209. Editorial Note
On February 23 an NAC Working Group met, pursuant to a request by the Department of State, to deal with expected requests for economic assistance from Argentina, Brazil, and Chile. The Chairman of the Working Group, Henry Bitterman of the Department [Page 407] of the Treasury, stated that the group would be concerned strictly with objective economic criteria and not with political considerations. (Memorandum from Vaky to Holland, February 27, 1956; Department of State, Central Files, 835.00/2–2756)
On April 12 the ABC Working Group, as it was called, forwarded its study to the NAC Staff Committee. (NAC Staff Document 748; ibid., NAC Files: Lot 60 D 137, Staff Documents) Vaky forwarded a copy of the study to Holland and Lyon on May 10, and in a covering memorandum provided a summary of its principal conclusions. His memorandum reads in part as follows:
“What Argentina needs to do now in order to regain her ‘productive rhythm’ is to reverse the policies which brought about present difficulties. In general terms the main required measures are: 1) bring inflation under control; 2) develop a long-range agricultural and livestock program that gives adequate consideration to the country’s productive opportunities and export possibilities; 3) rehabilitate and overhaul the railway system both physically and administratively (a sine qua non for genuine progress); 4) increase electric generating capacity (assured fair treatment, private capital could do a considerable part or all the job); 5) seek to earn or save foreign exchange by investigating the possibility of new products such as forestry products and minerals, eliminating excessive government control that hampered activity and increasing petroleum production as rapidly as possible.
“It is clear that Argentina commands neither the necessary domestic savings nor the necessary foreign exchange to undertake all these projects out of her own resources. If her recovery is not to be indefinitely postponed or slowed down she will need large amounts of external financing. The figure of 1.2 billion dollars mentioned by Prebisch has no known firm basis. The actual amount ‘needed’ depends on the specific plans and programs of the Government, about which we know practically nothing. The amount she will seek from foreign governments or international institutions will depend upon her willingness to accept private foreign investment and the extent to which she obtains capital goods by contracting short and medium term equipment obligations abroad.” (Ibid., Central Files, 835.00/5–1056)