399. Editorial Note

Assistant Secretary Holland, accompanied by Maurice Bernbaum, visited Chile August 1–2 as part of a larger trip to several Latin American countries. On August 2, Holland met with Oscar Herrera regarding economic matters. During their talk, Herrera said that he was being attacked in Chile because of the difficulties which his anti-inflation program imposed on many sectors of the economy and pointed out that he needed some outside evidence of the results of his program to help still this criticism. He asked Holland to help him get prompt action from the IBRD on pending loan requests for coal and electric power projects. A memorandum of that conversation, drafted on August 10 by William Belton is in Department of State, Santiago Embassy Files: Lot 64 F 87, Economic Matters—General.

In telegram 66 from Santiago, August 2, Holland briefly noted the gist of that and other conversations which he had during his stay in Chile. “Herrera under strong attack from local sectors whose economic interests prejudiced by credit restrictions and other austerity features government’s anti-inflationary program,” the telegram stated. “My conference government, Embassy and Lockett persuade me government needs demonstrate some accomplishment in field foreign aid in order withstand adverse pressure.” He recommended strongly that the Department urge the IBRD to announce the authorization of the coal mine loans to Chile and that the International Cooperation Administration approve Chile’s requests for Public Law 480 loan projects as soon as possible. (Ibid., Central Files, 825.00/8–256)

In despatch 100 from Santiago, August 3, the Embassy reported on the results of the Holland–Bembaum visit. “Mr. Holland’s visit was very timely,” it commented in part. “There had been an almost [Page 817] miraculous transformation since his last visit. The favorable turn of events had vindicated the United States Government’s view that, while the United States was genuinely disposed to help Chile, the main responsibility for lifting the country out of the mire was Chile’s. The visit afforded a splendid opportunity to emphasize the congratulatory attitude in responsible sectors abroad as a result of Chile’s having taken effective steps to face up to her problems. It was a good opportunity also for Mr. Holland to buoy up Minister Herrera and to encourage the Government to stay on the right, albeit somewhat rocky, road.” (Ibid., 725.00(W)/8–356)

On November 1, the IBRD approved a $15 million loan to Chile for the development of electric power. For additional information on the loan agreement, see International Bank for Reconstruction and Development, Twelfth Annual Report 1956–1957 (Washington, 1957).