Foreign Relations of the United States Diplomatic Papers, 1940, The American Republics, Volume V

610.1131/308½

Memorandum by Mr. Emilio G. Collado of the Division of the American Republics³

[Washington,] June 10, 1940.

An Economic Program for the Americas

In the last several weeks all sorts of plans and programs have been advanced within the Department and within the Government for attacking the economic problem which the international situation is causing in the American Republics. The present memorandum will attempt to measure the extent of the problem, summarize briefly a number of the proposals which have been set forth, and suggest a plan for attacking the entire problem.

The Extent of the Problem

During the period 1935 to 1938 the total exports of the twenty other American Republics averaged just under two billion dollars a year. Of the total, about 7 percent consisted of trade among the twenty other American Republics, about 32 percent consisted of exports to the United States, about 55 percent was ultimately destined for Europe, less than 2 percent went to each of Japan and Canada, and the small remainder was shipped elsewhere. It will readily be seen that, under present international circumstances, the greatest concern of the other American Republics is with the $1,069,000,000 worth of products which during this four-year period were shipped, on the average, annually to Europe. This figure also highlights the fact that while the United States was much the largest individual market for the products of the other American Republics, with England taking only slightly over one-half as much as the United States, Europe as a whole constituted a much larger market than the United States.

Turning to the individual commodities exported, it is found that 20 leading commodities or groups of commodities constitute 88 percent of the total exports of the other American Republics. The following paragraphs will discuss each of these 20 leading commodities or groups in a summary fashion.

Petroleum. Petroleum is the greatest export of the other American Republics, amounting in 1938 to $317,000,000 and 33,000,000 tons. Statistical analysis is complicated by the fact that a large percentage of Venezuelan oil is shipped to the Netherlands West Indies where it is refined and reshipped. Nevertheless, it appears that about one-sixth of the total, or perhaps $50,000,000 worth of petroleum, was shipped from the other American Republics to the United States, either directly or via the Netherlands West Indies. Practically all of the rest was shipped to Europe. The principal countries of origin were Venezuela (79 percent), Peru (8 percent), Colombia (6 percent), and Mexico (5 percent).

In view of the fact that practically no petroleum is imported into the United States except from the other American Republics and from the Netherlands West Indies, and the United States is in fact on an export basis, it would not appear practicable greatly to expand imports of petroleum into the United States from the other American Republics to make up for the loss of European markets.

Coffee. Coffee is the second most important export of the other American Republics, amounting in 1938 to 26,000,000 bags valued at $234,000,000. The principal countries of origin were Brazil (57 percent), Colombia (21 percent), Venezuela (5 percent), and several Central American countries.

The United States is, of course, by far the largest market, taking $134,000,000 worth of the total. Imports into the United States from countries outside of this Hemisphere are very small. In view of this situation, the possibility of diverting exports of the other American Republics from Europe to the United States (amounting to almost $100,000,000) is small. Two suggestions have been offered for increasing the use of coffee in the United States: One is to try to induce blenders to use more coffee and less other substances in blending coffee; the other is to develop the use of coffee in the production of plastics. Neither of these possibilities would appear to hold out much hope for the immediate future.

Meats. The other American Republics in 1938 exported 725,000 tons of meats valued at $124,000,000. The principal countries of origin were Argentina (80 percent), Uruguay (10 percent), Brazil (9 percent), and Chile (1 percent).

The United States imported but 5 percent of the total—mainly in the form of canned meats. Most of the remainder went to the United Kingdom, with small amounts to several other European countries. Imports into the United States of meats and meat products from nations outside of this Hemisphere have consisted principally of hams from Central Europe. Latin America is not in a position to supply this demand.

Sugar. In 1938 the other American Republics exported 23,000,000 bags of sugar valued at $116,000,000. The principal countries of origin were Cuba (86 percent), Dominican Republic (7 percent), Peru (5 percent), and Haiti (1 percent).

