Under Secretary’s Meetings, Lot 53 D 2501

Notes of the Under Secretary’s Meeting, Department of State, 9:30 a.m., October 31, 19512


[Here follow a list of those present (20) and discussion of matters unrelated to Brazil.]

Joint U.S.–Brazil Economic Commission

Mr. Miller reviewed the difficulty in the appointment of a man to work on the Joint U.S-Brazil Economic Commission and how Ambassador Bohan had quickly come to our rescue as its interim head. He emphasized that Brazil is especially adapted to this new type of commission technique.
Ambassador Bohan stated that he could be neither proud nor apologetic of the three-month work, because a great amount of work remains to be done. However, the Commission is organized and the many subsections have been planned and are beginning their work. Ambassador Bohan found Brazil a great nation of huge potential. Two primary problems face Brazil, and those are distribution and fuel. The [Page 1232] Economic Commission cannot help on the problem of distribution. The Commission will focus its main activity on the problem of distribution, since the Commission does not want to waste its efforts in dealing with too many matters. One of the main problems is improvement of the railroad system. Basically, the railroads need general rehabilitation, other than just physical. The main thing required is managerial rehabilitation, the solution of which involves many political headaches. Ambassador Bohan stated that unless the Commission could set up a good railroad management corporation, no amount of money would accomplish the results required to improve the railroad situation in Brazil. One great danger on this project involves requirements and a high priority is needed to get the necessary steel brake equipment, track-laying equipment, etc. Another important problem is improvement of ports. Operations and dredging are the main problems in connection with this project.
With respect to agriculture, Ambassador Bohan reported that Brazil has a large agricultural extension program, and that the Commission must act as a catalyst in bringing the local, state and federal parts of the government together. Some of the main problems in connection with agriculture are storage and credit. Agriculture lags far behind industrial development, and Brazil badly needs a better balance between these two. The problem is to get the government to use the resources at hand.
In reviewing the need of Brazil for requirements for railroad equipment, Mr. Thorp stated that the Department has machinery for handling these requirements, and that we must be assured of a good case before we attempt to bring it outside the Department. He felt that the steel situation would be better about a year from now. Ambassador Bohan pointed out that the steel would be needed during the first quarter of next year.
Ambassador Bohan explained that Mr. Truslow’s successor on the joint Commission will be Mr. Knapp, and Mr. Miller added that Ambassador Bohan had agreed to backstop Mr. Knapp. Mr. Miller added that he is pleased to report that there has been a meeting of the minds with respect to the organizational location of the Point IV country director in our mission in Brazil. The Point IV director will be under Mr. Knapp.
Mr. Webb asked about the pressure in Brazil to build industrial facilities at such a pace that it is not in balance with agricultural facilities. Ambassador Bohan confirmed this and stated that there is a psychological problem in Brazil and elsewhere in that the government and the people feel that building a strong industrial machine means success. He hoped to have some success in improving the agricultural situation in Brazil by utilizing the existing organizations in that [Page 1233] area. He noted that It may be necessary to set up “servicios”3 in Brazil.
When questioned on the duration of this commission experiment, Ambassador Bohan noted that this is a new technique and one which involves action and not merely study. The Commission should be of temporary use only and should not last much more than 18 to 24 months. It is hoped that the Commission will aid in the establishment of permanent institutions which will take over what the Commission has done. Two important institutions which must be established are a railroad authority and an investment finance corporations, the latter working on power, industry and mineral development.
  1. Master file of records of meetings, documents, summaries, and agenda of the Under Secretary’s meetings for the years 1949–1952, as maintained and retired by the Executive Secretariat of the Department of State.
  2. The Under Secretary’s meetings convened at the Department of State on a weekly basis; they were attended by the Deputy Under Secretaries of State, Assistant Secretaries of State, and office directors. Under Secretary of State James E. Webb presided at the meetings.
  3. For documentation on the use of “servicios” in Latin America, see pp. 1038 ff.