2. Memorandum of Discussion at the 237th Meeting of the National Security Council, Washington, February 17, 19551

Present at this meeting of the Council were the President of the United States, presiding; the Secretary of State; the Secretary of Defense; the Director, Foreign Operations Administration; and the Director, Office of Defense Mobilization. Also present were the Secretary of the Treasury; the Attorney General (for Item 7); the Director, Bureau of the Budget; the Director, U.S. Information Agency; the Chairman, Interdepartmental Intelligence Conference (for Item 7); the Chairman, Interdepartmental Committee on Internal Security (for Item 7); the Deputy Secretary of Defense (for Items 6 [Page 3] and 7); the Chairman, Joint Chiefs of Staff; the Director of Central Intelligence; the Assistant to the President (for Items 6 and 7); Messrs. Cutler, Dodge and Rockefeller, Special Assistants to the President; the NSC Representative on Internal Security (for Item 7); the White House Staff Secretary; the Acting Executive Secretary, NSC; and the Senior Member, NSC Special Staff.

There follows a summary of the discussion at the meeting and the main points taken.

[Here follows discussion of items 1 and 2, “A Net Evaluation Subcommittee” and “Program of United Nations Action to Stop Aggression”.]

3. United States Objectives and Courses of Action With Respect to Latin America (Progress Report, dated February 3, 1955, by the Operations Coordinating Board2 on NSC 5432/13)

Mr. Cutler summarized the major points in the Progress Report, and called special attention to the number and size of Latin American loans which had been made by the Export-Import Bank and the International Bank.

Secretary Humphrey reported that the United States was making very good progress in persuading several of the Latin American countries to adopt sound economic policies. He mentioned that approximately $300 million would be spent in Peru during the next five years to develop copper mines. In response to a question, Secretary Humphrey said Peruvians are participating in the private companies developing these mines. He added that Peru gave better treatment to foreign capital than any country in Latin America.

Secretary Humphrey said that a line of credit will be extended to Brazil . . . . The credit will be extended to the present government, which will be replaced in the forthcoming elections. It is hoped that officials supported by the present government will win the elections.

Secretary Humphrey went on to say that when Argentina sought U.S. loans some time ago, it was told that no U.S. capital would be available for Argentine development until existing laws were revised so that foreign capital would be treated fairly. Since that time, the Argentine Government has approved new laws, and has made it possible for the United States to assist in financing construction of a steel plant in Argentina.

Secretary Humphrey discussed the development of oil fields in Argentina and Brazil He said Argentina was about ready to make a deal with four U.S. oil companies. He commented on the fact that [Page 4] there was no coal in Brazil, but that there must be some oil in an area so vast. He added that the Brazilians are building an industrial economy, but they have no domestic source of cheap fuel. The more progress they make toward industrialization, the worse their fuel situation becomes.

Secretary Dulles interrupted to note that Brazil was one of those countries where an atomic reactor might make a real difference.

Secretary Humphrey noted that in the past Brazil had refused to allow foreign capital to participate in oil development. He believed that Brazil would permit foreign capital to participate in the oil industry if the Argentine deal went through.

Governor Stassen called attention to the diversification of the Bolivian economy which is beginning to take hold. It is hoped that Bolivia’s dependence on tin mining can be reduced. He said that since the completion of the Cochabamba—Santa Cruz Road, settlers were migrating to the agricultural lowland areas. He added that private U.S. companies were again showing interest in investment in Bolivia.

Secretary Humphrey said the Council should realize that a strong base for Communism exists in Latin America. He said that wherever a dictator was replaced, Communists gained. In his opinion, the U.S. should back strong men in Latin American governments. Secretary Wilson commented that the United States must assist in the development of a middle class in Latin America.

Dr. Flemming cited a paragraph in the Progress Report calling attention to Soviet interference in strategic minerals markets in Latin America, including the purchase of certain materials. He asked to be given a statement on sales of such strategic materials with a view to deciding whether something could be done by the United States to put an end to Soviet activity in this field. Mr. Cutler referred him to the OCB and the CIA.

Mr. Rockefeller returned to the comments made by Secretary Humphrey concerning U.S. support of dictators in Latin America. He said that dictators in these countries are a mixed blessing. It is true, in the short run, that dictators handle Communists effectively. But in the long run, the U.S. must encourage the growth of democracies in Latin America if Communism is to be defeated in the area.

The discussion of dictators recalled to the President’s mind a comment which Portuguese Premier Salazar4 had made some time ago, to the effect that free government cannot work among Latins. The President said he firmly believed that if power lies with the people, then there will be no aggressive war. He indicated his [Page 5] agreement with Mr. Rockefeller that in the long run the United States must back democracies.

Secretary Humphrey recalled a conversation with the President of Venezuela,5 who said his government had three objectives—to raise the standard of living, to create more jobs, and to provide the best of everything for his army because without the army there was nothing.

Secretary Dulles asked Mr. Allen Dulles whether work had been completed on a study of the recent revolution in Guatemala. It had been hoped that the Guatemala case could be given publicity as an illustration of how Communists operate in this Hemisphere. Mr. Allen Dulles said he would check on this project . . . .

The National Security Council:

Noted and discussed the reference Progress Report on the subject by the Operations Coordinating Board.

[Here follows discussion of items 4–7: “United States Policy Toward Italy”, “Antarctica”, “Significant World Developments Affecting United States Security”, and “Admission to the United States of Certain European Non-Official Temporary Visitors Excludable Under Existing Law”.]

  1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Items 1–6 of this memorandum were prepared by Bromley Smith, Senior Member, NSC Special Staff; item 7 was prepared by J. Patrick Coyne, NSC Representative on Internal Security, on February 18.
  2. See Foreign Relations, 1952–1954, vol. iv, p. 89.
  3. Ibid., p. 81.
  4. Antonio de Oliveira Salazar.
  5. Marcos Pérez Jiménez.