890.00/8–2554
Memorandum of Conversation, by the Secretary of State
Memorandum of Conversation Between the Secretary and Governor Stassen
We discussed the economic problem of Southeast Asia1 and in general the importance of trying to promote capital developments which would increase the productivity of the countries and in turn bring about a steady, if slow, increase in the standards of living of the people. I expressed the view that unless we could counter the Communist program in this respect that the effort to hold back Communism in Asia would be in vain. In that part of the world I mentioned that slogans which appeal to us do not have the same [Page 790] appeal. There the great majority of the people live with practically no economic margin for survival, and survival is their first concern. Mr. Stassen said that he agreed with this general approach and felt that a good deal could be worked out through Japan’s industrial capacity and her ability to promote capital developments in the area.
I said that the question of procedure would be involved, or at least be discussed, at Manila, and that I had been giving a good deal of thought, with my advisers, as to whether or not we should establish an economic mechanism within the security treaty, or should have another treaty for that purpose, or should work out a treaty through some existing arrangements, such as the Colombo Plan or some alternative that the US might sponsor. Mr. Stassen said that he was inclining to the view that the best thing would be to build on the Colombo Plan, and I said that was the trend of my own thinking. We agreed that it was essential that Japan should be brought in to the Colombo Plan if this plan were adopted as the basis of operations.
We recognize that there are disadvantages in the Colombo Plan in that the name did not have a very good connotation in this country because of the recent Colombo Conference. Also it had a British Commonwealth origin and to a considerable extent was financed through sterling currency operations. Nevertheless, it seemed that the advantages of a going organization which already accomplished much and is attracting the best economic and financial brains of the area offset these disadvantages.
Mr. Stassen said also that, subject to the President’s and my approval, he was planning to take a trip through the area sometime in November with a view to attempting to appraise the economic possibilities. He thought of inviting to go with him representatives not only of State, but Commerce, Treasury, and Budget. I said I thought it would be unwise to invite a representative of Budget as I did not think Budget should be made into an operating agency. He agreed.
I said that I thought that any final decision on this plan should await my return from Manila as the discussions there might throw light upon the best future course of conduct. He said he thought that it would be all right if the decision was made after I returned, but that in the meantime he would like to do some preliminary studies here in Washington with State, Commerce and Treasury. I acquiesced in this with the understanding that what was done here would be highly tentative and preparatory.
Dulles and Stassen had also discussed Southeast Asia during a conversation on Aug. 9:
“‘Mr. Stassen indicated the desirability of a major effort to line up sound economic policies to back up the Southeast Asia military arrangements, the economic arrangement to run from Japan to India. He suggested that he himself might go to the area with representatives from State, Treasury and Commerce, with a view to preparing the groundwork for what may be a major economic conference in Asia sometime toward the end of the year’.” (Reported in a memorandum from John W. Hanes, Jr., Special Assistant to the Secretary of State, to Robertson, Aug. 9; 890.00/8–954)
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