Special Message to the Congress Transmitting Report on Foreign Assistance Programs

To the Congress of the United States:

This report demonstrates the remarkable progress made in strengthening our foreign assistance programs and policies since 1961.

The 1961 Act for International Development called for major changes in the operation and emphasis of these historic programs. For more effective direction, the activities of several agencies were brought together under the Agency for International Development. New guidelines were laid down for our aid programs as part of the bold effort to make the 1960's the Decade of Development.

This report for fiscal 1963 shows clearly the ways in which these new guidelines are being translated into concrete programs. They provide the foundations for the lean, tightly-managed aid program we plan for fiscal 1965. I want to call your attention particularly, therefore, to some significant features of this report which mark our progress during 1963 toward basic and continuing objectives of our foreign assistance policy.

Interest-Bearing Loans Replace Grants

As the 1961 Act directed, interest-bearing loans have replaced grants as the chief mechanism for assistance. Loans represented 57 percent of AID's commitments during fiscal 1963--the highest proportion in the history of the foreign assistance program.

Aid ls More Selective

Our aid became increasingly selective and concentrated in fiscal 1963--a trend that has since been accelerated. Eighty percent of all economic assistance funds authorized that year were for just twenty countries. Sixty percent of total military assistance went to just nine key countries.

Aid to Latin America Increases

To increase the impact of the Alliance for Progress, our aid to Latin America was sharply stepped up in fiscal 1963, reaching 23 percent of world-wide commitments, compared with 18 percent the preceding year and an average of only 2 percent from 1948 to 1960.

New Policies Protect the Dollar

Policies designed to protect our balance of payments produced major results in fiscal 1963--a dramatic jump in the purchases of U.S. products. U.S. producers supplied 78 percent of all AID-financed commodities during the year, compared with 63 percent the preceding year, and less than 50 percent in earlier years.

Increased Participation by U.S. Industry

Under these policies U.S. business and industry exported $855 million in AID-financed goods and equipment to Asia, Africa and Latin America during the year, and American shipping firms were paid about $80 million to carry AID-financed commodities to their destinations in the less-developed countries. These dollars meant more jobs for American workers.

As a result of the same policy, U.S. ships carried more than 80 percent of the total net AID-financed cargo that year, well in excess of the 50 percent required by the Cargo Preference Act.

Private Organizations Play a Larger Role

The 1961 Act also called for greater use of America's vast private resources in the battle against world poverty. During fiscal 1963, about one-fourth of all technical assistance was carried out not by AID personnel, but by American colleges, universities, business, professional firms, and service organizations or contract with AID.

More than 70 of our colleges and universities were at work in 40 countries under AID contracts, helping other people make progress in education, in health, in agriculture, in business and industry.

During the year, there was a four-fold increase in cooperative programs designed to help private citizens organize savings and loan institutions, credit unions, rural electric cooperatives, housing and farm credit co-ops. These programs that go right to the people have continued to grow. To expand this significant work, AID relied heavily on contracts with experienced private groups such as the Credit Union National Association, the National League of Insured Savings Associations, the Cooperative League of America, and the National Rural Electric Cooperative Association.

Increased Emphasis on Private Enterprise

In recognition of the fact that foreign investors helped build our own nation's economy and that private capital must do most of the job for the developing nations, we increased efforts to encourage American investment in the less-developed countries. Twelve countries signed investment guaranty agreements during fiscal 1963, bringing to fifty-five the number of less-developed countries participating in this successful program.

This year, for the first time, AID guaranteed a substantial amount of new U.S. private dollar investment in development banks organized to foster private enterprise in the less-developed countries. U.S. investors applied for guaranty coverage totaling $32 million for new or additional investments in such banks.

Significant Savings by Improved Management

Fiscal 1963 saw the beginning of significant economies in the management of aid programs by the Agency for International Development. Economies made in that year included savings of more than $900,000 by centralized purchase of DDT, $1,200,000 during the first six months of the fiscal year alone through tighter travel policies and regulations, and $34 million saved through an aggressive program to use Government-owned excess property in overseas projects.

Economic Aid to Europe Terminated

Major assistance to Europe under the Marshall Plan had ended by the mid-fifties, but a few smaller supplemental programs continued during the years after. Fiscal 1963 saw the last economic assistance commitment for Europe: a single grant of $125,000 authorized to finance the closing out of prior activities in Yugoslavia.

Finally, let me point out this. It is particularly appropriate that the same year which marked the termination of the historic and successful Marshall Plan for Europe was also the year in which our efforts in the less-developed countries began giving unmistakable evidence of success.

With our help, developed countries like Britain, France and Japan recovered from the war rapidly and were soon in a position to give rather than receive assistance. But when we first extended America's helping hand to the less-developed countries a decade ago, there was no such promise of rapid results. We knew it was right and necessary to help these poorer countries to a better life if we were to preserve our own good life and expand the family of the free. But only recently could we be certain that it was practical and only recently have been able to see with our eyes the proof of our earlier vision. In fiscal 1963, for the first time, it became unmistakably clear that countries like Free China were ending their dependence on AID and that others would follow.

We know today that the progress in controlling diseases that have sapped men's strength to build and to work, the steady expansion of educational opportunities, the slow but persistent increase in national income and output in the countries we have aided are leading to further successes. We know that if our goal is still distant, our course is true.

LYNDON B. JOHNSON