Foreign Relations of the United States, 1955–1957, American Republics: Multilateral; Mexico; Caribbean, Volume VI

136. Summary Notes of a Meeting of the Subcommittee on the Buenos Aires Economic Conference, Department of State, Washington, December 28, 1955, 11:30 a.m.¹

Washington, December 28, 1955, 11:30 a.m.

PARTICIPANTS

• State:
• Mr. Holland(Chairman)
• Mr. Kalijarvi
• Ambassador Randall
• Mr. Sanders
• Mr. McAuliffe
• Mr. Kirk
• Mrs. Mulliken
• Agriculture:
• Mr. Morse
• Commerce:
• Mr. McClellan
• Mr. Poirier
• Defense:
• Mr. Kenny
• Export Import Bank:
• Mr. Arey
• Mr. Rowntree
• ICA:
• Mr. Atwood
• Interior:
• Mr. Imhoff
• ODM:
• Mr. Cooley
• Treasury:
• Mr. Overby
• Mr. Harley

Date of Buenos Aires Conference

The position paper on this subject was approved. In brief, it was agreed that Ambassador Randall should state in the Inter-American Economic and Social Council that the US is prepared to participate in the Conference during the latter part of 1956, as contemplated in the final declaration at the Rio Economic Conference,² if this timing is satisfactory to the host government and to the other countries. The Ambassador should point out, however, that since US elections occur in the fall of 1956, there would be the disadvantage that the US Delegation to the Conference might not be speaking for the succeeding Administration. If the other governments attach importance to this consideration, or if for any other reason they should desire to postpone the Conference, the Ambassador should agree to a later date, in 1957, acceptable to them.

Mr. Overby pointed out that we should try to avoid conflicts with the International Monetary Fund and International Bank meetings which are usually held in September.

Summary of Policies Announced at Rio

Mr. Holland urged all Sub-Committee members to read BAEC Memo 2³ on positions taken by the United States and Latin American reaction at the Meeting of Ministers of Finance or Economy, Rio de Janeiro, November 22–December 2, 1954.

The positions we took at Rio were developed to counteract growing enthusiasm on the part of the Latin American countries for planned economies and for developing their resources through government assistance rather than through private initiative and private financing. At the Tenth Inter-American Conference, held in Caracas in March, 1954, the need for a reconsideration of United States policies toward Latin America became evident. A sub-Cabinet committee met during the summer of 1954 and reviewed all important aspects of inter-American economic relations. The U.S. program was discussed with other governments in advance of the Rio meeting. They were told that the U.S. was not prepared to encourage economic development by any of the following methods, which the Latin Americans were proposing: (1) large grants, (2) an inter-American Bank, (3) price stabilization schemes, or (4) preferential trade arrangements. Instead, we would recommend: (1) expanded trade, (2) stimulation of private investment, (3) increased lending, especially by the Export-Import Bank, (4) consultation with interested governments regarding surplus disposal, and (5) gradual expansion of technical assistance activities.

Mr. Holland said that the results of these policies will be held up for scrutiny at the economic conference in Buenos Aires; if the policies have been successful, the maintenance of United States leadership in the Hemisphere will be promoted. It is therefore important that the Sub-Committee consider whether the policies are being carried out effectively and, if not, what should be done.

Mr. Holland stated that our performance on trade has been good. We have successfully resisted all attempts to impose tariff or quota restrictions on Latin American products. We have also made substantial progress in stimulating private investment. The record in public lending was very good up to the beginning of this fiscal year, but since that time has slowed down, and a positive stimulus may be needed. He added that it may be necessary actively to promote loans in Latin America in order to establish a record of satisfactory progress. Failing such progress our Government will be faced with a political problem at Buenos Aires.

Mr. Arey stated that the Export-Import Bank has pending a number of sound loan applications, on which action is currently being delayed at the request of the State Department.

Mr. Kenny suggested that a special meeting of the Sub-Committee might be called to discuss the loan problem, if it appeared to be a serious threat to the success of our program. Messrs. Arey, Holland, and Kalijarvi offered to look into the matter and see if questions with regard to the loan program could not be resolved through discussion between State and the Eximbank.

Mr. Holland reported on his recent visit to six of the Latin American countries⁴ and said he saw measurable proof of the success of United States policies in the economic field. He found that private enterprise is held in higher esteem than was the case when he visited these countries prior to the Rio Conference. Some of the protagonists of state socialism have changed their line completely, Dr. Prebisch⁵ among them. Others have disappeared from the active political scene. Governments which were formerly timid in their criticism of Communism are now more outspoken.

Mr. Atwood agreed that the willingness of the Latin American countries to go along with U.S. policies is stronger now than it was before the Rio Conference but commented that the change has been taking place gradually over the past seven or eight years. These countries have come to recognize increasingly their responsibility for working out their own development programs and of turning to the United States for assistance only on those phases of the program which have our support.

Future Work of the Sub-Committee

With reference to the future work program of the Sub-Committee, Mr. Holland suggested that the position papers prepared for the Rio Conference be reviewed to determine whether they will still be applicable to the Buenos Aires Conference; that each agency represented on the Sub-Committee review the papers and recommend changes, if any; that the Sub-Committee in its subsequent meetings take up designated portions of the papers; and that the Sub-Committee hold its next meeting in April. The Sub-Committee accepted these suggestions.⁶

1. Source: Department of State, OAS Files: Lot 60 D 665, BAEC Memos. Confidential. Apparently drafted by Sanders. A covering transmittal sheet addressed to the CFEP Subcommittee, dated January 11, 1956, and designated BAEC Memo 5, is not printed.
2. 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 (commonly called the Rio Economic Conference), held at Quitandinha, Brazil, November 22–December 2, 1954; for documentation, see Foreign Relations, 1952–1954, vol. iv, pp. 313 ff.
3. Not printed. (Department of State, OAS Files: Lot 60 D 665, BAEC Memos)
4. See Document 76.
5. Raúl Prebisch, an Argentine economist and Executive Secretary of the U.N. Economic Commission for Latin America.
6. The review took place during the early months of 1957. Several memoranda relating to the review, bearing late March and early April dates, are in Department of States, OAS Files: Lot 60 D 665, BAEC–General. The next meeting, scheduled for April 12, was apparently never held.