159. Summary Minutes of a Meeting of the Ad Hoc Committee on Ambassador Cooper’s India Aid Proposals, Department of State1

PARTICIPANTS

  • E—Mr. Prochnow (Chairman)
  • Ambassador Cooper
  • NEA—Mr. Allen
  • SOA—Mr. Jones
  • SOA—Mr. Smith
  • ICA—Dr. FitzGerald
  • ICA—Mr. Ferris
  • U/MSA—Mr. Barnes
  • U/MSA—Mr. Horn
  • H—Mr. Claxton
  • S/P—Mr. Trezise2
  • OFD—Mr. Corbett
  • ED—Mr. Springsteen

The meeting considered Ambassador Cooper’s three proposals regarding U.S. aid to India:3 (1) assurances of continued U.S. aid for a three to five year period; (2) a moratorium on the repayment in [Page 318] kind of 226 million ounces of silver lend-leased to India during World War II; and (3) a long-term PL 480 program for India.

After extended discussion on these three points, the following decisions were reached.

(1)
Continuity of aid: It was agreed that the question of assuring continuity of aid programs (as opposed to projects, for which authority is now being sought) was a broad one involving countries other than just India and might be achieved through a general legislative request without specifying any one country. It was not deemed advisable at this time, however, to seek such legislative authority for assuring such continuity.
(2)
Moratorium on Lend-lease Silver Debt: Treasury opposition to this proposal, together with other problems such a moratorium (e.g. consultations with Congressional Committees, U.K. attitude, Pakistan’s share of the debt, legislative action by India, etc.) would raise were noted. It was agreed that the Department would proceed to formulate its position on this matter. It was also agreed that Ambassador Cooper might talk to Treasury on the problem in order to outline his views and his understanding of the Indian attitude (pursuant to his conversations with Finance Minister Deshmukh4) [on?] this matter.
(3)
PL 480: It was agreed that additional funding authority should be sought in order to undertake additional programs including India. It was pointed out that the Indian PL 480 program may involve problems for U.S. relations with other countries (e.g. normal marketings, etc.). It was agreed that the preparations of the negotiating instructions would provide the means for resolving these problems.5

The meeting adjourned, subject to call by the Chairman.

  1. Source: Department of State, Central Files, 791.5–MSP/5–1156. Secret. Drafted by George Springsteen of the Economic Development Division of the Office of International Financial and Development Affairs on May 8. Attached to a memorandum from Prochnow to Hoover dated May 11.
  2. Philip H. Trezise, who represented Bowie at the meeting, reported to the latter in a memorandum of May 8 that a “wet blanket” had been thrown on each of Cooper’s proposals. The Ambassador was said to have maintained that his real concern was the P.L. 480 program. Trezise added that Philander P. Claxton, Special Assistant to the Assistant Secretary of State for Congressional Relations, had commented that India would have no trouble securing a substantial long-term loan if only Nehru expressed gratitude for past U.S. aid. (Ibid., S/P Files: Lot 66 D 487)
  3. Supra .
  4. Chintaman Dwarkanath Deshmukh.
  5. The United States and India signed a P.L. 480 agreement on August 29 which covered 3 years and involved the sale of surplus U.S. agricultural commodities with an export market value of $360.1 million. The transaction included dairy products, skim milk powder, wheat, cotton, tobacco, and for the initial year, rice. Eighty percent of the local currency proceeds derived from the sales was to be made available to the Indian Government; 65 percent being a loan and the rest a grant. These funds were intended for India’s second Five Year Plan. The other 20 percent the United States could employ for its own needs in India.