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

MSA–FOA Director’s files, FRC 56 A 632, “Rio Economic Conference”

Minutes of a Meeting Held in the Executive Office Building, 11 a.m., June 21, 1954

confidential
MISC/RA–47

June 21, 1954, 11 a.m.

• Present:
  • Mr. Stassen
  • Dr. FitzGerald
  • Mr. Hardesty
  • Mr. Floyd¹
  • Mr. Bauer
  • Mr. Cady
  • Mr. Doggett
  • Mr. Trisko
  • Mr. Buck
  • Mr. Schuweiler
  • Mr. Holmgreen
  • Mr. Roseman
  • Mr. Carusi
  • Mr. Frost
  • Mr. Wiggins

Purpose of the Meeting

Mr. Stassen called this special meeting of FOA personnel to discuss the guidelines needed for the Rio Conference and some of the issues that will probably be raised there. He explained that one of the reasons for analyzing the situation at this meeting was to consider whether it is appropriate to have the policy guidelines developed at a lower level, with all the preconceived limitations that exist, or whether it is necessary to have some early, Cabinet-level attention given to the need for broad guidelines on our Latin American policy.

Conclusions

(1) We need early reference to the Cabinet level, to get some very important guidelines for the Rio Conference established.

(2) FOA representatives should not consent, in working groups or in the Sub-Cabinet Committee, to any inadequate recommendations or measures; if necessary, FOA representatives should reserve their position so that there may be an appeal later.

(3) FOA believes that the U.S. economic policy toward Latin America is inadequate and that from that inadequacy are coming and will continue to come very serious political and security problems; therefore it is very important that the U.S. develop a new, adequate policy.

(4) Some regional economic approaches in this hemisphere are past due; and we will not get a correct psychological attitude in Latin America unless there is evolved a method for multilateral work on economic problems and financial considerations.

Discussion

Mr. Hardesty said that the first five meetings of the Sub-Cabinet Committee were devoted almost exclusively to a general discussion of the broad philosophy of what could be done at the conference and the position the U.S. should take. The Committee is now considering the FOA staff report which is considered the basic document from which a position will be developed.

Mr. Stassen asked Mr. Hardesty what three things the Latin American governments want from the conference. Mr. Hardesty said the first is psychological—they want the U.S. to give them treatment in development financing that is equal to that given to other areas of the world; second, the formation of a Pan American Bank, and third a floor under prices paid for their commodities.

Mr. Hardesty expressed concern that it appears to be the viewpoint of many members of the Sub-Cabinet Committee that we should be ready with a defense at Rio, anticipating how we can throw back the Latin American requests, rather than to have a positive approach as to what we have to offer. Mr. Buck said that rather than being on the defensive at the conference we should take the offensive by pointing out to the Latin American countries the steps which they should or must take to improve their economies and stating that after those steps are taken we are prepared to cooperate with them in certain stated ways.

1. Financing Economic Development

Dr. FitzGerald said that the central question is whether and to what extent the U.S. will commit itself to arrangements which look toward larger developmental resources for Latin America. Unless there are compelling reasons for establishing U.S. institutions in addition to IBRD and the EXIM Bank, our effort should be concentrated on developing, prior to the Rio Conference, a more liberal policy toward EXIM loans to Latin America. There will be procedural difficulties in preparing a statement that the U.S. will assist in further economic development in Latin America in return for the Latin American countries’ taking a number of steps which will be difficult politically and for which in many instances they do not have the necessary administrative competence. Basically the question that must be decided before the Rio Conference is whether the U.S. is going to make any additional loans, primarily loans for developmental assistance, and under what conditions.

Mr. Buck said there has been considerable pressure for a more liberal EXIM Bank policy with respect to loans, particularly export loans, but he felt it would be very difficult to get the Bank to state a maximum amount that they would be willing to put into Latin America without knowing in advance the conditions of the loans. He said he thought there were great possibilities in S/TIM’s proposal that the EXIM Bank utilize the South American branch offices of U.S. banks to make development loans and that this proposal should be put forward at the Rio Conference. (Note: This proposal is mentioned briefly on page 14 of the FOA Staff Report² and is expected to be discussed this week³ with the Export–Import Bank.)

Mr. Stassen said there are some who feel that governmental loans or credits are a substitute for and a block to private investment for developmental undertakings and that he did not believe this was necessarily so.

Action: He asked Mr. Doggett to have RS&R prepare a list⁴ showing the Latin American countries which have received EXIM Bank or IBRD credits over a period of years and which countries have received private foreign investment, indicating the volume of each type of financing; and to analyze these data to see if there is any indication whether governmental credit for development facilities expanded or contracted private investment.

2. The Regional Approach

Mr. Stassen said he believed the Latin American countries want to move in a regional direction and to have more regional relationships of an economic nature and that our government has had a firm position against such a move. He added that he felt we have been and are in grave danger of continuing to be totally inadequate in our approach to Latin American economic problems and that a new approach could only be achieved at the Cabinet level, with the President.

We will not get the psychological attitude we want to have in Latin America unless there comes out of the Rio Conference some sort of regional arrangement that has developed as a result of Latin American desires and U.S. interest in them. Our discouraging such a development would create an unfavorable attitude because they know of the successful regional development in Europe on an economic basis.

