884.51/66

The Ethiopian Vice Minister of Finance (Yilma Deressa) to the Secretary of State

Dear Mr. Secretary: In pursuance of my memorandum of the 25th of June,28 I have the honor to bring to the notice of the Secretary of State the desire of my Government to secure a loan. I have been instructed to request a loan which my Government intends to use for the rehabilitation of the country. The revenue of the country which is raised by taxation is hardly sufficient to meet the current expenditures of the Government and cannot be made to cover capital expenditures which are essential to put the country back on its feet. Among the outstanding items for which the loan is requested are:—Rehabilitation of agriculture, repair and maintenance of roads, bridges and other means of communication, to finance existing industries and to secure the service of American experts to operate these industries, to develop mines and in general to improve the economic condition of the country.

The importance and need for agricultural development in Ethiopia cannot be too stressed from the point of view of increasing production which will go a long way to aid the Allied cause in the campaign of producing for the war effort.

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There is in Ethiopia today a large floating peasant population which has been made homeless by the Italo-Ethiopian war and also by the subsequent campaign. There is also a vast area of fertile land which for lack of capital and labor now is idle and unproductive. My Government, after a careful study, has drawn up a plan by which to settle the floating population on this land. As most of these unfortunate men are quite poor and have no means of starting farms, the entire expense of re-settling them must, at least for the first year, be met entirely by the Government. The expense, when calculated, proved to be beyond the means of the meagre budget of the country.

Secondly, the farmers in Ethiopia today are neither producing in sufficient quantity nor are they working for the right kind of production. Transportation conditions, uncertainty of finding a market, and lack of manufactured commodities to be exchanged for their products has played a large part during the last two years in curtailing production and therefore decreasing the potentiality of the peasant population. People in the far out provinces have been forced to produce for the subsistence of their families alone. It is, therefore, evident that production can only be increased by the latter group if a guarantee is given to the farmers by the Government to purchase the crops at a reasonable price. They must also be induced to raise certain types of agricultural products for export. The scheme requires a substantial sum to be held by the Government to effect the re-purchase.

There is certainly considerable room for the improvement of agricultural technique and farming methods in Ethiopia, and my Government has every intention to introduce scientific methods in so far as its financial condition permits. But even with the existing methods of production, it will be possible to increase production ten fold if credit can be provided. In addition, crops such as cotton, tobacco, oilseeds, fruit and similar products could be encouraged on a vast scale if only my Government could offer the necessary financial inducement to the farmers.

In Ethiopia, as elsewhere, the success of the economic system of the country is conditioned by facility of transportation. Communication in Ethiopia, as it stands today is deplorable. To repair roads and bridges, overhaul the system of transportation and communication, finance is required, and the amount available from the national budget has proved hopelessly inadequate.

The currency situation in Ethiopia is not less preoccupying. Lack of subsidiary money and fluctuation of the exchange rate between the Maria Theresa dollar and the British East African pound has created currency problems.

Mining and industry like-wise lack credit. A rehabilitated Ethiopia will undoubtedly be in a position to meet its obligations within a reasonable period. Any loan granted will be of a self-liquidating [Page 103]nature as the whole sum received will be used for capital expenditure.

I enclose a statement of the amount of the loan and credit requested by my Government and also the manner in which we hope it may be supplied.

I hope, Sir, that you will be good enough to examine favorably the request of my Government.

I avail myself [etc.]

Y. Deressa
[Enclosure]

Statement on Amount of Loan and Credit Requested by the Ethiopian Government 29

Credit to be made available in the United States in cash balance and to purchase consumers goods $40,000,000
Silver Loan under Lend Lease $10,000,000
Total $50,000,000

The credit may be supplied over a period, the terms and conditions of which to be specified.

  1. Missing from Department files.
  2. Printed from corrected copy received from Mr. Yilma Deressa July 21, 1943 (filed separately under 884.51/67).