December 16, 1949
MEMORANDUM OF TELEPHONE CONVERSATION
Participants: Mr. Paul Hoffman Secretary Acheson
Mr. Hoffman called me today just before lunch and said that he was going to get into a fight and he hoped that I would back him because he was afraid he would not be able to win it unless he had the Department's backing.
He said that the ECA does not yet have the final figures from the countries abroad so that they cannot know precisely what their final appropriation for the coming fiscal year would be. But they have made calculations and have come up with the figure which he thinks is an underestimate and will put a squeeze on the foreign countries. That, he said, he thought was not undesirable. His figure, he thought, was $3,170,000,000. The budget proposes to cut this to $2,900,000,000.
The main point, which he reiterated several times, was that if they went in with this figure to the Congress there would be no chance whatever of getting it raised as might be the case with other agencies which have a vote appeal. He said that if, after they get their final figures in and they were carefully checked, it was found that further reductions in his original figure could be made, he would be willing to have that done. But, until he was convinced that the $3,170,000,000 was in excess of what was actually needed, he was extremely anxious-and would fight to the last ditch-not to have a "meat ax" applied to the figure.
Hoffman then said that on one point he was taking a position which he thought was somewhat contrary to the State Department-and that was that he would not want the ECA appropriation loaded with military aid. This, he thought, would be detrimental to maintaining the best approach to the Marshall Plan. When I questioned him as to just what this meant, he mentioned Greece, an amount of $15 or 20 million which he said was not significant in amount but that he did not on principle like to have these common items included. He recognized that some of the funds supplied to foreign countries by ECA went for items such as food for their soldiers and he thought that was very different from ECA taking over the direct procurement of common items.
He said that he had been pointing out wherever he could that the way to meet the unbalanced budget was not by cutting down on foreign aid. If you did this, you probably would have to turn around and add large amounts to the military, until Russia was actually contained.
He said that he would like to make the strongest possible kind of a fight to Pace and if he could not win with Pace, he would have to go to the President. I told him that Mr. Webb had been dealing with this matter; that I would talk with Mr. Webb, and that I would have Mr. Webb call him this afternoon.
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