The United States imported about $80,000,000 worth, or 72 percent of the total. Most of the remainder went to the United Kingdom.

Copper. In 1938 the other American Republics exported 484,000 tons of copper valued at $107,000,000. The principal countries of origin were Chile (76 percent), Peru (13 percent), Mexico (8 percent), and Cuba (3 percent).

Of the total, 35 percent or over $30,000,000 worth was shipped to the United States, most of the remainder going to Europe and Japan. The United States imported about 30 percent of its requirements from nations other than the American Republics—16 percent from Canada and 14 percent from Europe and Africa. There is apparently no reason why imports from Europe and Africa could not be replaced by either Latin American or domestic copper.

Wool. Exports of wool from the other American Republics in 1938 amounted to 215,000 tons valued at $92,000,000. The principal countries of origin were Argentina (52 percent), Uruguay (37 percent), Chile (6 percent), Peru (3 percent), and Brazil (2 percent).

Of the total, but $8,000,000, or 8 percent, came to the United States, the remainder being shipped to Europe and Japan. In addition to its imports from the other American Republics, the United States imported in 1938 about $15,000,000 worth, mainly from British Dominions in the Far East. In view of British war time regulations the United States has recently taken substantially larger quantities of wool from South America and it is believed that additional supplies could be obtained to replace those formerly imported from elsewhere. Wool presents a product which the United States imports from the other American Republics that might well be increased substantially.

Cotton. In 1938 the other American Republics exported 384,000 tons of cotton, valued at $67,000,000. The principal countries of origin were Brazil (70 percent), Peru (18 percent), Mexico (5 percent), and Argentina (5 percent).

Only $2,000,000 worth or 2 percent of the total was exported to the United States, approximately 80 percent to Europe, and 17 percent to Japan. The United States also imported about $7,000,000 worth of cotton from other sources, over $3,000,000 from Egypt consisting of the long staple variety. The Peruvian cotton constitutes a possible but not particularly acceptable substitute for the Egyptian variety. The United States, of course, has tremendous stocks of the short staple variety.

Metals other than Copper and Tin. These metals were exported from the other American Republics in 1938 in the amount of 2,700,000 tons valued at $73,000,000. Principal countries of origin were Mexico (64 percent), Bolivia (9 percent), Peru (8 percent), Cuba (6 percent), Chile (5 percent), and Argentina (4 percent).

Of the total, 42 percent or $31,000,000 worth was exported to the United States, and most of the rest went to Europe. Some $21,000,000 worth of similar products was imported into the United States from countries outside of this Hemisphere and consists in large measure of Manganese from the U. S. S. R. In case of necessity this might be obtained from Cuba and Brazil, but a greater organization of the Brazilian industry would be necessary in order to permit this diversion.

Hides and Skins. Exports from the other American Republics of hides and skins amounted in 1938 to 237,000 tons valued at $63,000,000. The principal countries of origin were Argentina (50 percent), Brazil (19 percent), and Uruguay (13 percent).

The United States took $15,000,000 worth, or 24 percent of the total, and most of the rest went to Europe. The United States also imported $20,000,000 worth of these products from other parts of the world.

It is believed that imports of goat and sheep skins from the other American Republics might be stimulated, but calf skins are not available to supply United States demands.

Wheat. In 1938 the other American Republics exported 2,000,000 tons of wheat valued at $61,000,000, the principal countries of origin being Argentina (98 percent) and Uruguay (2 percent). None is imported into the United States, which is a large wheat exporter. The largest market is Brazil, which takes 48 percent of the total, and most of the rest goes to Europe and Japan.

Linseed. In 1938 the other American Republics exported 1,300,000 tons of linseed valued at $60,000,000, Argentina supplying 95 percent of the total and Uruguay the remainder. The United States took 26 percent or over $15,000,000 worth and most of the remainder went to Europe. Imports into the United States from other than this Hemisphere are negligible.

