LETTER TO HONORABLE ALLEN W. DULLES FROM MAURICE H. STANS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01676R004300140008-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 16, 2016
• Document Release Date: June 30, 2004
• Sequence Number: 8
• Publication Date: July 15, 1959
• Content Type: LETTER

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t N WITH ATTACHMENT
EXECUTIVE CE OF THE PRESIDENT
My dear Mr. Dulles:
We would appreciate very much your views on the
enclosed draft Bureaa of the Budget staff analysis of
Free-World and Sino?Soviet Economic Aid. Activity.
Certain of the data contained in the report are based
on information prepared in your agency.
We should very much like to receive such comments
as you might have by August 1, 1959.
Staff of the Bureau of the Budget are available for
any consultation deemed desirable.
Copies of the tables are also being sent to The
Acting Secretary of State, The Secretary of the Treasury,
The Acting Secretary of Commerce, the Special Assistant
to the President for National Security Affairs, and the
Chairman of the Council on Foreign Economic Policy.
=_zcerely yours,
Honorable Allen W. Dulles
Director, Central Intelligence
Agency
Washington 25, D. C,.
On file OMB release instructions
apply.
Executive ReQigtty
'E FE T Y FILE
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 MOW-
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General Conclusions of Comc rlson of :llno-Soviet Bloc and
The material contained In this study zovera the years 1954
through 1958 and was derived from documents published by official
agencies, U. S. and international. A few of the figures have been
estimated or interpolated, and have been so indicated. The nudes
of the totals have not been affected by these anathods. The principal
conclusions of the study are
1. On a wo:cld-wide basis. Soviet ecoao .c aid activity in
the peat five years has been dwarfed 'ay U.S. activity, public
and, private. Activity by other free ? id countries is also
much larger than the Bloc's.
2. Bloc ap ~ivii~y is concentrated in a few countries. In
Syria, Egypt, and Afgnistan, Bloc ar'tivi,y is much larger than
all Free World arogre , government s d private, combined.
Though Bloc expenditures in India epp:~.ar to be large, they are
much less than )"a^ee World aid. Bloc acistce to Yugoslavia
had been large, but was cancelled about a year ago.
3. Through 1958, Bloc expenditu:?es have been relatively
high in the mill.ery program, relatively low in the economic
program. However, on the basis of present commi nts, expendi-
tures on economic aid can be expected to rise rapidly while
military expend:-1twuresa iri11 taper off. Total expenditures should
reach an annual rate; of one half billion dollars by 1960 or
shortly thereafter.. Even at this level Bloc aid would be only
oae-eighth of the current rate of the not outflow of resources
from Free World countries. Thus, the problems raised by Bloc
aid, programs do not appear to be a function of amount, but
of selectivity, props activities, method of administration,
and similar matters.
4. In any comparison of technical and related personnel
of the Soviet Bloc and U.S., the figu~-es are overwhelmingly
in favor of the U.S.
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 SE
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E PI AXON OF TEE 'ZABLES
These tables are a comparison of cono tc aid activity in the under-
developed areas by the Sino-Soviet Bloc, the Free World, and the International
Agencies for the years 19514 through 1958, Statistics on the Free World Include
Government programs, private investment and an estimate of private donations.
The International agencies can be considered essentially an activity of the
Free World inasmuch as the Bloc supports only one of them, the United Nations
Technical Assistance agency. There are seven tables in ell:
I - Summary of Expenditures by the Free World and Sino-Soviet
Bloc on Economic Assistance tc the Underdeveloped areas,
1951+-1958
A - Regional. Comparison of Net Ex-peaditures by Sino-Soviet
Bloc and United States (.Government on Economic Aid,
1951}-1958
it - Unexpended Balances and Unused Credits by Region, 1958
tl : - Commitments of Sino-Soviet Bloc Assistance (Economic and
Military) by Source, 1954-195v
IV` - Detail of Sino-Soviet Bloc Me. 1954-1958
V - Free World Government Economic Aid Expenditures in
Underdeveloped areas, 1954-195,3
VI - Free World Private Investment to Underdeveloped Areas,
1954-1A58
VII - Comparison of Technicians and ether Professionals in
Underdeveloped Areas, 1958
The underdeveloped areas of the world are defined as the Middle East;
Asia, except Japan; Africa, except the Union of &,iath Africa; Latin America;
and three countries In Europe, Portugal, Spain and Yugoslavia. Greece and
Turkey are included as part of the Middle East.
The tables cover the past five years, 1954 through 1958, but the
time period. for each statistical series is not always the same. Figures for
the Sino-Soviet countries, UN agencies, private donations and private invest-
ment are for the calendar year. Figures for governments are for the fiscal
year of the government concerned, thus : UEFA, July 1-June 30; UK, April 1-
March 31, etc. Government figures for comp cable time periods are not avail-
able. However, the time differences involved make no appreciable effect on
either the magnitudes of the totals or their trend.
