Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

40. Memorandum From the Acting Administrator of the Agency for International Development (Gaud) to President Johnson¹

Washington, October 1, 1965.

SUBJECT

• Legislative and Administrative Accomplishments

The A.I.D. report on the legislative and administrative accomplishments of your administration is enclosed.

As requested, the report is a detailed, comprehensive record of a very active and successful period in the history of the U.S. Foreign Assistance Program.

While I believe we can be justly proud of every item in the report, I should like to underscore the following:

• —Congressional cuts in foreign aid budget requests are at an all-time low. Last year only $266 million was cut from your budget request. This year an even lower cut of $241 million set a new record in the history of the aid program.
• —Private enterprise participation in the foreign assistance program is increasing rapidly. We have an active, many-pronged program underway to encourage U.S. private investment in the developing countries. We have doubled since 1963 the number of specific-risk investment guaranties in effect under the aid program.
• —Economy and efficiency are prime objectives of the AID agency. We have reduced agency employment by over 2,000 since November 1963—a cut of more than 12%. Last year our cost reductions were estimated at $17.4 million; our goal for next year is almost double—$33 million.

William S. Gaud ²

Enclosure

LEGISLATIVE AND ADMINISTRATIVE ACCOMPLISHMENTS BY A.I.D.

A. Legislative

1. Foreign aid has been pared down to a “bare bones” program with the result that Congressional reduction of proposed requests under this Administration have been the lowest in the program’s history, less than 8%.

2. Congress this year eliminated or modified several restrictive provisions included in previous Appropriations Acts.

a) Elimination of the Whitten proviso contained in last year’s Act, which required that a review and determination be made by the President before the final $300 million of economic assistance funds could be obligated.³

b) Elimination of the restriction on reuse of loan repayments from past development loans and Alliance for Progress loans.⁴

c) Modification of Section III, which pertains to security clearances, that removes the mandatory requirement that all contract employees be cleared and allows the President to promulgate regulations that waive clearances for persons in non-sensitive positions.⁵

3. The Congress has shown a new awareness of the role the Executive Branch (A.I.D.) can play in promoting private investment in the developing areas of the world as it authorized doubling from $2.5 billion to $5.0 billion of the total face amount of specific risk guaranty contracts that may be outstanding at any one time. Such awareness reflects in part (a) expanded efforts by A.I.D. to promote such investment (the number of coverages outstanding has more than doubled since 1963) and (b) other private enterprise activities developed or supported by A.I.D. such as the catalogue of investment opportunities, Businessman’s Information Center, and the Executive Service Corps.⁶

4. An amendment to the act governing the Food for Peace program (P.L. 480) provides that in programs administered by A.I.D., food distributed by U.S. voluntary agencies overseas shall be directed, insofar as practicable, toward community and other self-help activities designed to remove the causes of hunger. Able-bodied unemployed and under-employed recipients of these foods are strongly urged to contribute their energies toward helping to better their own and their community’s economic position. Prior to this amendment commodities were distributed overseas only on the basis of need which is the same pattern as in the U.S. Government’s domestic distribution program.⁷

B. Administrative

1. Participation in the Proposed Asian Development Bank—The U.S. has indicated its willingness to participate in the establishment of the Asian Development Bank. Discussions have been under way with other governments since last spring on the specific purposes and outline of such an institution, and approval of a Bank charter by interested governments is expected to take place at a ministerial meeting this winter. Primary responsibility for conducting necessary negotiations with foreign countries on the charter, and obtaining eventual Congressional approval of the charter now being negotiated rests with Treasury. Nevertheless, A.I.D. which has played a major role in these efforts from the time of the U.S. decision to join the proposed Bank as announced by the President last April is continuing to work actively with the Treasury on this project.⁸

2. A.I.D./University Relationships—A study group chaired by the then President of the Carnegie Foundation, John Gardner, has laid the framework for a series of actions designed to improve and promote better relationships. Actions taken along this line include appointment of a committee of university representatives to review periodically such relationships, creation of an office of Special Assistant for University Relations, and issuance of a new standard university contract.

3. Food for Peace—A.I.D. is now financing the vitamin fortification of non-fat dry milk and is arranging to fortify the flour and cornmeal sent overseas for feeding programs. A.I.D. is now also working closely with private industry in promoting the development and use overseas of grain based, protein enriched whole food products. In addition, comprehensive experimental programs involving nutrition, education, research in product development and marketing, welfare feeding programs and other actions, and which are designed to develop the best mix of methods for dealing with malnutrition in the pre-school child, are being developed in a selected number of countries.

4. Southeast Asian Development—In response to your pledge to seek $1 billion from the Congress to expand economic and social development in Southeast Asia,⁹ A.I.D. has: (a) developed an overall development program; (b) obtained U.N. support for fund raising and strengthening existing U.N. agencies to carry out various programs, including the immense Mekong River project to which we have recently pledged $17 million; (c) encouraged other countries, such as Japan and Thailand, to initiate programs in the fields of agriculture and development planning coordination; and (d) maintained pressure on advanced countries to make significant sums available to the region on a multilateral basis.