Corn. In 1938 the other American Republics exported 2,700,000 tons of corn valued at $59,000,000, Argentina exporting 95 percent of the total and Brazil most of the remainder. None was shipped to the United States, which is on an export basis except in years of drouth.

Nuts, Waxes, Oils, Chicle, and Extracts. In 1938 the other American Republics exported 768,000 tons of these products valued at $38,000,000. The principal suppliers were Brazil (71 percent), Argentina (12 percent), and Mexico (7 percent). Of the total, 52 percent was destined to the United States and most of the rest to Europe. The other American Republics constituted only 17 percent of the total supply for the United States of such products. The Philippines and China led with large shipments of coconut oil and tung oil.

The large and growing uses of such vegetable and nut oils in industry in the United States make this one of the most profitable fields to explore.

Nitrate. Chile in 1938 exported 1,500,000 tons of nitrate valued at $31,000,000, about 40 percent of the total coming to the United States and most of the rest being shipped to Europe and Japan. The United States imports no other nitrates.

Cereals (except wheat, corn, and linseed). The other American Republics in 1938 exported 975,000 tons of these products valued at $31,000,000. The principal countries of origin were Argentina (63 percent), Brazil (17 percent), and Chile (14 percent).

Imports of such products into the United States consist chiefly of barley malt and hops. A few million dollars worth of these might be imported if Chile, the principal producer, expanded its crops.

Bananas. In 1938 the other American Republics exported $28, 000,000 worth of bananas, all of the Caribbean countries entering into the trade. The principal market was the United States, which took 79 percent, and Europe took an additional 15 percent. In view of the extensive organization of the banana trade, it would not appear possible to increase imports of bananas into the United States.

Tin. In 1938 the other American Republics exported 28,000 tons of tin valued at $25,000,000. Bolivia accounted for 95 percent of the exports, practically all of which went to Europe. During the same year the United States imported $44,000,000 worth of tin, largely from the Far East.

Cabinet Woods, Lumber, and Quabrocho [Quebracho]. In 1938 the other American Republics exported $22,000,000 worth of these products, Argentina constituting the principal supplier (57 percent), followed by Brazil (21 percent), Mexico (12 percent), and Chile (5 percent). The United States took approximately one-quarter of the total and Europe about 50 percent. There is very little opportunity for increasing imports into the United States from the other American Republics.

Cacao. In 1938 the other American Republics exported 206,000 tons of cacao valued at $22,000,000. The principal countries of origin were Brazil (57 percent), Venezuela (14 percent), Ecuador (13 percent), Dominican Republic (9 percent), and Costa Rica (4 percent).

The United States took two-thirds of the total, practically all of the remainder going to Germany and the Netherlands. The United States also imports about $8,000,000 worth of cheap grade cacao from Africa for use in mixing with the higher grade cacaos obtained in Ecuador and Venezuela. Increase of imports into the United States would be a matter more of increasing production of the cheaper grades of cacao in the other American Republics than of purchasing the higher grades now shipped to Europe.

Fibers. The other American Republics in 1938 exported 153,000 tons of fibers valued at $9,000,000, Mexico being the principal country of origin (60 percent), followed by Cuba (14 percent), Chile (11 percent), Haiti (7 percent), and Brazil (6 percent).

The United States took almost two-thirds of the total and most of the remainder went to Europe. The possibilities of increasing the imports of certain fibers such as Java, sisal, and kapok jute from India, Manila hemp, and silk, all of which might be produced in the other American Republics, are great.

