Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

122. Memorandum From the Director of the Office of International Finance, Department of the Treasury (Willis) to Secretary of the Treasury Anderson⁰

May 25, 1960.

During the course of a meeting with Don Paarlberg on May 23, to discuss the uses of PL 480 foreign currencies, Mr. Paarlberg indicated that he may discuss with you directly some of the problems which were raised at that meeting. The two broad questions discussed at that meeting were: (1) uses of PL 480 loan repayments; and (2) the new policy recently inaugurated by the Budget Bureau to require dollar appropriations for all US uses of foreign currencies acquired under PL 480 sales agreements. The questions which Mr. Paarlberg may discuss with you are briefly outlined below:

(1) Use of PL 480 Loan Repayments

Up to this point, repayments under 104(g) loans to foreign governments have been small, and there have been no repayments under 104(e) Cooley loans to private enterprise. Those repayments which have been made are held by the Treasury and are made available for sale to US Government agencies.

Congress has been promised an Administration proposal which would establish general policies for dealing with loan repayments, but because of the failure within the Administration to agree on a proposal it was decided to postpone a submission until the next session of the Congress. Mr. Paarlberg believes that we should agree on a proposal which could be turned over to the next Administration. He will probably suggest that this task should be assigned to the Francis Committee which has been handling this matter.

At the time this question was last considered by the Francis Committee, in January of this year, there were several points of difference between the Treasury Department and other Departments. Treasury and Agriculture proposed a revolving fund for Cooley loan repayments, after provisions are made for Treasury sales, the educational exchange program, and the agricultural market development program. The Budget Bureau, the State Department, and the ICA opposed this proposal.

Treasury joined Budget in proposing that loan repayments should be made available for US Government agency use only against dollar appropriations. This was opposed by Agriculture, State and the ICA.

Treasury joined with the other Departments in supporting the present statutory authority to use loan repayments for the educational exchange and agricultural market development programs, which the Budget Bureau opposed.

Treasury joined with the other Departments in supporting the use of loan repayments for transfers to international organizations (for example, IDA) free of the appropriations procedure, a view which was opposed by the Department of Agriculture.

(2) The New Budgeting Procedure for Foreign Currencies

The Budget Bureau, with our support, recently inaugurated a new procedure under which US Government agencies will have access to foreign currencies acquired under PL 480 only pursuant to the appropriations procedure. Under this policy there will be two kinds of dollar appropriations:

a. Unrestricted dollar appropriations which can be used to purchase foreign currencies from the Treasury when available, or otherwise when not so available; and

b. Restricted dollar appropriations to purchase only those foreign currencies held by the Treasury where such currencies are:

(i) limited by agreement to special programs and are not available for general use; and

(ii) are determined by the Secretary of the Treasury to be in excess of normal requirements.

Agriculture is disturbed about the way this new policy has worked out in practice. They contend that the PL 480 statute requires that they be given access to foreign currencies acquired under that statute, and that if they are restricted to the currencies declared to be in excess supply, this purpose of the statute is likely to be negated.

GHW

0. Source: National Archives and Records Administration, RG 56, Records of the Office of the Secretary of the Treasury, Robert B. Anderson, Subject Files, Office of International Finance. Official Use Only. The source text, which was sent through Upton, is stamped, “Noted R.B.A.”