The forthcoming Budget Message will propose maintenance of the Presidential power of transferability of all assistance funds and will ask authority to merge these funds with the regular defense funds.  It will also propose that the Secretary of Defense have primary responsibility for the administration of foreign military assistance in accordance with the policy guidance of the Secretary of State.

The fact that we can now reduce our foreign economic assistance in many areas is gratifying evidence that its objectives are being achieved.  By continuing to surpass her prewar levels of economic activity, Western Europe gains self-reliance.  Thus our relationship enters a new phase which can bring results beneficial to our taxpayers and our allies alike, if still another step is taken.

This step is the creation of a healthier and freer system of trade and payments within the free world—­a system in which our allies can earn their own way and our own economy can continue to flourish.  The free world can no longer afford the kinds of arbitrary restraints on trade that have continued ever since the war.  On this problem I shall submit to the Congress detailed recommendations, after our Joint Commission on Foreign Economic Policy has made its report.

ATOMIC ENERGY PROPOSAL

As we maintain our military strength during the coming year and draw closer the bonds with our allies, we shall be in an improved position to discuss outstanding issues with the Soviet Union.  Indeed we shall be glad to do so whenever there is a reasonable prospect of constructive results.  In this spirit the atomic energy proposals of the United States were recently presented to the United Nations General Assembly.  A truly constructive Soviet reaction will make possible a new start toward an era of peace, and away from the fatal road toward atomic war.

DEFENSE

Since our hope is peace, we owe ourselves and the world a candid explanation of the military measures we are taking to make that peace secure.

As we enter this new year, our military power continues to grow.  This power is for our own defense and to deter aggression.  We shall not be aggressors, but we and our allies have and will maintain a massive capability to strike back.

Here are some of the considerations in our defense planning: 

First, while determined to use atomic power to serve the usages of peace, we take into full account our great and growing number of nuclear weapons and the most effective means of using them against an aggressor if they are needed to preserve our freedom.  Our defense will be stronger if, under appropriate security safeguards, we share with our allies certain knowledge of the tactical use of our nuclear weapons.  I urge the Congress to provide the needed authority.

Second, the usefulness of these new weapons creates new relationships between men and materials.  These new relationships permit economies in the use of men as we build forces suited to our situation in the world today.  As will be seen from the Budget Message on January 21, the airpower of our Navy and Air Force is receiving heavy emphasis.