Summary of Principal Products Exported by the other American Republics to Europe. The following table summarizes the amounts of the principal products of the other American Republics which have in the past been destined to Europe, statistics being based on 1938 figures:

	Millions of Dollars		Millions of Dollars
Petroleum	250	Corn	50
Coffee	100	Nuts, waxes, oils, chicle and extracts	18
Meats	110	Nitrate	18
Sugar	25	Cereals except wheat, corn, and linseed	28
Copper	60	Bananas	4
Wool	75	Tin	24
Cotton	60	Cabinet woods, lumber, and quabrocho	11
Metals other than copper and tin	40	Cacao	7
Hides and skins	40	Fibers	3
Wheat	25
Linseed	40
		Total	998

The discussion above indicates that exports might be diverted to the United States, in substitution for United States supplies formerly obtained elsewhere, in the following amounts: Wool, $12,000,000; cotton, $2,000,000; metals other than copper and tin (chiefly manganese), $6,000,000; hides and skins, $8,000,000; cereals (chiefly barley malt), $2,000,000; and a small amount of cacao. In addition, a suitable development of a tin smeltery, of nut and vegetable oils, and of fibers in the other American Republics might permit the importation into the United States of much larger quantities of these materials. There is also considerable room for development of rubber and mandioca flour for import into the United States. Even without the development of new productive capacity, but with the construction of a tin smeltery, probably $75,000,000 worth of additional imports into the United States might be developed.

The Dynamic Character of the Production and Exports of the Other American Republics.

There has been presented above a fairly extensive summary of the export trade of the other American Republics by principal commodities, with an indication of the great extent to which the other American Republics have been dependent upon European markets for a number of these commodities, and the rather small immediate possibility of diverting their exports to the United States.

This analysis has of necessity been on a static basis, using figures of earlier years. It must be emphasized that this alone is not sufficient to give an adequate view of the entire problem. Some mention has already been made of the possibility of increasing supplies of such products as rubber, tin, nut and vegetable oils, and fibers which could find a large market in the United States.

In addition, there are many other trends in the production and trade of the individual American Republics which must be taken into account. Thus Haiti has been making extensive efforts to develop its coffee industry, although coffee is a product in which there certainly exists a great supply relative to the world demand. Similarly, Paraguay, after a number of years of warfare, is attempting to develop production and exports of a number of products of which Hemispherical surpluses already exist. Any attempt to lay out a solution to the economic problem confronting the other American Republics must take into account the interest and aspirations of each of the individual nations, and it will be necessary to direct developmental efforts in the more backward nations as far as possible into production of commodities which may be absorbed in the United States or in the other American Republics.

Assumptions Underlying an Economic Program for the Americas.

The above analysis has indicated the extent to which the other American Republics are dependent upon European markets for their products. Of the $1,069,000,000 worth of products which the other American Republics shipped annually to Europe over the four-year period, 1935 to 1938, only about $75,000,000 worth is directly susceptible of diversion to the United States unless new production, rubber, tin, and so forth, is developed. It is probable that another similar amount of trade between the other twenty American Republics might be developed, but this leaves a large volume of the products of the other American Republics—at least $900,000,000 worth a year—dependent on markets in Europe and elsewhere.

The possible types of solution to the problem thus presented by the international situation lie in:

1. Diversion of United States purchases to the other American Republics,

2. Development of trade among the other American Republics,

3. Development of production in the other American Republics of goods marketable in the United States,

4. Limitation of production in the other American Republics of those goods of which large surpluses exist,

5. Indirect aid in the form of public works and other developmental expenditures,

6. Temporary assistance to cushion the immediate shock—this assistance had best be in the form of credits to the monetary authorities and central banks of the other American Republics, (5 and especially 6 are not in themselves permanent solutions to the problem)

7. Acquisition of stocks of the products of the other American Republics for eventual disposal outside of the normal trade channels in the United States.

Judgment as to what types of solution it is recommended be embodied in an economic program for the Americas must be conditioned by assumptions as to the character of the international situation which must be faced. Regardless of the outcome of the conflict in Europe, it is clear that the character of international trade of the principal country or countries of Europe will be greatly changed from that previously followed by such nations as Great Britain and France. If Germany is successful, there arise questions as to what type of a peace will result and what will be the character of the economic institutions of Europe. At the one extreme, there may be a powerful centralized unit aggressive in the military, political and economic senses. At the other extreme, there might be a policy directed towards maximizing the economic well-being of Europe through more liberal trade and financial policies. It has been indicated that Dr. Schacht⁴ has been preparing plans for this type of an economic reconstruction.

