21. Letter From the Special Assistant for Mutual Security Coordination (Bell) to the Chief of the International Division, Bureau of the Budget (Macy)1

Dear Mr. Macy: You will recall that during the presentation of Public Law 85–532, which as subsequently enacted by the Congress authorized the loan of 48 U.S. Navy vessels to friendly countries, the Executive Branch indicated its intention to require the Latin American recipients involved to bear the costs associated with the reactivation of the vessels to be loaned. We have now found that the economic and political situation in the recipient Latin American countries will necessitate [Page 157]the provision of grant aid to cover the rehabilitation costs.2 We are working out plans with Defense to undertake a program with respect to those vessels which can be reactivated from funds available in FY 1960. (You will recall that funds were included in the FY 1960 MAP for this purpose though originally it was planned as a credit financing transaction.) We also plan to consult with the appropriate Congressional committees with regard to this matter in the very near future.3

Because of the long standing interest of the Bureau of the Budget in this program I wanted to inform you of our latest plans. I shall continue to keep you informed of any further developments which may be of interest.

Sincerely yours,

John O. Bell4
  1. Source: Department of State, Central Files, 720.5621/3–2459. Confidential. Drafted by Robert L. Burns, Athol H. Ellis, and Seymour Weiss of the Office of the Special Assistant for Mutual Security Coordination on March 23.
  2. In a memorandum to Bell, January 26, commenting on the budgetary problems posed by the need of the United States to finance out of grant aid to Latin America the rehabilitation of vessels authorized for transfer under the provisions of P.L. 85–532, Rubottom stated in part: “We cannot, in the FY 1959 and FY 1960 programs, absorb all of the $10 million required each year for ships by deleting ASW aircraft from the programs. Irrespective of the apparent poor prospect of finding other items which could feasibly be removed, I recommend that the Defense Department be requested once again to try very hard to find, in each yearly program, items amounting to $5 million which could be eliminated and the savings applied on [the rehabilitation of] ships. I concurrently recommend that the levels of both the FY 1959 and FY 1960 Latin American programs be increased by about $5 million, so as to provide the additional funds required to implement the rehabilitation during those two years.” (ibid., ARA Special Assistant’s Files: Lot 62 D 24, Military 1959)
  3. See Document 23.
  4. Printed from a copy that bears this typed signature.