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

244. Memorandum From the Deputy Coordinator of the Mutual Security Program (Bell) to Acting Secretary of State Dillon⁰

June 17, 1959.

SUBJECT

• Fiscal Year 1961 MSP Budget Requirements

I understand that the Fiscal Year 1961 budget will be the subject of further discussion at the Cabinet meeting on Monday. We have, as you know, provided the Budget Bureau staff with the revised projections of our Fiscal Year 1961 requirements for new obligational authority, pursuant to your recent reconsideration of these estimates. For your convenience I tabulate below the broad categories showing the amount requested for each for Fiscal Year 1960 and the projected request for Fiscal Year 1961.

	FY 1960	FY 1961	(in millions of dollars)
Military Assistance	$ 1,600	$ 2,250
Development Loan Fund	700	1,000
Contingency Fund	200	200
Economic and Other	1,430	1,430
Investment Guaranty Fund	0	100
Indus Waters	0	180
TOTALS	$ 3,930	$ 5,160

It is not clear to me to what degree this meeting will either (a) replace the discussions between you and Mr. Stans which he had suggested take place this month or (b) narrow the range of such discussions. However, I would hope that in any case you could have a reasonably early discussion with Mr. Stans with a view to firming to the maximum degree possible the order of magnitude within which we are to plan our FY 1961 program. I am firmly convinced that there is very little to gain by a repetition of our previous practice of presenting requirements in magnitudes which have no possibility whatsoever of serious consideration and that it is to everyone’s advantage to reach agreement at an early date. As nearly as I can see, the controversial areas are pretty well confined to the question of the dimension of military assistance on the one hand and the figure for DLF on the other. I would hope that it would be possible to reach agreement with Stans on all of the figures but, even if military assistance and the Development Loan Fund were left as variables, obtaining his concurrence that we could plan for the non-military requirements in the dimensions suggested would enable us to have a much more effective and orderly program development and would assist our job of constructing the FY 1961 presentation quite materially. I think there is a considerable sympathy for this point of view both in ICA and in the Bureau although I don’t believe that either has taken an agency position.

We are planning to get guidelines to the field for the development of the non-military fiscal year 1961 program by the end of this month. These guidelines will necessarily include a schedule for preparation of material and its review in Washington. The timing of this schedule and its structure can be materially influenced if, by the first of July, we have an understanding with the Bureau as to the acceptability of the order of magnitude we have set forth in our projections. The situation on the military program is somewhat more advanced, and presents rather different problems but, needless to say, settlement on the figures which you and Mr. Gates agreed to back would be most helpful. I cannot see we would be in any better position to debate them with the Bureau a few months from now than we are at this time. It is perfectly apparent that requirements for greater amounts can be identified and put forward; it is equally apparent that our projections probably represent the outside dimension of compatibility with the budgetary problem. Consequently, I would think that it would be well worthwhile to negotiate this one out with the Bureau now on a broad basis.

I am not suggesting that a more detailed review of the composition of the programs would be denied to the Bureau but rather that we at least can proceed on the basis of a common mutual assumption as to the dimensions within which programs are to be reviewed and justified.

So far as the DLF is concerned, it makes much less difference whether a figure is decided now or later since the justification does not depend on the construction of a detailed program but rather on an entirely different kind of argument. It would not seriously damage our position if we had to wait some time on this figure since presumably the justification would be essentially the same whether the figure was 700 or more.

Recommendation:

That you attempt to obtain agreement on the part of Mr. Stans to an order of magnitude for FY 1961 Mutual Security Program at as early a date as possible and, in any case, you attempt to reach agreement on the non-military component before June 30th.¹

0. Source: Eisenhower Library, Herter Papers. Confidential. Initialed by Bell and sent to Dillon through S/S.

1. Dillon initialed his disapproval on June 19. He wrote below his initials:

   “You can plan firmly as of now on economic funds of approximately & not less than the amounts recently indicated. On Indus waters there may be an agreement as to whether we get it all at once or just get the authorization but that should not be important from your point of view. DLF can wait.”