891.03/4–1251: Telegram
The Ambassador in India (Henderson) to the Secretary of State
2804. Eyes only for McGhee.
1. Rajagopalachari, after Nehru most influential member Cab and reputedly leader of pro-Amer group in Cab, called me aside during reception last evening for “brief private confidential talk.” He said Nehru yesterday afternoon had shown him text of foodgrain bill before Congress and had discussed it point by point. Nehru had expressed himself as deeply disturbed at provisions and Rajagopalachari inclined agree with Nehru that it wld be extremely difficult if not impossible politically for GOI to enter into agreement with US providing for dispatch US special mission or incorporation mission in US Emb for purpose observing distribution foodgrain for participating control use counterpart funds, etc. Indian public so sensitive at any kind fon intervention that conclusion such an agreement wld afford opportunity for anti-western elements have field day and might more than offset goodwill generated by gift. Rajagopalachari so disturbed at prospect he personally wondered whether it wld not be preferable for foodgrain to come as long term loan rather than grant. Or wld US Congress insist on observers and supervision also in case long term loan.
2. I expressed considerable surprise at his remarks. Said text various foodgrain bills available GOI for two months. Had assumed Ind Emb Washington had fully reported situation and that in absence objections GOI not averse to provisions in these bills. Informal statements made to Emb during last two months by responsible GOI officials [Page 2143] and even Cab members had caused me believe GOI understood and not unduly concerned at provisions.
3. Rajagopalachari said Nehru told him this matter brought his attention only three days ago and Rajagopalachari realized what Congress might demand only when Nehru showed him copy of bill. He deeply distressed at situation. Looked as though efforts US Govt assist India might result in harm rather than benefit our relations.
4. I said provisions similar to those contained in these bills were to be found in practically every aid agreement extended during recent years to other countries. It wld be practically impossible to persuade Congress to grant funds for use in US or abroad unless there was some kind machinery for making sure these funds were used for purposes intended. These provisions shld not be considered as indications of lack of trust in Ind Govt or officials. They were rather standard requirements applicable to all countries receiving aid from US. Furthermore I was confident there was no intention US Govt send India any high powered missions or special reps in order exercise pressure on India with regard its econ or admin policies. My govt fully realized that two million tons foodgrain represented less than five percent that consumed by India annually and it wld be absurd to utilize gift this kind for purpose of endeavoring interfere in India’s food distribution system or in Indian’s econ plans. It seemed to me that India’s fear or reluctance to enter into routine arrangements of kind provided in bill or bills before Congress cld not be considered as complimentary intentions or intelligence US Govt. Helpful co-op wld be difficult in case suspicious US motives were allowed affect arrangements, for extension aid. If India preferred loan to grant on conditions contained in these bills it might be well for US Govt to be informed of situation immed. I hoped however GOI wld consider carefully all aspects including its needs for econ developments before indicated preference of loans to grant.
5. Rajagopalachari reminded me I shld consider conversation as personal and private. He wld like to give matter more consideration and discuss it further with colleagues in Cabinet. He wanted me understand India cld have not objection to US having say in manner expenditure counterpart funds. Agreement re use these funds however cld be achieved through dipl channels rather than thru activities special missions or individuals in India.
6. Although somewhat concerned at Rajagopalachari’s reaction which seems reflect Nehru’s attitude difficult for me believe his remarks expressive of final views GOI. Shall discuss this matter with Bajpai today without mentioning name Rajagopalachari.