Obviously, we must adopt an inter-American economic program closely linked with our domestic, economic and defense programs, and calculated to permit this Government to resist economic and military aggression if necessary but to cooperate economically if European policy is directed in more liberal channels. The following programs summarize a number of proposals which are current, and attempt to arrange them in a unified program.

An Economic Program for the Americas.

Direct Trade Arrangements. 1. It is the opinion of Mr. Hawkins of TA⁵ that there exists a considerable range of items in which this Government could make tariff concessions under the trade agreements act, and that such concessions would be of significance in encouraging imports from the other American Republics. TA is proceeding to study this question closely, and it is suggested that such efforts be pushed as rapidly as possible.

2. In view of the competitive dangers and weakening bargaining position of twenty-one separate nations producing in many cases similar commodities, it may be desirable for the twenty-one American Republics to agree to consult with one another to determine whether a unified front and collective negotiation should be adopted in individual cases where an overseas power approaches any one country in trade negotiations which partake of economic aggression. There is attached a memorandum⁶ on this subject suitable for submission to the Inter-American Financial and Economic Advisory Committee. This memorandum has already been cleared in RA,⁷ TA, EA,⁸ and by Mr. Berle, and is pending further clearance in its policy aspects.

It will be recognized that such an agreement is not of itself sufficient to bind together the Americas in an economic sense. It will have to be supplemented by alternative direct aid and assistance to counteract economic advantages which may be offered the individual countries by the outside powers.

3. The possibilities should be explored of increasing trade among the other American Republics, especially by diverting purchases of individual nations which formerly were made outside of the Hemisphere to others of the American Republics. This matter is already being studied in subcommittees I and II of the Inter-American Financial and Economic Committee.

Financial Assistance to Bridge Emergency Situations. The effective operation of the entire program being described would obviate most if not all of the necessity for taking care of emergency situations. While the proposed program were being put into effect, however, there would probably arise a number of situations in which immediate financial assistance would be the only practical remedy. In such category is the two million dollar credit just extended to the Central Bank of Peru by the Export-Import Bank. This type of assistance may also be useful in smoothing over and taking care of difficulties of timing in the operation of other phases of the program.

Such assistance could be extended by: (1) Stabilization fund—The Secretary of the Treasury has indicated that he is averse to using the fund for such purposes and has indicated that, while he is warmly sympathetic to cooperative action to maintain the economic structure of the Americas, other methods must be found.

(2) The Export-Import Bank—The Export-Import Bank is able within the limitations on its credit extensions to fulfill this need and has already extended several credits of this type. It is possible that the present funds of the Bank are sufficient to carry it through with this type of credits and with development credits until the first of the year. Moreover, it seems certain that Congress will be available for quick legislative action if such be necessary. Nevertheless, it is suggested that consideration be given to increasing the funds of the Export-Import Bank by $200,000,000.

(3) Specific appropriation—The Secretary of the Treasury has suggested the possibility of requesting Congress to appropriate funds specifically for this purpose. This would have the advantage of obtaining funds for the specific purpose and with the character of the operations fully recognized by the Congress and the public. It may not be as feasible politically to obtain this type of legislation as to increase the funds of the Export-Import Bank, and it is suggested that the policy-making officials of the Government determine whether one of these approaches, or both, should be adopted.

I am continuing to explore this point with Dr. Harry White and other officials of the Treasury Department, whose views in general coincide with those expressed in this memorandum and those of officers of the Department.

