514. Editorial Note
Following the April 8 meeting with Hensel, a memorandum was drafted in the Bureau of Inter-American Affairs, setting forth recommendations to the National Security Council on the subject of credit for Latin American countries. Copies of the recommendations were sent to S/P, E, and S/MSA. A memorandum from Edward J. Sparks to Robert R. Bowie, dated April 18, asked that ARA be informed as soon as the request for a decision had been forwarded to the NSC, so that a reply could be made to Hensel’s letter of April 13. (Department of State, S/P–NSC Files: Lot 61 D 167)
Attached to the April 18 memorandum was a copy of the paper containing ARA’s revision of paragraph 20 (e) of NSC 5432/1, which reads as follows: “Seek ultimate military standardization, along U.S. lines, of the organization, training, doctrine, and equipment of Latin American armed forces; countering trends toward the establishment of European military missions in Latin America, or agencies or individuals with a similar function, other than those of the United States; and facilitating the purchase of U.S. equipment by offering Latin American countries the lowest possible prices, more rapid delivery, predelivery financing of long lead-time items and credit limited to a three-year period. The feasibility, if any, of the use of foreign currency or barter arrangements should be explored.” (Ibid.)
A memorandum from Spencer to Sparks and Jamison, dated April 19, informed them that the Policy Planning Staff had notified him that Frederick E. Nolting, Jr., would not concur in the revision of paragraph 20 (e) because he disagreed with ARA’s position. Nolting’s office advised Spencer that he disagreed because the Peruvians [Page 1036] already had funds earmarked for the submarines and could purchase them from a European country. If they did so, the United States would lose in terms of standardization of arms in Latin America. (Ibid., Central Files, 723.5621/4–1955)
On April 26 Holland sent Under Secretary Hoover a paper prepared by ARA, in consultation with E, similar to the one attached to the April 18 memorandum, explaining ARA’s position opposing long-term credit to Latin American countries for the purchase of military equipment. (Ibid., S/S–NSC Files: Lot 63 D 351, NSC 5432 Memoranda) On April 27 Deputy Under Secretary Murphy sent a memorandum to Hoover explaining Hensel’s position favoring long-term credit to Peru for the purchase of submarines. He informed Hoover that “Mr. Hensel explained his position as resting squarely on present NSC approved policy relating to credits for Latin America. He said that he stressed this point in his conversation with Mr. Holland and that the latter admitted that his insistence on a credit term of three years was not in accordance with NSC policy and that NSC policy should be changed.” (Ibid.)