204. Letter From the Assistant Secretary of State for Inter-American Affairs (Holland) to the Secretary of the Treasury (Humphrey)2
Dear Mr. Secretary: With respect to the proposal of Mexican Secretary of Finance Carrillo Flores for a ten year loan to the Mexican Treasury in the sum of $75 million, I enclose a copy of a letter from Ambassador Francis White, together with a copy of its enclosure, a Memorandum of Conversation with Senor Carrillo Flores.3
The Department fully supports Ambassador White’s view that Mexico should take action to increase the confidence of investors and others in the economy of the country. In the field of financial stabilization Mexico seems to be making progress. The lack of confidence in the peso, which persists, while partially a hangover from the devaluation of last Spring rather than a reasoned appraisal of present conditions, is due also to failure of the Mexican Government to take positive action to effect a return of confidence. Confidence in the peso will return only with time and as the Mexican Government carefully avoids disturbing actions, and at the same time takes advantage of every opportunity to reassure the public and to encourage foreign investment.
Ambassador White suggests that it would be well to have considered what, if any, help the United States can give and that he be informed so he could pass it on informally and confidentially to Carrillo Flores. It is our feeling that Mexico’s financial position is improving and we question whether at present there is need for additional financial assistance in the stabilization field. Carrillo Flores [Page 650]should be told that we wish to be helpful and after Mexico has taken the internal steps to restore confidence we will review the situation again with him. In the meantime he can be told that we look forward to discussing matters with Mexico’s representatives when they arrive later this month.
I feel that Carrillo Flores is a friend of the United States who has fought successfully to maintain the convertibility of the peso and who merits our support.
I shall be pleased to receive and transmit to the Ambassador any comments you may wish to have sent to him.4
- Source: Department of State, Central Files, 812.10/1–1755. Confidential. Drafted by Young.↩
- Both dated December 16, 1954, neither printed.↩
- In a memorandum to the President dated February 25, Secretary Humphrey wrote: “Part of the lack of confidence in the peso following the sudden and drastic devaluation in April 1954 involves political factors, including the composition of the Mexican Cabinet and the restoration of the confidence of Mexican and U.S. businessmen in the dedication of the Mexican Government to the principles of private enterprise rather than increased government intervention.” (Eisenhower Library, Whitman File, Administration Series, Humphrey, George M. 1955)↩
- Printed from a copy which bears this typed signature.↩