Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

ARA/REA files, lot 57 D 597

Memorandum of Conversation, by the Director of the Office of Regional American Affairs (Cale)

[Washington,] April 9, 1954.

[Subject:]

• The Question of Changing the Nature of the Technical Assistance Program in Latin America

• [Participants:] IIAA—Messrs. Hardesty,¹ Hill,² Floyd,³ Burnett⁴ and Couse⁵
• USIA—Mr. Johnson⁶
• ARA—Mr. Holland
• EDT—Mr. Frank
• AR—Mr. Cale

Mr. Hardesty produced an agenda (copy attached)⁷ which he said had been drawn up to facilitate discussion of the matters which he thought should be considered.

[Here follows discussion by Mr. Hardesty concerning the terms of reference within which FOA/IIAA considered itself to be operating.]

At Mr. Hardesty’s suggestion, Mr. Hill reviewed the history of the Institute’s programs since they were begun in 1942. He concluded by saying that he believed that in some cases the technical assistance which the Institute is now furnishing is in excess of the financial capacity of some of the countries to utilize. He illustrated by saying that it is of doubtful benefit to teach a poor farmer how to use a steel plow unless he has the ability to purchase such a plow. Mr. Hill also said that he believes that serious consideration should be given by the United States to finding some means whereby credit can be provided in cases such as these to permit the farmer to make the needed purchase and that further thought should be given to providing credit to stimulate the local manufacture of such items as plows where this would further the utilization of the “know how” now being provided under the technical cooperation program. He added that he did not believe that we should make any material expansion in the level of grant aid that we are extending to Latin America. Mr. Hill also pointed out that technical assistance activities might themselves be expanded so that in addition to the emphasis now being given to technical assistance in agriculture, education and health and sanitation more would be done in providing technical assistance to industry, in improving government services, etc.

Mr. Burnett then discussed the legal aspects of development assistance in Latin America. This boiled down to the following:

There is authority in the present Mutual Security legislation for engaging in the following types of activity in Latin America:

1. Providing technical assistance.

2. Providing economic development assistance.

3. Disposing of United States agricultural surpluses under conditions such that the local proceeds obtained from the sale of the surpluses in a foreign country can be utilized for economic development purposes.

The principal, if not exclusive reason, why the economic development authority exists, insofar as the Latin American area is concerned, is the fact that it was needed in order to permit the carrying out of a program of this nature in other areas of the world. Some slight use of the economic development assistance authority was nevertheless made this year in connection with the economic aid program for Bolivia. Furthermore, the Mutual Security legislation for Fiscal Year 1955 which has recently been introduced into the Congress contains all of the aforementioned authorities. It also contains, as does the present legislation, a provision permitting the transfer (up to 15 per cent this year) of funds as between areas of the world. Given the size of the funds being requested for some of the other areas of the world and, assuming that there will be funds that can be transferred from these areas, FOA could carry out a materially larger program in Latin America than it is now conducting.

In view of the time that had been taken up by the foregoing discussion, the report on the 1955 budget of the IIAA by Mr. Floyd was omitted, at Mr. Hardesty’s suggestion.

Mr. Hardesty then requested that Mr. Johnson repeat for the benefit of the State Department representatives a statement which he had made to Mr. Hardesty before the meeting. Mr. Johnson pointed out that personnel in the United States information program had at one time all been in the Department of State but that following the change of administration after the last elections a decision had been made which separated operations and policy formulation in this field, with operations personnel leaving the Department and policy making personnel and responsibility being kept in the Department. Mr. Johnson then said that the Department of State drafts policy papers for USIA, that in general these are good policy papers but that they often arrive late and furthermore do not always fully take into account certain operating problems that are encountered in putting them into effect. He expressed the view, therefore, that personnel of USIA should participate in the drafting of the policies in this area.

Mr. Hardesty then stated that IIAA believed that it would also be helpful if it could help participate in the formulation of policy with respect to the technical cooperation and economic development programs. He mentioned in this connection the committee within FOA which Mr. Stassen has recently established to coordinate FOA’s views as to United States policy for the Rio economic conference.⁸

Mr. Hardesty said that he believed that the policies which have heretofore been followed by the United States in respect to economic cooperation with the Latin American countries will not be good enough for the Rio meeting. He expressed the view that there is a need for a restatement of United States objectives toward Latin America, with special emphasis on economic matters. He also said that he had just been informed that he was expected to appear on Monday, April 12, before the House Foreign Affairs Committee in support of the Mutual Security Program for Latin America for Fiscal Year 1955. He then inquired whether it would be possible for the Department to supply him with the general framework within which he might make his comments before the Committee. He indicated that he believed it only fair to the Congress that he inform the Congressional committees of any changes that might be contemplated in United States economic policy toward Latin America insofar as they might affect the Mutual Security Program.

Mr. Cale pointed out that the regional justification which has already been prepared for the Mutual Security Program for Latin America for Fiscal Year 1955 did appear to set the framework within which Mr. Hardesty might make his statements, unless a change in policy was contemplated. He also expressed the view that any statement made by Mr. Hardesty should be drafted in such a way as not to arouse Latin American expectations beyond our ability to meet them. Mr. Cale also suggested that it might be preferable, even if any change is contemplated, to discuss such a change with the appropriate committees, off the record, and to wait to announce it until the Rio conference. Mr. Hardesty again indicated that he believed that a change of policy was needed and that he should be able to make some statement concerning it.

Mr. Holland agreed to provide Mr. Hardesty with a statement that should establish the general framework of Mr. Hardesty’s comments before such time as Mr. Hardesty might need to appear before the Foreign Affairs Committee.

1. Marion N. Hardesty, Acting Regional Director, Office of Latin American Operations, Foreign Operations Administration.
2. Rey M. Hill, Vice President, Institute of Inter-American Affairs.
3. John C. Floyd.
4. John G. Burnett.
5. Robert R. Couse.
6. Presumably Charles F. Johnson.
7. Not printed.
8. Reference is to the Meeting of Ministers of Finance or Economy of the American Republics as the Fourth Extraordinary Meeting of the Inter-American Economic and Social Council (IA–ECOSOC), popularly referred to as the Rio Economic Conference, held at Quitandinha, Brazil, Nov. 22–Dec. 2, 1954; for documentation relating to the conference, see pp. 313 ff.