610.1131/312½

The Acting Secretary of State, the Secretary of the Treasury (Morgenthau), the Secretary of Agriculture (Wallace), and the Secretary of Commerce (Hopkins) to President Roosevelt

My Dear Mr. President: In response to your letter of June 15, 1940, asking for the combined judgment of the Secretaries of State, Treasury, Agriculture, and Commerce as to means of strengthening inter-American economic relations, the following specific proposals are submitted:

We are in agreement that it has become imperative for the United States to supplement its military defense program with effective and decisive action in the field of economic defense. To this end we recommend the adoption and execution of a joint economic program for the Western Hemisphere. The objectives of such an economic program should be:

(1)
The safeguarding and strengthening of the economy of the Western Hemisphere, coordinate with the defense of the territorial integrity of the political divisions comprising the area.
(2)
The maintenance and expansion of the incomes and purchasing power of producers in the Western Hemisphere.

The problem is rendered especially acute by the fact that all of the countries of the Hemisphere are producers and exporters of raw materials and basic foodstuffs in quantities far in excess of the present consumption demand of the area. Bound as are the American Republics by close ties of inter-American solidarity, it is most appropriate that they should immediately consult with one another as regards the protection of their economies from the repercussions of the international situation. As circumstances permit, other countries, similarly situated, should be invited to participate in such consultation and in whatever cooperative arrangements may result therefrom.

The following lines of action are specifically recommended:

A.
The Government of the United States should propose to the governments of the other American Republics the creation by mutual agreement of an appropriate inter-American organization which would have the means and the authority for dealing, by joint action, with certain basic problems involved in their trade relations with non-American countries. The proposal should envisage the establishment [Page 370] of an Inter-American Trading Corporation, with strong central direction, with an organization appropriate for achieving the desired objectives, and with control equitably distributed among the participating countries. It should be contemplated that the Corporation should from the outset operate as an effective agency for joint marketing of the important export staples of all of the American Republics.
B.
Without waiting for the Inter-American cooperative plan above outlined to be established and at work, and with a view to facilitating the negotiation and effectuation of the plan, the Government of the United States should immediately and vigorously undertake to deal with the various pressing problems, including the handling of critical commodity situations. Existing powers and facilities are not adequate for this purpose. It is therefore recommended that the Congress be requested to authorize the RFC for a period of one year to utilize or organize a corporation or corporations to purchase and dispose of certain products of the American Republics. There is attached a draft of legislation amending the RFC Act in this sense.
C.
Vigorous action by the agencies concerned should be undertaken as rapidly as possible in the broad field of development in some American Republics of new industries and production. In addition, appropriate agencies of the United States Government should be directed to give immediately further attention to such questions as the extension of new credits and of cooperation, when desired by other American Republics, in the strengthening of their monetary systems. When and as it may be found necessary and advisable, increased attention should be given to the problem of existing foreign indebtedness of some Latin American countries.

Faithfully yours,

[File copy not signed]
[Enclosure]

Suggested Legislation

Section 5 (d) of the Reconstruction Finance Corporation Act, as amended, is hereby amended by adding at the end thereof the following paragraph:

The Corporation is authorized and directed, for a period of one year from the effective date of this Act, when requested by the President, to utilize or organize a corporation or corporations for the purpose of acquiring, carrying, and distributing emergency surplus products of the Western Hemisphere, and to subscribe for the non-assessable stock thereof, and to make loans to any such corporation or to any other corporation organized to assist it, or necessary to such program. The commodities acquired under this Act may be sold or transferred for any purpose approved by the President. Loans made by the Reconstruction Finance Corporation under the provisions of this paragraph may be on such terms and conditions and with such maturities as the Corporation may determine. The amount of notes, bonds, debentures, and other such obligations which the Reconstruction Finance [Page 371] Corporation is authorized and empowered to issue and to have outstanding at any one time under existing law is hereby increased by $1,000,000,000.

[The program for Inter-American economic cooperation was announced by the President in a statement released by the White House on June 21. See Department of State Bulletin, June 22, 1940, pages 675–676.]