40. Memorandum of a Conversation Between the Assistant Secretary of State for Inter-American Affairs (Holland) and the Regional Director for Latin America, IBRD (Knapp), Department of State, Washington, April 26, 19561


  • Guatemala: Klein & Saks Economic Advisory Mission

Mr. Holland telephoned Mr. Burke Knapp of the IBRD today with further reference to the meeting in Mr. Holland’s office on April 24 which Mr. Holland had to leave. Mr. Holland said he recalled that Mr. Knapp had asked him, shortly before he left the meeting, what Mr. Holland thought was the extent to which the United States should concern itself with the decisions in the economic field of the Guatemalan Government, and its development. Mr. Holland said he felt that the United States should participate from the moment the Guatemalans hit on an idea in all phases of analysis and reaching decisions, drafting of plans or decisions—in short, in every phase of their planning as long as the United States Government is carrying the heavy responsibilities it is in that country. He feels that there is no aspect of their internal affairs of which we should not be aware, concerned and vigilant.

Mr. Knapp said that their discussion of this point on April 24 had referred to active participation and Mr. Holland emphasized that he included active participation in his thinking on the matter.

Mr. Knapp stated that he believed Mr. Holland might have made this statement a few years ago but he felt that the situation was no longer the same in the sense that it made a “fifth wheel” of the IBRD. Mr. Holland said that he was not well enough informed to comment on this aspect, but that if Mr. Knapp felt it justified the use of the time, Mr. Holland would be happy to make a serious study of this aspect and give Mr. Knapp his further considerations on the point. His purpose at the moment was only to give Mr. Knapp his feelings on our function in Guatemala—that he believed that the Guatemalan Government would not have survived and cannot yet survive if we do not discharge this function.

Mr. Knapp said he felt Mr. Holland need give the subject no further study until IBRD reaches a decision on what they will do in the area. Mr. Knapp stated his belief that it is probable that IBRD will decide to terminate its mission there and devote its efforts elsewhere, and he emphasized that, if this proves to be the case, [Page 117] such action will be taken in the best of spirit, it will not be done in pique nor will it affect in any adverse way future relations between Guatemala and the IBRD as regards future loans.

He also mentioned that he had heard it said that Mr. Atwood had heard that Mr. David Gordon opposed the activities of Klein–Saks. Mr. Knapp said that he had gotten out a file of letters from Mr. Gordon and had called Mr. Atwood and told him that the letters contained only statements to the effect that there obviously had been a misunderstanding. Mr. Knapp said he believed the matter had been cleared up with Mr. Atwood.2

  1. Source: Department of State, Central Files, 814.00/4–2456. Confidential. Drafted by Barbara E. Dunlap.
  2. In a memorandum of a telephone conversation, April 30, Knapp informed Holland that the IBRD mission in Guatemala would be terminated to “let Klein–Saks pick up the operation.” (Ibid., Holland Files: Lot 57 D 295, Guatemala) In a letter to Holland, May 28, Knapp wrote: “Just a note to let you know that, upon an urgent request from the President of Guatemala communicated through the Ambassador here, we have agreed to extend Mr. David Gordon’s assignment in Guatemala until the end of September. The Guatemalans are apparently unhappy about our announced intention to terminate the Mission at that time, but we have made clear to them that this is a firm decision.” (Ibid., Guatemala Files: Lot 60 D 647, IBRD)