65. Memorandum From the Assistant Secretary of State for Inter-American Affairs (Holland) to the Under Secretary of State (Hoover)1

SUBJECT

  • FOA Organization for Latin America

You have asked that I express my views as to how FOA’s integration in the Department should be handled with respect to Latin America.

In a number of ways the situation of FOA in Latin America is quite different from the rest of the world:

1.
Out of a total budget of $3.5 billion only $52.5 million or about 1½ per cent is scheduled for economic assistance to Latin America.
2.
Our policies in Latin America contemplate no grant aid programs, no large military programs, no soft loan programs. Instead we depend upon close, constant, and effective work with each of the countries to solve its particular economic problems. This means that we must have a great deal of knowledge about the details of the economy of each country, and we must intervene almost on the working level in the problems of many of these countries. The result is that every day in most of our embassies our Ambassador and his officers are working in many areas of the field covered by FOA. This is a situation probably peculiar to our hemisphere, i.e., a very [Page 326]small FOA program a considerable part of which overlaps the economic work of our embassies.

In view of the foregoing, inevitably sharp differences of opinion have developed between FOA and ARA. I am afraid that the same will happen if FOA activities are conducted as they have been in the past in a semi-autonomous unit in the Department. I believe that we will achieve: (1) far more harmonious and effective work in this field, and (2) great savings in money and personnel if technical assistance operations in Latin America are entrusted to the Institute of Inter-American Affairs2 and it, in turn, is placed in ARA with which it was at one time very closely associated, the Assistant Secretary of State for Inter-American Affairs having been the Chairman of the Institute’s Board of Directors.

Under such an arrangement the ICA would furnish to the Institute policy advice and coordination on a worldwide basis as well as functional services. ARA would, on the other hand, direct the Institute’s operation and its policies insofar as they relate exclusively to the Latin American area.

Like every plan this has advantages and disadvantages. The obvious disadvantage is that you might have one arrangement for FOA activities in Latin America and another for those activities elsewhere in the world. The advantage, however, is that the operations would, in my judgment, be far more effectively conducted and would more faithfully reflect and effectively implement our policies in this hemisphere, and that there would be a very substantial saving in money and manpower. Therefore, I believe that the advantages substantially exceed the disadvantages and I recommend this arrangement to you.

I also recommend, in order to assure more efficient and effective operations in the Latin American countries, that the FOA personnel in the field be integrated into the embassies and operate under an Economic Counselor or chief economic officer who, in addition to his regular embassy duties, would take the place of the present USOM chief.3

  1. Source: Washington National Records Center, ICA Director’s File, FRC 61 A 32, Box 309, Latin America. Confidential.
  2. The Institute of Inter-American Affairs (IIAA), a nonstock corporation wholly owned by the U.S. Government, was incorporated in 1942 under the laws of Delaware. In 1947 it was reincorporated under the Institute of Inter-American Affairs Act (P.L. 369, 61 Stat. 780). On June 30, 1955, the Institute (which had previously functioned under the Foreign Operations Administration) was transferred to the Department of State and became attached to the International Cooperation Administration. From 1950 on, the Institute administered the Latin American portion of the worldwide technical cooperation program.
  3. Attached to the source text is a handwritten note from Under Secretary Hoover to John B. Hollister, May 11, which reads as follows: “There is a good deal in what Mr. Holland points out, although I do not necessarily agree with all of his conclusions. I shall be glad to talk with you about it.” Hollister was appointed Director of the International Cooperation Administration (ICA) on July 1, 1955.