Office of the Historian

850.33/2–1854

No. 202
Memorandum by the Deputy Assistant Secretary of State for European Affairs (Bonbright) to the Acting Secretary of State1

confidential
[Washington,] February 18, 1954.

Subject:

  • Budget Bureau Reaction to the Proposal for a Loan to the European Coal and Steel Community.

Mr. Stassen has summarized in the attached memorandum the agreement which was worked out last week among the State Department, Treasury, FOA and Defense with respect to the funds to be used in a loan to the European Coal and Steel Community. He has sent a copy of this memorandum to the Bureau of the Budget, which we understand is preparing to comment on the agreement.

When FOA proposed in January that the U.S. make available $100 million of MSP funds for a loan to the Community, the Bureau of the Budget concurred, with the proviso that the loan [Page 367] should not require a request to Congress for funds in FY 1955 beyond those already included in the President’s budget. Since the current agreement, as outlined in the attached memorandum, would require an additional appropriation from Congress for fiscal year 1955, it is possible that the Budget Bureau will raise an objection.

This memorandum, therefore, is for your background information in the event that the question of Budget Bureau approval should at some time be raised with you.

[Attachment]

Memorandum by the Director of the Foreign Operations Administration (Stassen) to the Deputy Secretary of Defense (Kyes)

confidential
[Washington,] February 12, 1954.

Subject: Loan to the Coal and Steel Community

Based upon our discussion on the afternoon of February 11 with respect to the above matter, it is my understanding that you have no objection to the proposal for a $100 million loan to the Coal and Steel Community during Calendar Year 1954, and that we are agreed that the financing of this loan should be handled as follows:

a.
$50 million from those Fiscal Year 1954 military assistance funds which have already been set aside in the form of a reserve to meet various contingencies, and
b.
$50 million from a special appropriation which will be sought from Congress for Fiscal Year 1955 as a new and separate item which would be included in, and which would be additive to the $3.5 billion now contained in the President’s total foreign aid program.
c.
The entire $100 million to be available during Calendar Year 1954 to the Coal and Steel Community under agreed terms of loan satisfactory to the Secretary of the Treasury.

We will proceed to implement this agreement on this basis unless further questions are raised with Mr. Rand, Acting Director during my journey to the Far East.

May I express my appreciation of your constructive cooperation on resolving this matter.

  1. Drafted by Boochever.↩