exactly as energy from other sources, provided, of course, that security regulations are adequate. I believe also that training of atomic experts should also be handled as training of experts in other fields. The State Department should, of course, maintain its policy direction, and the Atomic Energy Commission should control fuel and information, and give technical advice.

16. I have tried to turn certain activities of this organization over to other departments. It seemed to me improper that the work with escapees and refugees should be divided, so that part of this work carried on in the ICA has been consolidated with the work in this and the immigration field in the State Department. I believe that for fiscal year 1958 the appropriations for these activities should be through the State Department appropriation bill. These activities have nothing to do with economics, and are essentially political.

17. I have tried to transfer the investment guaranty program to the Export-Import Bank. While this work is of economic significance in that it is influential in persuading private capital in this country to move into foreign fields, its machinery is more of a banking nature, and since the Export-Import Bank handles the mechanics of all our loans and is in the lending field itself, this work seemed to fall naturally within its jurisdiction. Although I had an agreement with Sam Waugh to take this over, he later changed his mind because he thought it might involve the sterilization of some of his lending power in order to supply reserves for this insurance. I am unable to accomplish this now because the Congress specifically instructed the ICA to continue to administer this program.

18. This brings me to a most important subject, which is the better use of the great amounts we are spending so that we may stimulate private investment as much as possible rather than to continue to make advances or grants to governments. The latter course tends to socialize the countries we are trying to help, and offers temptation to those in control of the government to participate in state-owned capital investment to their own advantage. This organization, under the present setup, can hardly lend to private interests, foreign or American, the dollar funds appropriated for it. We can, however, make available to lending organizations in the countries we are helping certain dollar amounts which will, in turn, be lent by them to private industry, subject to our specific or general approval. This is being done successfully in the Philippines, India, and other countries. We can also make available substantial amounts of local currency, the use of which is under our partial control, for lending to private interests which are willing to invest dollars or other foreign exchange in the country in question. We are discussing this with the Export-Import Bank, and are negotiating with several American companies for projects to be financed in this way.

We must press continually for legislation in the countries in which we work to improve the climate for foreign private capital. While this activity is supposed to be part of the ICA work, it has always seemed to me to be essentially a function of the embassy proper. I do not believe this is adequately impressed on Ambassadors, from what some of them have told me.

19. This brings us to the question of PL 480, the operations of which have made available so much local currency. Operations under Title I of this law need clarification and decision as to ultimate goal. The tendency has been to make a sale and let the question of the use of the proceeds be thrashed out later, whereas I believe the proper procedure is to have the whole question of the use of the proceeds settled at the time the sale agreement is made. The Department of Agriculture is always pushing for the acceptance of any transaction which will help eliminate the most troublesome of the surpluses, and there is a tendency on the part of the State Department representatives to approve a deal which is politically attractive to the country involved. If, as in the great majority of cases, the country involved wishes to borrow the sales proceeds for the purpose of its own industrial development, the ICA should have the responsibility of planning this development in order that the economic status of the country involved can be best improved. The ICA should, therefore, have a most important part in the planning of these sales from the very beginning so that there will be adequate consideration of this principle. Frequently, the size of the PL 480 program dwarfs completely the ordinary economic operations in a country, and this raises organizational questions. In Chile, for instance, an ICA organization set up for the purpose of conducting a $1.5 million technical assistance program is obviously inadequate to plan and police a $5 million PL 480 development program which has resulted from the sales agreement of January 27, 1955. With the new authorization of $1.5 billion for Title I sales, it is probable that there will be more than $1 billion worth of foreign currencies owned by the United States within the next year or so. The planning of the use of these funds not only becomes a major operation, but we should be considering what will happen in the future when interest and amortization begin, and final payments are ultimately made. I have named a special staff assistant for financial matters to oversee our guaranty and lending functions.

20. When it comes to this over-all planning, we must think through what will happen to our Mutual Security Program if, as is probable, in the not too distant future, we have a year of substantial business recession, with a certain amount of unemployment, and there arises perhaps a need for internal government aid of one kind or another. Securing appropriations for foreign aid will be most difficult. We must try to work out some way of establishing reserves for our most important programs to tide things over such a year, or years. We must insist on countries doing all they can to help themselves, and doing it now instead of waiting until the time it will be forced on them. Otherwise, there results not only the highly dangerous situation of a country loaded down with a program it cannot continue, but the complete loss of friendship with that country because it will feel we have let it down.

21. I know how much you are interested in the question of what portion of our program should be in loans. There is obviously great pressure from Congress to put all development assistance on a loan basis. Until something can be done to work out the idea you have sometimes stated of making a loan conditioned on the relative future recovery of the borrower, I think we should make more loans of economic developments funds even though the loans are “fuzzy”.¹¹

22. We must face the problem of handling the various review boards which have been or are about to be appointed. The Senate Foreign Relations Committee and the House Foreign Affairs Committee have set up review boards, and the House Appropriations Committee may do the same. The President is considering appointing his own committee, while there is already in existence the Presidentially-appointed committee of which Eric Johnston is Chairman, and which is supposed to advise him and me on international development. I have created a new Evaluation Staff in my office, to be composed of four teams of two members each. The team members will be senior, experienced personnel, one with ICA experience, and the other, to be detailed from the State Department, with strong economic background. This staff will provide me with objective evaluations of program objectives, content, and operating effectiveness, based on actual on-the-site review of operations. They will spend about three months visiting missions, followed by one month in Washington. This should provide us with an evaluation of each country program approximately every two years.