5. Encouragement of Multilateral Agencies and Coordination Devices—The U.S. has strongly supported the efforts of the World Bank to organize under its leadership additional consultative groups to aid donor countries for the purpose of improving the coordination of aid from the donors to specific countries. Although four such groups have been established since 1962, it is only recently that the Bank, with our support, has attempted to expand the coverage of these groups. In addition, the U.S. had strongly urged other donors to increase their assistance and the DAC member governments have agreed to take appropriate steps to attain assistance levels equivalent to 1% of national income as recommended by UNCTAD. The governments represented on the Development Assistance Committee have also agreed to targets for softening assistance terms during the coming three years and to tailor the terms of their assistance more realistically to the repayment capacities of individual recipient countries as well as to harmonize their terms to individual countries within consortia, consultative groups and other coordinating arrangements.

6. Relationships with and Use of the Rest of the Federal Community—A.I.D. has accelerated its efforts to utilize on a cooperative basis the facilities of other federal agencies in our programs. A recent example of such use has been an agreement with the Public Health Service to administer A.I.D.’s world-wide malaria eradication program. In this way, A.I.D. is able to tap the expertise already within the government in the administration of its programs.

7. Programs for Unsponsored Foreign Students—A.I.D. has inaugurated a program under contract with the Institute of International Education to assist needy foreign students from developing nations who are in the U.S. on their own resources and who possess leadership potential. Summer institutes and academic year fellowships have been established to provide a climate for a better education for these students who otherwise for lack of financial support might be unable to complete their educations properly and who might therefore return to their countries with misleading impressions of the American way of life.

8. Management Improvements—A.I.D. in response to President Johnson’s call for tighter, leaner, more effective management of government programs, has brought to bear a wide variety of management techniques, resources, and approaches, and has focused the attention and concern of every employee on accomplishing this task.¹⁰ Results have been:

a) A comprehensive manpower management system was developed: strong, central direction of Agency manpower resources has been established; control has been extended over all categories of Agency manpower; better manpower planning procedures have been installed; and a manpower reporting system has been designed.

b) Agency staffing levels have been reduced by 2,112—a cut of more than 12% since November 1963; additional improvement in manpower utilization are planned.

c) An impartial evaluation of A.I.D.’s Washington organizational arrangements confirmed their basic strength.

d) New organizational arrangements include: a single State-A.I.D. focal point for Latin American affairs and for each Latin American country; a new Office of Labor Affairs to strengthen free labor institutions in less developed countries; a new program to evaluate the operational performance and effectiveness of A.I.D.’s overseas missions; and new Operations Review Committee to speed decision-making on broad operating problems.

e) A.I.D./Washington organization structure was simplified through consolidation of the Communications Resources Division with the Office of Technical Cooperation and Research; merger of the International Development Organizations staff with the Office of Program Coordination; consolidation of two police training facilities in Washington; consolidation of four Far East country offices into two geographic area offices; and establishment of a regional A.I.D. mission in Washington to administer small assistance programs in 13 African countries.

f) Overseas, separate A.I.D. organizations in 18 countries were eliminated; increased authorities were delegated to selected missions to permit greater flexibility and quicker, more decisive and effective program implementation action; regional controller and audit groups were established to improve the utilization of scarce financial management expertise; and A.I.D. overseas administrative support operations were consolidated with State in 30 countries where manpower and dollar savings could be achieved.

g) An Agency-wide Management Improvement and Cost Reduction Program was inaugurated. Savings through cost reductions and cost avoidance actions totaled an estimated $17.4 million in FY 1965. Cost reduction targets for FY 1966 and FY 1967 have been set at $33 million each year.

h) A comprehensive reorganization of personnel activities and a thorough overhaul of the Agency’s basic personnel policies and procedures was effected.

i) Applications of automated techniques to fulfill Agency data requirements and simplify paperwork operations continued to grow. Mechanized payrolling, automation of certain processing functions for specific risk guarantee applications; development of an automated skills inventory, automation of the communications routing system, and other applications were installed.

j) A long-range effort to develop a modern information system for A.I.D. and other foreign affairs agencies was undertaken. A.I.D. is presently concentrating on the development of an information system for its technical assistance programs.

1. Source: Washington National Records Center, RG 286, AID Administrator Files: FRC 69 G 1866, David E Bell (Speeches), FY 1966. No classification marking.
2. Printed from a copy that indicates Gaud signed the original.
3. The text of an amendment introduced by Representative Jamie L. Whitten is in the last paragraph to Title I, Economic Assistance, of the Foreign Assistance and Related Agencies Appropriation Act, 1965, P.L. 88–634, approved on October 7, 1964. (78 Stat. 1016)
4. 78 Stat. 1016.
5. 78 Stat. 1019.
6. These were introduced in President Johnson’s special message to the Congress on foreign aid, March 19, 1964; see Document 4.
7. Not further identified.
8. On April 20, 1965, in a statement delivered following a meeting with Eugene Black, former President of the IBRD, President Johnson promoted U.S. participation in an Asian Development Bank. For text of his statement, see Public Papers of the Presidents of the United States: Lyndon B. Johnson, 1965, Book I, pp. 435–436.
9. Not further identified.
10. In President Johnson’s special message to the Congress on foreign aid on March 19, 1964, he called for the AID Administrator “to embark on a major program to improve the quality of his staff—and to reduce the total number of AID employees by 1,200 by the end of fiscal year 1965.”