522. Editorial Note

On August 24, Henry Dearborn sent a memorandum to Holland concerning the sale of military equipment to Peru on credit terms. He added up the cost of the items requested by Peru (listed in the September 3 letter, infra) and said that if all were approved Peru would receive about half the total credit approved so far for all of Latin America. He considered the situation undesirable for two reasons: (1) In a period of increasing tension between Peru and Ecuador, the fact that Peru might go elsewhere for arms if the United States refused to sell did not adequately answer Ecuador’s possible charge that “the U.S. had placed fuel on the fire by making [Page 1050] it easy for Peru to buy U.S. equipment;” and (2) the Pentagon had given no assurance that it would continue to sell significant amounts of military equipment on credit terms, and it seemed unlikely that any other Latin American country would receive nearly as much credit as Peru. Dearborn’s memorandum suggested that the Peruvians be advised that Peru had received more credit than any other Latin American country and additional credit could not be approved, although military items might be bought for cash. (Department of State, Central Files, 723.5–MSP/8–2455)

A memorandum from Holland to Dearborn; Neal; and Robert S. Folsom, Deputy Director of the Office of Regional American Affairs, dated August 26, stated that ARA’s fears regarding the results of a policy of easy credit for Latin America for military equipment were being realized. The final paragraph of the memorandum reads: “We have had time now to see that instead of improving our relations with Peru we have caused them to degenerate sharply with the Army and the Air Force, each of which feels that it is entitled to just as favorable credit terms as those extended to the Navy.” (Ibid., 823.56/8–2655)