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responsibilities in this field. The result is that with each new requirement a new decision must be made as to how the program should be handled because no precedent is regarded as controlling.

The Economic Cooperation Administration-Department of State problem

In view of the evolution just traced, it is apparent that the most critical administrative issue in the field of foreign economic affairs relates to the role of the Department of State and the question of whether the Economic Cooperation Administration or an agency like it should be continued.

Prior to the passage of the Foreign Assistance Act of 1948, which established the Economic Cooperation Administration, nearly as much discussion appeared to be centered on the administrative set-up for the program as on the program itself. Although Greek-Turkish aid and interim aid to Europe during the previous year had both been administered by the Department of State, in the case of the European recovery program there was considerable sentiment from the outset in favor of creating a separate agency to be responsible for administration. But wide differences of opinion developed over what status the new agency should be given within the Government, and what organization form it should have.

Provisions of the Foreign Assistance Act of 1948.-During the preparation of the proposed legislation, some opinion within the executive branch favored an administration within the Department of State, but the Secretary of State was strongly opposed to the idea. The proposed bill as drafted by the Department provided for a new separate agency which would be under the jurisdiction of the Department of State on foreign policy matters. Congress also appeared to favor placing administrative responsibilities outside the department. The prevailing view was expressed by Senator Vandenberg:

* there was general feeling throughout the (Senate) committee as well as throughout the Senate, and probably throughout the country, that since the bill was economic in character, administration and control of the program should be under business management rather than diplomatic management.

The Economic Cooperation Administration is headed by an Administrator appointed by the President and confirmed by the Senate. The Administrator is responsible to the President and has status comparable to that of the head of an executive department. In setting up this independent agency, however, it was recognized that a close relationship exists between the work of the Department of State and the conduct of an economic assistance program which would have many foreign policy ramifications. The statute provided, therefore, that the Administrator should cooperate closely with the Secretary of State. It was stipulated that the Administrator and the Secretary

of State should inform each other of operations and plans coming within the scope of their respective duties. The Secretary of State was required to consult with the Administrator whenever the Administrator's actions were not consistent with United States foreign policy. On the other hand, when the Administrator believed that actions taken by the Secretary of State were inconsistent with the purposes and provisions of the European recovery program, he was to consult with the Secretary of State. Differences were to be settled by the President.

In accordance with legislative permission for the Administrator to use the services and facilities of various Federal agencies, joint memoranda of understanding have been drawn up between the Economic Cooperation Administration and such agencies as Treasury, Agriculture, Commerce, and the Export-Import Bank. The Department of Agriculture acts as an agent for the Economic Cooperation Administration in acquiring agricultural commodities through the Commodity Credit Corporation. It arranges for shipping, storage, inland transportation and processing of the commodities supplied. Arrangements have also been made with the Department of Commerce to gear the aid program into the export licensing responsibilities of that agency to facilitate the delivery of aid. If assistance is furnished on credit terms, the Administrator allocates funds to the Export-Import Bank, which administers the loans on terms specified by the Administrator in consultation with the National Advisory Council on International Monetary and Financial Problems. The Economic Cooperation Administrator is authorized to guarantee the convertibility into United States dollars of the proceeds of private investments, provided these are made for approved projects, and these guarantees are also administered by the Export-Import Bank.

The Foreign Assistance Act authorized the Secretary of State, after consultation with the Administrator, to conclude the basic agreements with participating countries. These agreements call for certain actions on the part of the aided nations, such as stabilizing currencies, balancing budgets, reducing trade barriers, furnishing information to the United States, facilitating United States stockpiling, and depositing local currency counterpart funds. The Secretary of State was also authorized, on the recommendation of the Administrator, to employ members of the foreign service reserve and staff for service in the Economic Cooperation Administration missions overseas. The embassies were made responsible for providing administrative and technical services to the agency on a reimbursable basis. Overseas, a United States special representative with the rank of ambassador represents the Administrator in Europe, and is chief representative of the United States Government to the Organization for European Economic Cooperation. It is his duty to coordinate

the activities of the chiefs of the special missions in each of the countries receiving aid. These mission chiefs, although second in rank to the chief of the diplomatic mission, report directly to the Economic Cooperation Administration rather than to the ambassadors.

Experience under the Economic Cooperation Administration.-Review of the record during the past 3 years appears to indicate that advantages of speed and effectiveness were probably gained by the establishment of the Economic Cooperation Administration as an autonomous agency. The record also suggests, however, that this autonomy has made it hard to establish a proper dividing line between the responsibilities and functions of the Department of State and the Economic Cooperation Administration. It has been charged, for example, that Economic Cooperation Administration officials have too often taken positions and made them public on delicate controversial matters in the field of foreign relations without prior consultation with the Department of State. It has been claimed on the other hand that undue concern over foreign sensibilities on the part of the Department of State has prevented economic aid programs from developing their maximum effectiveness.

