Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

16. Memorandum of Conversation Between President Eisenhower and Secretary of State Dulles⁰

Augusta, Georgia, November 30, 1958, 11:30 a.m.

ALSO PRESENT

• Dr. Milton Eisenhower¹
• Mr. Merchant
• Mr. Greene

[Here follows discussion of several unrelated subjects.]

6. I said that, with regard to the Mutual Security Program for FY 1960, there has emerged disagreement between the State Department and the Bureau of the Budget. While I would not ask for a decision on the spur of the moment I would hope that the President would give us our day in court before cuts are made as I believe that we cannot do what we must do to lift the peoples of the underdeveloped nations up onto a plane of economic dynamism with the cut in mutual security funds on which the Bureau of the Budget is now insisting. Given the size of the resources which the Soviets and the Chinese Communists are devoting to an economic offensive in underdeveloped countries I thought that we must be prepared to make some sacrifices if we are successfully to meet this competition. I suggested that increased taxation, perhaps new forms of taxation such as a national sales tax, might be envisaged.

The President agreed that the American people must better understand that they may have to undergo sturdy measures in order to be successful in the kind of world struggle in which we are engaged, and said that he felt this should be made clear in his State of the Union Message. He noted two conflicting elements of the problem: Indispensable confidence in the economic health of the US and in the dollar will not endure unless we balance our budget and correct our current unhealthy fiscal situation; at the same time we must find the funds to assist in the economic development of other countries. In this connection he referred to a letter which he had had from Lewis Douglas (copy attached)² about the importance of the availability of dollars to the underdeveloped countries. He also mentioned a letter he had had from Lamar Flemming about the difficulties being experienced by American companies operating in Latin America.³

The President also noted the political opposition in the US, as it is expressed in Congressional attitudes, toward cutting budgets for domestic programs in order to make funds available for Mutual Security Programs within a balanced budget. Dr. Milton Eisenhower suggested the policy of a two-year balanced budget, to get away from the problem of annually trying to accomplish this end; the President acknowledged that multiple-year budget balancing is intrinsically preferable but not sufficiently understood by the public to be politically practicable. He asked that the views of Secretary Anderson be sought on what further could be done to accomplish the objectives we had discussed.

[Here follows discussion of several unrelated subjects.]

JFD⁴

0. Source: Eisenhower Library, Dulles Papers, White House Memoranda. Secret; Personal and Private. Drafted by Dulles’ Special Assistant Joseph N. Greene, Jr.
1. President of Johns Hopkins University; the President’s brother.
2. Not printed, but see Document 40. Lewis W. Douglas was former Ambassador to the United Kingdom.
3. Not further identified.
4. Initialed by Greene for Dulles.