July 31, 1950
MEMORANDUM
At the meeting which the President held with the Congressional leaders, reported in my memorandum of this date, at the conclusion of the discussion of MDAP, Senator Connally raised the question of diverting funds from ECA. The President pointed out that these funds were more necessary than ever. Senator Connally with some vehemence denied this and said that many of the ECA projects were unnecessary in the critical period in which we were entering and that this money should be used for military purposes. He cited the futility of building power plants. I pointed out that power plants would be more necessary than ever. The Senator with some heat brushed aside the President\'s arguments and mine and said that if a motion to reduce ECA was made he would support it. He left the meeting in a rather bad temper.
I think it is important to go over this matter with ECA because I suspect that although Senator Connally is wholly wrong the amount should be changed.
Also the question was raised as to whether counterpart funds should be used for military purposes. We replied that this matter was under reconsideration and that there was much to be said for permitting more flexibility. This also is a matter on which a decision should be reached.
S DA:ma