I hope that the committee appointed by the President¹² will be small, will consist of men who will give substantial time to their work, and will act quickly. I assume it will be unprejudiced, and will not contain those who have strong views, already announced, as to the nature and operations of the program. In this connection, I believe that Bill Rand would be an excellent appointee.

As far as study results are concerned, I cannot see how there can be an established policy in this work any more than in yours. While the welfare of the United States must be our general goal, a program of value in one country is poison in another. We must act quickly in some emergencies, and in others, wait for the smoke to dissipate. I cannot go along with those who believe in spending taxpayers’ money out of pure philanthropy. We can be generous in a real emergency because we are that kind of people, but most of the work in these lines should be left to private charity, and our actual relief aid should be short-term and limited in amount. Furthermore, we must plan to finish programs. If we never get out of a country and continue to take on new ones, such as Morocco, Tunisia and Sudan, we will be stretched too thin for our resources.

We must soon give much thought to the coming legislation, not only in concept, but in format. I have about concluded that the whole Mutual Security Act should be rewritten and brought up to date. At present it is a most difficult piece of legislation to understand, with its amendments, exceptions, arbitrary regulations, and outmoded definitions. I realize that the leading members of the Congressional committees and the committee staffs have become used to it in its present form, but if we consult them fully, and receive White House backing in a new Congress, we may be able to get the desired results.

The question of tying the military part of the Mutual Security Program in with the Defense Department legislation must be carefully studied. Many members of Congress have urged this, and it has the advantage of showing this country that much so-called “foreign aid” is actually defense expenditure. If this is done, we might even want to include that part of the non-military program which backs up the military effort in countries like Korea, Taiwan and Viet-Nam, which would mean that we would shrink the program of economic aid, from which the military aspect is largely withdrawn, to a few hundred millions.

I realize that the results of the various studies which are contemplated may well require other drastic legislative changes, but that should not prevent our own immediate review of what I have discussed in this paragraph.

23. I hope this report doesn’t sound like a general complaint. I know that many of the things I have touched on cannot be changed quickly, if at all. All government is inefficient, and this great sprawling bureaucracy of 8,000 people sprinkled all around the world, engaged in everything from building power plants and eliminating malaria to teaching teachers to teach, is very inefficient and wasteful. I took this work on with no illusions. It is the most interesting I have ever been in, and the most rewarding in itself. I have enjoyed particularly working with you, and have appreciated your continuous courtesy and understanding of my problems. I have bothered you as little as possible, for I know the crushing burdens under which you labor. The chief thing I regret is that I have so far been unable to find a Chief Deputy. I am still looking for a top executive of prestige to come in, first in the operating field, and then, little by little, to take over the work so that I can suggest to you and the President that my Deputy succeed me, and I can go back to running a law office.

John B. Hollister ¹³

1. Source: Eisenhower Library, Dulles Papers. Confidential; Personal and Private; Eyes Only. This document is from one of two unlabeled folders in box 57.
2. The 10th annual meeting of the Boards of Governors of the International Bank for Reconstruction and Development and the International Monetary Fund was held in Istanbul, September 12–16, 1955.
3. Reference is to the meeting of the Consultative Committee of the Colombo Plan in Singapore, October 17–22, 1955.
4. Held in Paris, December 16–19, 1955.
5. Juscelino Kubitschek was inaugurated President of Brazil, January 31, 1956.
6. Presumably the European Productivity Agency, established May 1, 1953, by the Organization for European Economic Cooperation.
7. The Agricultural Trade Development and Assistance Act (Public Law 480), enacted July 10, 1954, provided for the sale of surplus U.S. commodities abroad at prices below those of the current world market; for text, see 68 Stat. 454.
8. The meeting was held April 16–19 in Tehran under the presidency of Iran’s Premier, Husayn Ala. The Baghdad Pact, signed February 24, 1955, between Turkey and Iraq, contained provisions pledging mutual cooperation in defense, noninterference in the internal affairs of the other party, and peaceful settlement of disputes. The Pact, which provided for accession by other powers, was signed by the United Kingdom on April 5, Pakistan on September 29, and Iran on October 25, 1955. The United States did not become a signatory.
9. The Interdepartmental Committee on Certain U.S. Aid Programs, chaired by Herbert V. Prochnow, was composed of representatives of the Departments of State, the Treasury, Defense, and the International Cooperation Administration. The Committee examined the military programs in six countries and submitted its report in August 1956; see Document 27.
10. For text of the address, given at the Baylor University commencement exercises on May 25, 1956, see Public Papers of the Presidents of the United States: Dwight D. Eisenhower, 1956 (Washington, 1958), p. 526.
11. “Fuzzy” loans were generally understood to be loans extended to borrowing nations on easier terms and at greater risk of default than normal banking practice would allow.
12. Reference is to the President’s Citizen Advisers for Mutual Security. See footnote 2, infra .
13. Printed from a copy that bears this typed signature.