Commodities. It is clear that any policy for attacking the immediate and anticipated situation of the American Republics will fail unless provision is made for absorbing the large quantities of commodities produced in the other American Republics which have been in the past marketed in Europe, and the markets for which have been greatly reduced and in many cases changed considerably in character. It is recommended that legislation be prepared which would enable the Government of the United States to acquire such commodities in such amounts as may be necessary to relieve the immediate situation and that arising during the next year or so. The earlier sections of this memorandum have indicated the types of commodities which are produced in quantities considerably greater than the consumption of this Hemisphere.

The appropriations for the acquisition as to strategic materials, and the corporations for defense and the acquisition of strategic materials now before the Congress, would take care of a small part of this program insofar as it concerns such strategic materials. It will be noted, however, that the above lists of the principal exportable surpluses of this Hemisphere include many products not of direct military concern. It is suggested that steps be considered to create an additional Latin American commodities corporation under the Reconstruction Finance Corporation to permit the acquisition of stocks of such commodities. This suggestion is made in full realization of the fact that the acquisition of stocks of commodities in great quantities without some control over the quantities produced may be expected to lead to increased production of commodities in which there is already a world overproduction and of commodities in which there may be hemispherical overproduction if the course of world events results in closed or restricted overseas markets. This problem is further discussed below.

There is attached a draft prepared by Mr. Stinebower⁹ of legislation amending the RFC Act to permit the carrying out of such a policy. It should be noted that this was submitted with a memorandum indicating a number of difficulties which such a proposal might face.

It is suggested that if both defense and Latin American commodity corporations are created, that the latter take care of all purchases from the other American Republics, in turn reselling strategic materials to the defense corporations. The corporation would be authorized to sell or transfer products required only for the purpose of aiding the Government of the United States in its national defense program or for free distribution to persons in the United States receiving emergency relief benefits or for emergency relief in foreign countries. It might be desirable to include the power to resell such products outside of the American Republics.

Commodity Agreements. In addition to such relief as may be afforded by the purchase of surplus commodities, in the field of several commodities produced in the American Republics there would appear to lie room for beneficial commodity agreements. Coffee comes immediately to mind as a commodity in which agreement, especially between the producing nations, might be of real benefit. A coffee conference is now being carried on in New York.¹⁰

Discussions are also in progress which may lead to an agreement between the United States and Argentina with respect to corn.¹¹ Other commodities may offer greater or less opportunity for the conclusion of successful agreements.

Developmental Cooperation. The measures suggested above have been directed particularly towards maintaining the economies of the other American Republics at their present level of activity. It must not be overlooked that the economic situation of a great number of the other American Republics has not in recent years been very satisfactory. There consequently exists a great field for developmental work of a character designed to improve the economic situations of the other American Republics. Moreover, this developmental work may profitably be directed towards facilities for the production of those products which are specifically important in connection with our own defense needs. Reference is made to such products as rubber, tin and Manila hemp. With respect to rubber and tin on the one hand, it must be conceded that the announcement of a great Latin American developmental program with special preferences designed to make such a development commercially feasible may impede the rapid accumulation of stocks from existing producers in the Far East. On the other hand, the granting of preferences that may be needed to render Latin American production commercially feasible may require a semi-permanent departure from our existing trade principles.

Institutions that cooperate in this development work include:

1. The Export-Import Bank and the RFC. It was indicated above that the Export-Import Bank may have sufficient funds to last until January, but that it would probably be desirable to request an increase in its funds to $400,000,000. The Export-Import Bank should proceed immediately to cooperate in the carrying out of numerous broad development projects. In this connection, it will be remembered that Mr. Jones¹² has agreed in principle to carrying out the Brazilian steel project.

2. Inter-American Development Commission.¹³ The Inter-American Development Commission, which is designed to encourage the development of just such non-competitive production as this memorandum has indicated, has just been organized under the Chairmanship of the Under Secretary of Commerce, Mr. Edward Noble. The work of this Commission must be encouraged in every possible way.

