FOREIGN RELATIONS, 19 5 0, VOLUME


  Mr. Martin 8 commented that the discussion high-lighted the fact
that all of the .Council members were sympathetic to the proposed
approach 30 days earlier but most of them had some question now and
generally speaking thought any approach should be taken very slowly.
Mr. Gaston observed that the proposal might be "re-examined".
  Mr. Southard said that if he found that anyone wished to discuss
the proposal further he would bring the matter back to the Council
for further consideration.
  [Here follows discussion of another agenda item.]

  8Mr. William McChesney Martin, Jr., representative.from the Treasury De-
partment and Acting NAC Chairman.

NAC Files
  Extract From National Advisory Council Document No.: 1081

SECRET                          [WAsHINGToN] December 19., 1950.
Subject: Financial Policy Questions Reý Foreign Assistance Pro-
    grams Proposed for Fiscal Year :1952,
  The National Advisory Council Staff Committee submits the follow-
ing conclusions and recommendations for the consideration of the
Council:
Conclusions and Recommendations
  (1) Gold and Dollar Reserves of Recipient Countries
  (a) U.S. foreign assistance under present conditions should be dic-
tated primarily by considerations of mutual defense., The present
policy of not extending grant assistance.to European countries for the
purpose of increasing gold and dollar reserves should be continued.
Where an increase in reserves occurs or where such an increase seems
probable the situation will require the most critical, examination.
   (b) Where in the opinion of the US failure to provide dollar aid
would prejudice the. defense effort, such aidshould not be withheld
merely because the US anticipates that one of the effects of such aid
would be to increase the reserves of the recipient. country.
   (c) In general countries participating in the defense effort should
not be required to reduce the present level of reserves as a prerequisite
for receiving US aid. Where the country is makingthe maximum
contribution to mutual defense an unanticipated accumulation of
reserves occurring as a result of the vigorous application of appro-
priate economic and financial policies should not automatically result
in thexreduction of aid.
  (d) Underdeveloped Areas. In view of the amounts currently
contemplated for grant assistance to underdeveloped countries, it is


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