It has not been possible on the basis of limited investigation to draw firm conclusions about the various difficulties found to exist, or to assign responsibility for them with a proper degree of certainty. Nevertheless, the conclusion seems warranted that from the standpoint of getting the job done the decision to assign the task of the European recovery program to the Economic Cooperation Administration rather than the Department of State was probably justified under the circumstances prevailing at the time.

Dispersion of technical assistance and development activities

There are several areas in which the weaknesses of present arrangements for the conduct of foreign economic programs are particularly noticeable. One of these is the field of international development and technical assistance, in which the division of responsibility between the Economic Cooperation Administration and the Department of State, and the separation of these activities from other closely related economic affairs, are formidable obstacles to the "bold new program" envisaged in the point 4 formulation.

Technical assistance activities, in the general sense of programs designed to disseminate technical knowledge and promote capital investment abroad, have had a complex administrative history. The President, in his 1949 Inaugural Address, outlined four courses of action which he advocated that the United States should pursue in its international relations. The fourth of these, which has since come to be generally known as the point 4 program, was to make available the benefits of scientific advances and industrial progress in the

United States for the improvement and growth of underdeveloped areas. The President said:

We should make available to peace-loving peoples the benefits of our store of technical knowledge in order to help them realize their aspirations for a better life. And, in cooperation with other nations, we should foster capital investment in areas needing development.

To carry out the point 4 program, the Act for International Development was passed in 1950, authorizing the United States to participate in multilateral technical cooperation programs carried out by the United Nations, the Organization of American States, or other international bodies, and, in addition, to plan and execute bilateral programs. The President delegated administrative responsibility to the Department of State, within which the Technical Cooperation Administration was established. The Administrator of this organization is authorized to direct and supervise such bilateral projects as he approves and for which he allocates funds. In the Department of State the four regional bureaus, the Bureau of United Nations Affairs, the Office of Financial and Development Policy, the Office of Educational Exchange, the Office of Transport and Communications Policy, and the UNESCO relations staff assist in carrying out the point 4 program. The Interdepartmental Advisory Council on Technical Cooperation facilitates government-wide coordination.

The Department of State also administers the 10-year-old program of the Institute of Inter-American Affairs. When the Office of InterAmerican Affairs was terminated in 1946, authority to continue its activities was transferred to the Department of State, and in the following year the Congress reincorporated the Institute of InterAmerican Affairs. Life of the institute now extends to 1955.

Additional technical assistance activity in the Department of State was provided under the Philippine Rehabilitation Act of 1946. General responsibility for coordination of the several programs authorized in the act was vested in the Secretary of State; these included work in the fields of roads, fisheries, sanitation, harbors, shipping, geodesy, and aviation. Eight Federal agencies providing the technical assistance received funds from the Secretary of State. Authority under this act expired June 30, 1950. In 1951 the Economic Cooperation Administration initiated its program in the Philippines, using funds available for aid "in the general area of China."

During the past 3 years, the Economic Cooperation Administration. has developed the most extensive technical assistance program yet undertaken by the United States. Technical assistance backed by grants and loans has been carried out both in Europe and in the European colonial territories of Africa and Asia. These programs, together with aid to open up new sources of strategic materials have raised problems of relationship with the Technical Cooperation Administration of the Department of State.

The conduct of the same types of activity by both the Economic Cooperation Administration and the Department of State provides a setting for geographic and functional overlaps. In addition there are problems of coordination with the technical assistance financed through the International Bank and other specialized agencies of the United Nations. Technical assistance activities in the Department of State are largely separated from the broader program of investment that may be required to achieve real progress in underdeveloped areas. There is also question as to whether administration of the strategic materials program separately from technical assistance and other economic aid programs can achieve maximum results in the procurement and development of essential materials abroad.

The problem of scarce resources

Basic to the conduct of foreign economic affairs today is the task of obtaining the necessary raw materials to meet civilian and military requirements at home and at the same time to support programs of economic recovery, development, and military build-up abroad. To achieve an adequate supply of needed raw materials and their effective distribution among various demands calls for a series of related steps: The maximizing of domestic production and the development of substitutes; procurement of supplies abroad and development of new foreign sources; establishment of priorities and allocations at home and internationally; and the operation of a system of export claims, quotas, and licenses that will protect domestic objectives and at the same time assure that foreign commitments are met.

Several measures have thus far been taken to carry out these requirements. The Export Control Act of 1949, which gives the President export control authority, declares it to be the policy of the United States to use export controls:

* to the extent necessary (a) to protect the domestic economy from the excessive drain of scarce materials and to reduce the inflationary impact of abnormal foreign demands; (b) to further the foreign policy of the United States and to aid in fulfilling its international responsibilities; and (c) to exercise the necessary vigilance over exports from the standpoint of their significance to the national security.

Most of these powers have been delegated to the Department of Commerce.

Second, the Defense Production Act of 1950 declares it to be the intention of the United States to develop the military and economic strength necessary to oppose aggression and promote peace, and that "this task requires diversion of certain materials and facilities from civilian use to military and related purposes. * * *99 This act accordingly provides the President with authority to make needed adjustments in the economy and "to promote the national defense, by meeting, promptly and effectively, the requirements of military

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