3. Memorandum From the Deputy Assistant Secretary of State for Far Eastern Economic Affairs (Baldwin) to the Assistant Secretary of State for Far Eastern Affairs (Robertson1

I have now been able to examine carefully the final version of the paper (AEG/8) dated January 7, 1955 entitled “Proposed U.S. Position on Future U.S. Economic Assistance for Asia”2 which I understand has been referred to the new Council on Foreign Economic Policy. I wish to record the following views concerning this paper which very closely resembles the position paper3 which the Department of State presented for consideration by the NSC Ad Hoc Committee on Asian Economic Grouping.

There is much in the paper with which I am in general agreement. Some parts could and probably will be improved and clarified. In some respects the paper appears to reflect preconceived ideas and opinions and an attitude of inflexibility. For example, it could, I believe, be questioned whether the somewhat rigid position which is proposed with respect to the amount of aid represents a sound foreign policy judgment in view of the gravity and uncertainty of the Far Eastern situation. The paper specifies important objectives which should be achieved from U.S. economic assistance and states that in determining the level of such assistance “the magnitude and effectiveness of Communist bloc economic programs in Asia must be considered.” Its subsequent rather positive proposal that U.S. aid in FY 1956 should be about the same as in 1955 seems to prejudge the situation.

However, the aspect of the paper which gives me most trouble is the manner in which the problem under consideration is approached. The approach at times seems to be indecisive, if not almost diffident and reluctant. Although the important purposes to be achieved by economic assistance are rather clearly indicated the portions of the paper which recommend action do not indicate very convincingly that the program will be appreciably different from what we have already been doing in the area. If it is the considered judgment of the Department of State and other agencies which subscribed to the position paper that nothing new or different is necessary, then that aspect of the report is not deserving of criticism, except perhaps for [Page 7] failure to say so positively. I personally find it difficult to believe that the NSC statements which were the reason for the existence of the study do not suggest that something new and different should be done. I also find it difficult to believe that, in the face of the current situation in the Far East, advocacy of “the same or perhaps a little more of the same” with respect to any measures which may have a deterrent effect upon Communism is a satisfactory policy recommendation.

There is reason to believe that the public allusions to this matter which the President and the Secretary have made, and the extensive press speculation which has tended to overplay those allusions have caused the American public and the public in many foreign countries to expect that something more in the way of U.S. aid for Asia is contemplated. If the somewhat unenthusiastic attitude concerning the matter which appears from time to time in the position paper should be reflected in the ultimate policy decision the effect may be worse than if the question of additional U.S. aid for Asia had never been considered. It is disturbing to speculate about the manner in which a situation of this kind could be used by the Communists and some of the neutralists in the forthcoming Afro-Asian Conference.

It would, of course, be highly inadvisable for the U.S. to proceed on a course of action with respect to economic aid to Asia which would be either tawdry showmanship or ballyhoo, or to plan an expenditure which would be too great to be effectively absorbed, or too badly directed to accomplish long-term desirable results. No sensible person would recommend either. I do not believe, however, that a realization of what we should not do should deter us from following a positive and imaginative course of action which might have a “dramatic impact.” There may be a certain kind of dramatic impact in the proposed Afro-Asian Conference and its consequences, but it may not be the kind of dramatic impact which will benefit our cause. There is, I believe, an urgent need for the United States to seize the initiative in our struggle against Communism in Asia to prevent further deterioration of American prestige there. There is a real danger that if we experience additional reverses in Asia our ability to choose and embark upon constructive courses of action will be progressively lessened. That reason alone, it seems to me, constitutes a good argument against any move by us in Asia, including moves on the economic front, which are not designed to achieve the maximum beneficial results.

It is, I believe unquestionably true that the external aid which free Asia has received since the war has not produced a sufficiently rapid rate of economic growth. More external resources, utilized to the maximum extent, appear to be needed. However, the spirit of determination with which the U.S. should approach the question of [Page 8] future aid to Asia seems to me to be more important than the amount of the first year’s expenditures. Efforts which have been made to illustrate possible financial requirements may have tended to obscure more fundamental aspects of the matter. Until experience had demonstrated that a well-conceived program of economic assistance for Asia was not producing the desired results it would hardly be possible to know at what figure the program became too expensive. The important requirement is to spell out clearly the kind of program which is contemplated and indicate a determination to give it continuing support. I cannot refrain from feeling that the absence from the paper of a spirit of bold determination to do something in a manner commensurate with the magnitude of the peril which we face in Asia is its principal defect.

I have endeavored to be objective and impersonal in registering these views and I hope they will not label me a “die hard”. I have expressed them for two reasons: first, the gravity of the situation in Asia and the heavy responsibility which the Department bears for the formulation of wise policies with respect to Asia; and secondly because the nature of my own duties requires me, I feel, to express my frank opinion concerning the matter. I very much hope that the misgivings which I have expressed concerning the position paper will prove to be unfounded.

  1. Source: Department of State, FE Files: Lot 56 D 679, Economic—General. Secret. Drafted by Baldwin.
  2. Not printed. (Ibid., Central Files, 890.00/1–755) A later version of this paper is printed as NSC 5506, Document 7.
  3. Not found in Department of State files.