Mr. Roseman pointed out that the creation of regional institutions presents related problems such as the availability of private and public capital for investment and the possibility of developing a mutual self-encouraging and self-policing review of economic development planning.

Mr. Russell⁵ said that if there exists any master analysis of what is needed to reorganize and advance the economies of Latin America it should be possible to pick out long-term as well as shorter-term objectives; and if there were some pieces of a long-term program that could be rather easily effected we might concentrate on them.

Mr. Hardesty said that the Sub-Cabinet Committee group has brought out the point that our dealings with Latin American countries should be on a bilateral basis. Mr. Stassen said that probably one of their objections to the development of a regional or continental approach is the view that such an arrangement would impose a handicap on the facilitation of worldwide trade and payments; but the strength we built in Europe has facilitated a broader worldwide flow of goods rather than handicapped it.

Mr. Stassen then raised the question of the United States indicating a social conscience in relationship to the people of Latin America by supporting a progressive approach to an advance in the standard of living of the people as a whole, supporting such things as minimum wages and opposing current semi-slave labor conditions. If we do not help an evolution of this type, the impetus of social justice will be seized by the Communists and used to promote their system.

3. Position on Materials and Commodities

Mr. Stassen said another problem to consider is U.S. policy on raw materials and commodities.⁶ The discussion in the Sub-Cabinet Committee appears to have been far more limited than Dr. Eisenhower’s position. There is a question of basic policy involved as to whether we should have more than a stockpile approach, whether we should bring into it such elements as other countries’ foreign exchange requirements, their need for some stability in their prices, and the world balance of payments situation. We must go into the Rio Conference with more than a statement of sympathetic consideration because in the past they have not had sympathetic consideration. Of course this problem goes beyond the matter of Latin American policy; it is a matter of U.S. raw materials policy.

Mr. Trisko said we have been limited in what we could say on this subject by the general U.S. policy with regard to commodity stabilization measures, which is a conservative approach. In ECOSOC we are preparing again to take a negative stand on this subject. Mr. Stassen said the Administration may want to review its commodity policy again, in the light of the Latin American problem, and that we should not feel completely tied by the pre-existing commodity policy.

Mr. Stassen suggested the possibility of developing consultative bodies on basic raw materials. The groups would consist of representatives of major producers and major consumers who, without commodity agreements to limit production or agreements to purchase, would try to narrow the chart fluctuations. He had in mind that these bodies would be under government auspices and would consist of private individuals representing producers and consumers, with government representatives participating. Mr. Hardesty pointed out that Latin America is interested basically in a hemispheric approach rather than a world-wide approach. Mr. Stassen said there could not be a hemispheric approach on such basic materials as tin or copper. Mr. Trisko said that we should try to deflect the Latin American countries from concentrating on this particular aspect of their problem as a solution to all problems.

4. NSC –144/1⁷

General Porter⁸ said that Mr. Holland (State) has indicated that he was not certain the NSC document on Latin America needs to be revised at this time; but General Porter has been putting forward the FOA view that it should be revised. Mr. Stassen asked if any of the attendees felt that the U.S. now has an adequate economic policy in relationship to Latin America. None did. General Porter said that this subject might well be raised in the NSC meeting on June 24,⁹ when there will be a discussion on stockpile materials and their influence on commodity prices, and on regional economic arrangements.

The meeting adjourned at 12:25 p.m.

Mary Joan Fox

¹⁰
Executive Secretariat

1. FOA personnel listed below are identified as follows: John Floyd, Chief of the Latin American Program Staff; Walter Bauer; John C. Cady; Clinton L. Doggett; Ralph L. Trisko, Deputy Director of the Office of Industrial Resources; Ellsworth B. Buck; Melvin L. Schuweiler; E. N. Holmgreen, Director of the Office of Food and Agriculture; Alvin Roseman, Director of the Office of Public Services; Ugo Carusi, Deputy Assistant Director of the Office for Refugees, Migration and Voluntary Assistance; Dayton H. Frost, Chief of the Intergovernmental Refugee Programs Division; and Warren W. Wiggins, Program and Planning Division for Europe.
2. Regarding the staff report, see footnote 2, p. 314.
3. No record of this discussion was found in Department of State files.
4. Not found in Department of State files; for information concerning the total amount of loans to Latin American countries by the Export–Import Bank and the International Bank for Reconstruction and Development, see the minutes of the 214th meeting of the National Advisory Council, Sept. 22, 1954, p. 250.
5. Presumably William F. Russell, Acting Deputy Director for Technical Services.
6. For documentation on this subject, see volume i .
7. Dated Mar. 18, 1953, and approved by President Eisenhower on the same date; for text, see p. 6.
8. Brig. Gen. Robert W. Porter, Jr., Military Adviser, Foreign Operations Administration.
9. Reference is to the 204th meeting of the National Security Council; a memorandum of discussion at the meeting, dated June 24, 1954, is in Eisenhower Library, Eisenhower papers, Whitman file, NSC records.
10. Chief of the Committee Staff.