Sino-Soviet Bloc
The figures for the Sino-Soviet Rlcc, except repayments, have been
taken from the Economic Intelligence Committee publication, "Sino-Soviet
Bloc Economic Activity in the Underdeveloped Areas." Repayments have been
estimated, on the lusts 47f o 1&'-ER & ,po-Rg AS6 40068-4,rder to
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point up the small amount of repayments of Sino-Soviet credits thus far.
The official exchange rate of four rubles to the dollar has been used. While
,this rate represents an over-evaluation of the ruble insofar as internal
Russian prices are concerned, in world trade, Russian export prices have
almost always approximated. world price levels. It is also known that the
cost of several particular projects, such as the steel mill in India, is
reasonable by Western sta lards.
Although some of the Sino-Soviet commitment figures include what. are
really barter trade agreements? the total. of Sino-Soviet trade with Free World
underdeveloped countries has not been covered in the presentations on Bloc
economic activity. Comparisons of Bloc trade with Free World trade have not
been included in these tables.
Almost the whole of Bloc assistance is in the form of loans. Of the
total of $2.4 billion, only $98 million has been granted, and all of it in
the economic program, as follows (figures in millions): Cambodia - $34;
Burma. - $30; Ceylon - $16; Nepal - $12; Egypt - $5; and India - $1.
t,ctstoaunist China has made $61, million of t grants, Russia, $37 million,.
Since December 31, 1958, the termiral date of the tables, the
pattern of Bloc commitments has remained unchanged with one important
exception, a commitment of $137 million in economic aid to Iraq has been
added to the military commitment of $118 million, made in October,, 1958F.
In the area of private investment, figures for the United States
are rather good, but for other countries tiey are incomplete. From 1954 to
1957, direct investment by other countries was $3,6130 million. Several
hundred million dollars of portfolio investment are readily identifiable
and so the figure on the table has been rounded up to $4 billion. Figures
for short and medium term investment by nor.-Americans are not available,
but this type of investment is beci ng increasingly important for the
lesser-developed countries. West Germany is the leading supplier of
these credits after the USA.
Of the $4.5 billion of American private investment in the under-
developed areas fret 19511--1957, about $1 billion represents the short-term
financing of ordinary commercial transactions. Such financing frequently
helps countries with tt.orary balance of layments troubles, but probably
should not be considered e a development activity. It is worth noting
that before and after Worlt War I portfolio investment was the favorite
form of long-term capital investment. Not until after WW II did direct
investment become the common form of long-term investment, and not until
three years ago was interest in portfolio Investment renewed. Since 1956
portfolio investment by the U. S. has increased about three times over the
level of the early 1950s. It has also beet: increasing, but more slowly,
in Western Europe. (Only $40 n.illion of Aeerican private investment is
covered by the Investment Guaraney Program.)
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Technical and Related Personnel
Figures on Free Ghrld personnel, except American, are not available.
Bence, the table is limited to a comparison of the United States and the Bloc.
For this country, employees of private companies are shown as well as Govern-
ment personnel, i ,ach as both are regg:.red to make a true comparison
between the United States and the Bloc. "he figures in the "private" column
are the total m=bar of "'prinel-rals" reported in the =study on Americans25X1
overseas.
There is no way of identifying the number of non-goverument persons
engaged in activities of direct benefit to the country of residence. In many
of the Latin American countries there area number of self-employed profes-
sional people. There are many others in non-development commercial activities,
such as the luxury trades or internatio passenger, shipping? and airline
companies. Some are in the twilight zone. In spite of these reservations,
it is probably not unreasonable to assume that at least three quarters of
the number in any of the Latin American cc uunntri.es are associated with
development-type activities.
yn Africa, the Middle East, and Asia it can be assumed that virtually
all Americans are engaged in activities of direct benefit to the country,
except in Lebanon, where it can be assumed that the percentage no engaged is
very small..
There is one general exception in -tll countries - missionaries
wholly engaged in religious activities. Txlese, however, are rather fev,
probably no more than a third of the appro metely 27,,E American mission-
aries abroad, because much missionary activity today is of a public welfare
sort - schools, hospitals and clinics, even agricultural technical assist-
ance.
The personnel table is limited solely to persons engaged in economic
activities. It is in no may a measure of the number of persons from either
the Bloc or the Free World who are engaged in political, propaganda, and other
non-economic activities.
