868.00 TA/3–1350
The Secretary of State to the Secretary of Agriculture (Brannan)1
My Dear Mr. Secretary: I am writing in the hope of enlisting the cooperation of the Commodity Credit Corporation on the problem of providing economic assistance to Yugoslavia.
[Page 1387]As you are aware, during the last two months the National Advisory Council endeavored to solve the extremely difficult problem of financing the estimated dollar shortage of the Yugoslav Government during calendar year 1950. This endeavor was undertaken pursuant to the conclusions of the National Security Council, as approved by the President, that it is in the national interest of the U.S. that economic aid essential to the maintenance of its internal stability and its independence in the face of Soviet pressure be accorded Yugoslavia. The National Advisory Council’s effort throughout was to obtain the assistance of the various Agencies able to contribute to the problem.
Following consultations by me with the President, Secretary Snyder, and Mr. Gaston, the Export-Import Bank has just authorized a credit of $20 million which it is hoped will go a long way toward enabling Yugoslavia to maintain for the immediate future the necessary inflow of dollar imports. The Economic Cooperation Administration, as its contribution, has undertaken to do all that it possibly can to increase Yugoslavia’s dollar earnings during 1950 under its offshore procurement policy. In order to be most effective in this, the ECA has agreed to make and proceed upon a major change in its present offshore procurement policy.
American middling cotton is by far the chief raw material import which Yugoslavia finds it necessary to purchase with dollars. Of its total dollar raw material imports of roughly $50 million required during 1950, some $13 million represent the need for approximately 17,000 tons of middling cotton. It is believed that, were it possible for Yugoslavia to obtain less desirable grades of cotton totalling this tonnage at favorable prices, it would willingly forego the better grades. In this connection, it is understood that the CCC may hold among its stocks quantities of cotton of relatively low grades.
In view of the prospective size of the Yugoslav dollar obligations which will have to be met during the next few years to service credits already extended, it will be extremely difficult for the Eximbank to extend Yugoslavia additional financing should this prove necessary. In this connection, it is the view of the NAC that Yugoslavia will [Page 1388] possibly require additional raw material financing during 1950 amounting to some $15 million. It is highly essential therefore that the $20 million credit recently authorized be effective just as long as possible in meeting Yugoslavia’s requirements.
In order, therefore, that every effort be made to postpone Yugoslavia’s need for additional funds, I wonder if it would not be possible for the CCC to see its way clear to selling Yugoslavia during 1950 up to 17,000 tons of cotton of less desirable grades on favorable terms. Depending upon the terms which the CCC might be able to offer, in view of the importance of cotton in its import program the resulting savings to Yugoslavia would constitute a major contribution toward reducing the need for further Yugoslav raw material financing during 1950. This has been estimated, as already noted, at possibly $15 million.
I can assure you that I would appreciate your cooperation and that of the CCC in giving urgent consideration to this problem which I consider of such concern to the national interest.
Sincerely yours,
- At the meeting of the Export-Import Bank on March 1 at which approval was given for a $20 million credit to Yugoslavia (see telegram 142, March 1, to Belgrade, p. 1378), Bank Chairman Gaston asked the Department of State to press for action by the Commodity Credit Corporation to make some of its cotton stocks available to Yugoslavia at significantly reduced prices under the new credit (memorandum by Stinebower, March 1: 868.10/3–150). The Secretary of State and Gaston had apparently discussed such Departmental action earlier. The letter printed here was prepared when it was determined that the Secretary of State would not be able to make the necessary urgent representations on the matter orally. Documentation on Department of State proposals culminating in this letter are included in file 868.00 TA for February and March 1950. Copies of this letter were also sent to President Truman and Secretary of the Treasury Snyder. In a reply of March 23, not printed, Secretary of Agriculture Brannan expressed a desire to cooperate but urged that high-level Department of State officials be designated to consider the matter with Commodity Credit Corporation President Ralph S. Trigg (868.00 TA/3–2350). Secretary of the Treasury Snyder’s letter of March 29 to the Secretary of State, not printed, suggested an early meeting among State, Treasury, and CCC representatives (868.00 TA/3–2950).↩