Foreign Relations of the United States, 1955–1957, South Asia, Volume VIII

177. Memorandum of a Conversation, The White House, Washington¹

Washington, October 8, 1957, 10:30 a.m.

SUBJECT

• Indian Finance Minister’s Call on the President

PARTICIPANTS

• The President
• Mr. Krishnamachari, Indian Minister of Finance
• Ambassador Mehta
• NEA—William M. Rountree

Following an exchange of greetings, the President recalled with pleasure Prime Minister Nehru‘s visit of last year, during the course of which the two had had an opportunity of discussing at length the Indian development program. He asked the Finance Minister whether he had been encouraged with respect to the possibilities of private investment helping in the development program. Mr. Krishnamachari said that the private banking institutions of course were not prepared to make loans to India, but that there was some interest in investment by industrial firms, although not nearly as much as he had hoped. He said that India had opened a very large sector to private enterprise. The State must do a great deal itself, but private enterprise would have a substantial role to play in the Indian system. A problem was, of course, that the shortage of foreign exchange affected private enterprise as well as State operations.

The President commented generally on the Indian economic requirements, stating that the United States was sincerely interested in helping. The Minister would realize, of course, that the United States had taken on substantial burdens in the last few years and we had many problems of our own, such as the pressure of inflation, tight money, etc. He was pleased that during his meetings in Washington the Minister had been able to get to the State Department and other agencies information which could be used by the United States Government to evaluate the situation, and which might contribute to the preparation of recommendations to the Congress. The President commented upon the problem of persuading the public and the Congress that it was in our national interest to help other nations with their economic problems. The Minister could be sure, the President said, that the aspirations of India were supported by the Administration, but what we would be able to do would depend in large measure upon Congress. We were impressed with India’s first five-year Plan. The President hoped that the Indians would press forward with the second Plan, and would not become discouraged. He observed that for people who kept working, things seemed to work out. He recalled examples in the past where situations for the free world seemed dark and gloomy, but with hard work they soon improved.

The Minister said he was deeply touched with the kindness and courtesy he had received in Washington. He was particularly grateful to the Secretary.²

The President said he felt that he had a substantial understanding of the Indian problem, and had constantly pleaded for an understanding on the part of others. Unlike the United States which gained its independence at a time when it had vast untouched natural resources, India began with a very substantial population with very strained resources. Obviously the problems for India under these circumstances were infinitely greater than those which the United States faced in the early period of its own development. In considering United States cooperation with India, the question often arose as to political differences. While there were differences in our approach to international problems, the United States was cognizant of India’s high moral standards, that the Indian Government differentiated clearly between right and wrong, and that India would be unwilling to give up its independence. The Minister commented that our differences in international questions were really not fundamental. India had special problems, as did the United States. India, for example, could well understand “Little Rock”³ since India itself had an extremely difficult problem in “human relations”. The important thing was that both countries were trying to work out these problems.

The Minister said he thought one difficulty with which India might be confronted with respect to the question of aid was that its request came at the “tail end” of a 12 year period when the United States extended aid in generous quantities. He could understand the reluctance of the American people to continue this program indefinitely.

The President said that perhaps we were toward the end of a phase in our aid program, but he thought it should be considered only as a phase. The American people would realize that it was in their own national interest to help others. He felt that the Indian success was not purely a national affair for India, but that it would affect the whole free world. Friendly nations must find better ways of working together and of perfecting means for defending their way of life.

Mr. Krishnamachari observed that he was going to West Germany before returning to India. He commented upon the tremendous progress in Germany which had been facilitated by American aid.

He remarked, jokingly, that in some respects he wished the United States had occupied India in 1947. The results of the German occupation seemed to have enabled Germany to make an impressive economic recovery and expansion. The President observed that Germany should be able to help India and wondered if Mr. Krishnamachari would discuss this with the Germans. The Minister replied affirmatively, but did not appear to be greatly optimistic that Germany would be able to do much.

The President and the Minister discussed generally the question of Indian economic potentialities. The Minister mentioned particularly that the Indian production of steel would reach 5 million tons per annum after the present plans are implemented, which will provide enough steel for India’s internal needs with perhaps some for export. He said the very great deposits of high grade ore in India and other favorable factors would render it possible for India to produce steel at one of the lowest costs in the world.

In a general discussion of Indo-Pakistan relations, Mr. Krishnamachari emphasized his hope that the Kashmir question would not be permitted to come to a head. He observed that no one in Pakistan was strong enough to assume responsibility for a decision on Kashmir, and that if Kashmir should be lost to India the Congress party would fall from power. His hope had been that India and Pakistan would be able to solve this problem so that they could work together on a broad basis. India should be able to cooperate with Pakistan in common defense, customs, etc. Politics, however, had rendered this impossible in the past. The Minister mentioned Indian concern over arms to Pakistan, which had required India to divert substantial amounts of money to its own defensive requirements in the light of Pakistan’s increased capability and in circumstances where it seemed that Pakistan’s intentions were hostile to India.

The Minister asked again whether it would be possible for the President to visit India. The President said he would sincerely like to visit India, but his problem was that he had not been able to think of a way to do this without necessitating a trip to many other countries which had invited him. He had talked to the Secretary about this problem on several occasions, as recently as last week. In the ensuing discussion the President mentioned the possibility of his brother visiting India.⁴ Mr. Krishnamachari was enthusiastic.

After the Minister and Ambassador had left, the President instructed Mr. Rountree to mention to the Secretary the possibility of such a visit by his brother and to ask the Secretary to think about it.

1. Source: Eisenhower Library, Whitman File, International File. Secret. Drafted by Rountree. Enclosed in a memorandum from Fisher Howe to Goodpaster, dated October 9.
2. H.M. Patel told Dillon on October 9 that he, too, was appreciative of the courtesy he had encountered, but was compelled to conclude that no U.S. funds were immediately available to India from existing resources. Dillon assured him that the matter would continue to receive high priority attention. (Memorandum of conversation by Bartlett; Department of State, Central Files, 891.00/10–957)
3. On September 24, President Eisenhower nationalized the Arkansas National Guard and sent Federal troops to the city in response to a crisis stemming from the desegregation of Little Rock schools.
4. Presumably Milton Eisenhower.