67. Letter From the Assistant Secretary of State for Inter-American Affairs (Holland) to the Special Assistant to the President (Rockefeller)1

Dear Nelson: Thank you for letting me have an opportunity to look over the report prepared by Mr. Wallich for Mr. Randall on the Export-Import Bank and your draft of a proposed memorandum for the President.

I am impressed by the Wallich report. His conclusions that if we are going to diminish grant aid we must emphasize aid through sound loans; that a policy of public lending need not displace or compete with private sources of capital; that the Export-Import Bank should make developmental loans as well as those designed to finance the exportation of United States products are all eminently sound. On the latter point, I stated in a speech before the Pan American Society in New York on October 27, 1954:2

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“…3 the United States proposes to intensify and expand the activities of the Export-Import Bank. Through it we shall do our utmost to satisfy all applications for economic development loans that fulfill certain sound and logical standards.”

This recognition that the Bank will be active in the field of economic development was cleared by Treasury, Commerce, and the Export-Import Bank itself.

I also adhere to the recommendations set out at the conclusion of Mr. Wallich’s memorandum, although I feel that those in my own memorandum of March 29 are more complete and would like to see each of the latter implemented.

On the other hand, I would hope that you could adopt a somewhat different approach in your own draft of memorandum. There, the emphasis is placed on a loan target. I am entirely in accord with you on the great need to intensify the activities of the Bank; nevertheless, as I set out in my memorandum of March 29, I believe that the interests of the United States are affirmatively prejudiced if this goal is pursued through the establishment of a predetermined loan target.

You suggest a $200 million annual target. If the policies which I have urged or those recommended by Mr. Wallich are implemented, the activities of the Bank will, I believe, exceed these figures. In fact, the existing rate of authorizations, if sustained, will probably lead to a disbursement rate exceeding that set out in your memorandum.

If we establish a target for Export-Import Bank lending, that target is inevitably going to become known in Latin American governmental circles. The reaction of some will be that it is too small, no matter what might be its amount. The reactions of others will be that the assurance of the availability of this amount of credit makes unnecessary active efforts to attract capital from private sources. Others will start a scramble to direct what they will calculate is their country’s share into pet projects.

On the other hand, if we adhere to our announced policies of satisfying all economic development loans which meet the standards we have established, and if the Bank adopts a more aggressive role, all of the foreign policy objectives that we both seek will be attained, but without the disadvantages indicated above.

I would be glad to discuss this further with you, if you wish, and am grateful for your letter and its attachments.

With best wishes,


Henry F. Holland4
  1. Source: Department of State, E Files: Lot 60 D 136, Papers From Mr. Waugh. Confidential.
  2. The full text of the speech is printed in Department of State Bulletin, November 8, 1954, pp. 684–690.
  3. Ellipsis in the source text.
  4. Printed from a copy which bears this typed signature.