S/ISA Files, Lot 52–51

Summary Minutes of a Meeting of the Foreign Aid Steering Group, Held at the Department of State, 3:30 p.m., March 22, 1951

SG S–11

[Here follow a list of those present (25) and discussion of matters unrelated to the proposed Point IV program from Latin America.]

Other Tosh Force II Problems

30. Mr. Stinebower1 reviewed the last Steering Group action on the Inter-American Highway2 and said that the (State) Bureau of American Republics Affairs had asked to have the problem reconsidered. He said that the only question is whether to include the project in the omnibus bill, since it would go over in one form or another. Mr. Atwood,3 of ARA, reviewed the recent legislative history, including last year’s authorization of 8 millions, with appropriations of 4 millions, which have been used up. The Bureau now is requesting 24 additional millions of authorizations with appropriations of 28 millions. As for inclusion in the omnibus bill, ARA feels that highway construction is a number 1 project for under-developed areas. Generally, loans have been used for this purpose; but Mr: Atwood did not believe that the countries could borrow enough to complete this highway, although some loans for feeder roads, etc., should be feasible. Our present desire is to complete an all-weather highway to the Canal Zone in two years. The project would improve hemisphere defenses but could not be justified on solely military grounds.4 However, the economic development programs of the area are tied directly to highway availability, making the project an essential part of our aid to the area and to Latin America, where it is the only large grant element contemplated. ARA wants it to receive number 1 priority. Completion [Page 1057] in two years would save money in the long run. We are “committed” to completion of the road by the implications of the legislative history.

31. Mr. Gordon5 felt that new conditions since Korea call for reexamination of implied commitments developed in the last war which might today look like “business as usual”.

32. If the highway goes into the bill, he thought it should have a stronger justification than he has yet heard. The question is whether, in an international security bill, you should include a long-range development plan similar to those which have to be forfeited in some US localities. He also felt that we would damage the character of the bill and run the risk of appearing to be wrapping something in a security cloak.

33. Mr. Stinebower asked whether, if a stronger case could be made for the Highway as such, it should be included in the bill.

34. Mr. Lawson6 said he would prefer to see it included.


35. It was agreed that Task Force II should re-examine the Inter-American highway project to justify it in whole or in part on the basis of more immediate results, such as food production and raw materials development, as a part of the omnibus bill.

36. It was pointed out that this approach might have the effect of reducing the project to its more justifiable components, with perhaps a smaller total amount requested.

37. Since additional country studies are being prepared for Latin America already, it is not expected that re-examination of the highway will alter the timetable.

Programs submitted to Budget

38. Mr. Lawson commented that in the papers so far reviewed at the Bureau, they have yet to see a total country program to embrace loans, grants, technical assistance and military aid. In the Latin American submissions, US objectives, economic military and political are not shown country-by-country, so they cannot be related to the economic programs. This statement of objectives is necessary. Other deficiencies have been evident in the treatment of the internal and external financial positions, strategic materials, detailed military programs, possibility of government loans or private financing in short, the documents submitted do not add up to programs based on stated objectives by area and country, although the oral presentations at the Budget have been good.

[Here follow additional discussion of and action on matters unrelated to Latin America.]

  1. Leroy D. Stinebower, Director, Office of Financial and Development Policy, Bureau of Economic Affairs, and Chairman, Task Force II, of the Foreign Aid Steering Group.
  2. The summary minutes of the tenth meeting of the Foreign Aid Steering Group held in the Department of State, March 7, 1951, read in part as follows:

    Inter-American Highway—The funds for this project were originally intended for inclusion in the FY 51 supplemental appropriations request. TF II decided to include it in the omnibus bill, although uncertain of Department of Defense support, and to leave it to the Bureau of the Budget to decide the best legislative course to pursue. The prevailing sentiment of the Steering Group was that it should decide not to put this program into the omnibus, subject to the right of ARA to have this decision reconsidered.” (Lot 52–51, Box 124)

  3. Rollin S. Atwood, Deputy Director, Office of South American Affairs.
  4. In a letter to the Secretary of State, dated March 7, 1951, Secretary of Defense George C. Marshall stated in part the following:

    “The Department of Defense considers that, as stated by the IADB, the completion of this highway would be of value to the collective defense of the continent. However, in considering the over-all military requirements of the United States, the completion of this highway is of relatively low priority and expenditure of funds for this purpose at this time cannot be justified for purely military reasons.” (820.2612/3–751)

  5. Lincoln Gordon, Office of the Special Assistant to the President.
  6. George W. Lawson, Jr., Chief, International Activities Branch, Estimates Division, Bureau of the Budget.