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

4. Memorandum From the Director of the Foreign Operations Administration (Stassen) to the Deputy Assistant to the President (Persons)¹

Washington , June 27, 1955 .

SUBJECT

• The Fiscal Year 1956 Mutual Security Program

As you know, the House Foreign Affairs Committee report on the Mutual Security Program² is very good.

But the votes on a number of issues were rather close in the Committee, and there will be difficulty on the floor. Strong Democratic support can be counted, and I have personally checked with Speaker Rayburn and with Chairman Richards. Thus, the key question is whether the Republicans in the House will be mobilized in sufficient numbers to uphold the Committee and to uphold the President’s recommendations.

It is anticipated that the most difficult issues on the floor will be these:

1. Various attempts will be made to place under mandatory extreme restrictions, or actually to eliminate, aid to Yugoslavia—India—other neutral countries.

The arguments we have used and which the majority of the Committee has accepted are these:

a. It would play right into the Communists’ hands if the United States impetuously cut off neutral countries the moment the Communists tried to woo them.

b. We do not agree with the neutralists’ policies, but the indications are that they are remaining independent and sovereign, and this is very much more in the United States interest than to have them fall under Communist domination.

c. The continuation of aid should always be looked upon from the standpoint of the United States national interest, and the law contains discretionary Presidential powers. It would be a grave error to legislate rigid and mandatory foreign policy decisions in matters of this kind at any time, and especially not in advance of the Big Four sessions.

2. Amendments may be offered to reduce the Asian program³ or to make it mandatory that all aid to Asia be in the form of loans and agricultural surpluses.

We have been successful in the House Committee and in the Senate in overcoming all these attempts with the following arguments:

a. The United States has scored a real success in Western Europe. It took seven or eight years to do it, but it is now evident to all. The Communists are now concentrating on the Asian nations. We are beginning to show success in this area. It is extremely important in the United States national interests that we follow through to a successful program that gives Japan and India and other Asian nations a chance to earn a living, to remain non-Communist, and to establish reasonable defense capabilities.

b. A substantial portion of the aid will be in the form of loans, we will use it to foster private enterprise and opportunities for private investment, we will work with United States business concerns, but if too rigid and hard restrictions are placed on the program in the first instance, this may cause the effort to fail. In this vast area we need flexibility and continuity to score another success for the United States and for the free world.

3. With the large carry-over, mostly in military funds, of unexpended balances of over $8 billion, various attempts will be made to either reduce the carry-over or cut down the new authorization.

We have been successful in the Committee and in the Senate in overcoming these efforts by explaining:

a. A program of this kind operating around the world inevitably takes a long period of time to attain results and accomplish objectives. The United States is now getting the results from efforts that go back three, five, even seven years. There must be a consistent, continuous effort for the best results.

b. It is necessary that there always be about two years’ funds ahead, because on the average it is more than two years from the time Congress approves an effort until the time it is consummated. It took four years of persistent effort to get the agreement for German re-armament under the Western European Union.⁴ If the relevant carry-over funds had been chopped off at any time during the four years, it would have been tragic to United States interests.

c. The effort we are now making not only has an immediate effect but will have a very great bearing on the security and strength of the United States three and four and more years in the future. These large carry-over funds will not be carelessly used. They will be carefully administered to gain long term sound results in the United States national interests.

4. The House made one cut of $145 million in the military funds request.

No effort should be made on the House floor to restore it, but some hope might be expressed that when it comes to conference between the Senate and House, a substantial part of it might be restored.⁵

Harold E. Stassen ⁶

1. Source: Eisenhower Library, Harlow Records. Confidential. On July 1, the functions of the Foreign Operations Administration were transferred to the International Cooperation Administration under the directorship of John B. Hollister. For details of the transfer, see Eisenhower’s letter to Dulles, April 15, and Executive Order 10610, May 9, printed in Department of State Bulletin, May 2, 1955, p. 715, and May 30, 1955, p. 889, respectively. Further documentation on the reorganization and transfer of FOA operations to the new agency and the selection of the new director is in Department of State, Central Files 700.5–MSP and 103–FOA and the Whitman and Confidential White House Central files at the Eisenhower Library. Documentation on the reassignment of FOA Director Stassen to his new post as Special Assistant to the President on Disarmament is in Department of State, Central File 101.
2. House Report No. 912, Mutual Security Act of 1955, Report of the Committee on Foreign Affairs on S. 2090.
3. Section 418 of the Mutual Security Act of 1955 (Public Law 84–138), enacted July 8, 1955, established the “President’s Fund for Asian Economic Development” and authorized $200 million to foster economic growth and cooperation. Of this amount Congress finally appropriated $100 million to be spent any time before June 30, 1958. For text of section 418, see 69 Stat. 287.
4. The agreements reconstituting the Western European Union terminated the occupation of West Germany, recognized it as a sovereign nation, and admitted it to NATO as well as the WEU. These agreements went into effect May 5, 1955.
5. An attached memorandum from Persons to Presidential Assistants Harlow and Martin, June 29, noted that this memorandum was shown to the President prior to the legislative leadership meeting on June 28; see infra .
6. Printed from a copy that bears this stamped signature.