NOTE: ONLY TE Sl JO-3 S A'i.'I ']QC 3 ARS S R .'. ALL MWN ARE
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S E EI
1954 - 1957 .1958TOTAL Unexpended
Repayments of Balances
Loans and principal and Net Loans and Net Loans and Net & unused
~/ Grants interest Expenditures Grants Repayments Expenditures Grants Repayments Expenditures credits
Sino-Soviet Bloci+' ........................ 250 5 245 150 20 130 400 25 375 1,200
Free World - Public
U.S.A ............... ............. 6,976 699 6,277 2,173 256 1,917 9,149 955 8,194 3,557
Other Government J ..................... 4,091 83 4,008 1,301 60 1,241 5,392 143 5,2149 1,584 J
IBRD and IFC ........................... 495 115 380 285 60 225 780 175 605 648
Other UN Agencies ~ .................... 371 371 95 95 466 466 n.a.
Smmury of Expenditures by the Free World and Sino-Soviet Bloc on Economic Assistance to the Underdeveloped Areas, 1954-1958
ons o dollars)
897 11,036 3,854 376 3,478 15,787 1,273 14,514 n.a.
New Invest. Remission
& Reinvest. of Net new
earnings earnings investment
Free World - Private Investment
U.S.A ................................... 5,650 5,466 184
Other country ........................... 4,000 3,400 600
9;650
8;866 784
- 950
Private Donations J ..................... 950
Total ................ 10,600
Net effect on balance of payments,
Free World ............................. -
Investment Earnings Net Investment Earnings met
1,800 1,800 0 7,450 7,266 184
1,200
3,000
250
3,250
200
250
450
12.650 11.666
1,200
13,850 11,666
984
1,200
2,184
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 Far
East
Sino-Soviet Bloc 80
Less Repayments J
Net Total
U.S. Government 4,187
Mutual Security Program 3,814
X-M Bank: Gross (82)
Less Repayments 34)
Net 48
P.L. 480, Titles II & III 131
Title I 194
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TABLE IIA Regional Comparison of Net Expenditures Sino-Soviet Bloc and
U. S. Government on Economic Aid, 1954-195b
Near East
So. Asia
2,038
1,127
(64)
(56)
8
258
644
Africa
62
(29)
(13)
16
36
Latin
America
795
224
(826)
(507)
319
82
170
Western
Europe
134
1,061
490
(29)
(25)
4
175
392
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Undistributed
399
-25
37T
395
682
1, 400
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1954
1955
Ussx ......................
5.8
115.5
European Satellites.......
5.0
223.3
Czechoslavakia.........
5.0
214.6
Poland.................
-
-
East Germany...........
-
8.7
Bulgaria, Hungary,
Rumania ...............
-
-
(millions of dollars)
1956 1957
542.7 245.5
119.3 21.4
90.1 16.4
23.2 -
2.9 2.3
3.1 2.7
Communist China........... - - 55.4 20.0
1958
Total
Economic
Military
702.2
1,611e7
1,254-.0
357-7
279.9
648.9
227.0
421.9
82.7
408.8
100.9
307.9
155.5
178.7
64.7
114.0
30.1
44.0
44.0
-
11.6
17.4
17.4
-
43.6
119.0
119.0
-
Total ................ 10.8 338.8 717.4 286.9 1,025.7 2,379.6 1,600.0 779.6
25X1
TABLE III
Commitments of
Sino-Soviet Bloc Assistance Economic and Military) by Source, 1954-1958
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TABLE VI Free World Private Investment in Underdeveloped Areas 1954-1958 a/
(Millions of dollars)
195?
- 1957
1954
(Est)
Direct
Short-
Remissions
of Net
_
Invest- Net
A.
U.S.A.
Oil
Other
Total
Portfolio
Term Total
Earnings Effect
ment Remissions Effect
Latin America
(1470)
(1332)
2802
513
608
3923
3145
788
- - -
Asia, Middle East, Africa
( 717)
( 155)
872
305
258
1435
2321
-886
- - -
-
7
292
-
292
292
(2
1977
T117
)
3 7
1110
5466
1811
10000 -1555-
1954 - 1957
B. Other Countries,
Direct Investment Only
176o.
1400 )
175 )
170
55
35
45 )
Total Investment Earnings Remitted Net Result ment Remissions Effect
Prance
United Kingdom
Germany
Switzerland
Sweden
Netherlands
Other Countries
3640 b
1900 -140 - - -
1300
3200 h
58
440
1958 (Est)
Invest- Net
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MEMORANDUM FOR: Mr. Dulles:
P copy of this letter (and enclosures) has
for comment and preparation of an appropriate
reply for your' signature.
already been sent to DD/I (KWN-.
FORM NO. ,+, REPLACES FORM 10-101
10 1 wu i cH NIAY BE USED.
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