3. Inter-American Bank.¹⁴ The Inter-American Bank would, of course, constitute the best institution for inter-American cooperation in developmental projects and planning, as well as in shorter term monetary and exchange assistance to the monetary authorities of the American Republics. The convention for the establishment of the bank has been signed by the United States, Bolivia, Brazil, Colombia, Dominican Republic, Ecuador, Mexico, Nicaragua and Paraguay. Appropriate enabling legislation has been drafted and is being considered by Mr. Jesse Jones, who will be in charge of steering the latter before Congress. The report of the Secretary to the President and the Presidential message to the Senate¹⁵ relating to the convention have already been prepared and are awaiting the decision to proceed. I am informed by Mr. Warren Pierson¹⁶ that Mr. Jones intends to proceed as soon as his defense appropriations have been acted on by the Congress.

Ultimate Hemispherical Trade and Production Organizations. All of the measures listed above are steps which would be effective in meeting particular situations. None, or even all of them together, are a complete defense against total economic aggression by one aggressive European power. In the event that the Americas are faced with the alternative of defense against ruthless economic aggression or economic subordination to Europe, the ultimate organization for economic defense would take the form of a unit trading entity which would undertake to market the entire production of the Americas and to negotiate with such markets as it dealt with for such imports in payment as were deemed appropriate.

Such an organization would take the form of a trading corporation controlled by a council with advisory committees for each of the American Republics. It would purchase the surplus production—surplus, that is, in the hemispherical sense—by making dollar funds available against warehouse certificates and would dispose of products thus purchased in any one of several ways. First of all, it would attempt to bargain with the outside world to dispose of such products as would command favorable terms of trade. It would accumulate strategic materials in the amount that such stocks were deemed necessary. It would make surplus commodities available for relief distribution, both within the United States and perhaps within the other American Republics.

Unquestionably it would be necessary in some manner to block the dollar proceeds so that their use by the other American Republics would be supervised by the corporation. A part of these funds might be authorized for expenditure for purchases within the United States, and another part debited against imports from overseas nations resulting from trading operations of the corporation. Mr. Dudley Wood of the Department of Commerce has worked out many of the details of a plan for a Pan American trading corporation of this character.

It is obvious that such a corporation would only be a step preliminary to a further control of the production of the Hemisphere. It has been pointed out by Messrs. Stinebower and Feis¹⁷ that purchases of the surplus commodities of the Hemisphere either on an uncontrolled or a quota basis would inevitably lead to an increase in the production of products which may be surplus in an hemispherical sense unless some measure of control is imposed. This difficulty is accentuated by the natural desire of those nations of the Americas which are least favorably situated in the economic sense to develop their economy. This problem was touched on above. The only ultimate solution to the problems which would thus arise would be the establishment of an hemispherical marketing and production controlled organization, which would be empowered to make the necessary decisions as to how much production of individual commodities would be permitted and in what directions individual nations would be encouraged to develop. All this work would entail an infinite number of political, as well as economic, problems, but the situation would have to be faced, allowing as much room for self-determination by the individual nations as possible.

3. Addressed to the Chief of the Division of the American Republics (Duggan), to the Assistant Secretary of State (Berle), and to the Under Secretary of State (Welles).
4. Hjalmar Schacht, President of the Reichsbank, 1933–39; German Minister of Economics, 1934–37; Minister without portfolio in 1940.
5. Division of Commercial Treaties and Agreements.
6. Not attached to file copy.
7. Division of the American Republics.
8. Office of the Adviser on International Economic Affairs.
9. Leroy D. Stinebower, Assistant Adviser on International Economic Affairs; draft not attached to file copy of this document.
10. See pp. 380 ff.
11. See pp. 484 ff.
12. Jesse Jones, Federal Loan Administrator.
13. See pp. 374 ff.
14. See pp. 346 ff.
15. Ante, p. 347.
16. President, Export-Import Bank.
17. Herbert Feis, Adviser on International Economic Affairs.