December 16, 1949
MEMORANDUM FOR MR. WEBB:
With reference to my memorandum of conversation of today with Mr. Hoffman, I called him back and said that if he would like me to do so I would go over to the Bureau of the Budget and see Mr. Pace with him. I said that I would be somewhat embarrassed to argue for the figure of $3,175,000,000 which Mr. Hoffman, I understood, wanted to stand out for. This was because in the NSC we had all agreed that the figure for foreign aid should be $3 billion. There was to be a contingency item of $200,000,000 included in the $3 billion. As I understood the present idea of the Bureau of the Budget, what they now are doing in cutting to $2,900,000,000 is taking out half of the contingency fund. Therefore we would be arguing over a figure of $100 million. I said I would be willing to argue on this $100 million if Mr. Hoffman thought that it was important.
Mr. Hoffman said that it was his understanding that the $3 billion which was agreed in the NSC did not include ECA administrative expenses and military end use items; whereas now the $2,900,000,000 to which the Budget planned to cut ECA would include those items.
I said I knew nothing whatever about that and this was the first time I had had that idea presented to me. Mr. Hoffman said he would not worry so much about the $200 million cut but reiterated his fear that the Congress would cut them still further; that while they might be able to operate with the $200 million cut, a $500 million cut would be fatal, and he knew there was no way by which a guarantee could be given him that this would not occur. He said that he did not feel his figures were in any way padded and that he could justify his original figure of $3,175 million.
I said again that, while I was not qualified to argue as to whether the $3 billion figure agreed on at NSC included or did not include ECA administrative expenses and military end use items, I would be very glad to go over to the Bureau of the Budget and state in strongest terms possible my conviction that the foreign aid program was absolutely vital and that nothing must be done to endanger it.
DA
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