71. Letter From the Deputy Assistant Secretary of State for Economic Affairs (Kalijarvi) to Edward B. Hall1
Dear ED: The enclosed memorandum2 sets forth some of our views with respect to the international impact of Public Law 480. It has been prepared in response to your request in connection with your report to the Council on Foreign Economic Policy.
In general, our experience with Title I has not been sufficient to permit a definitive evaluation of all aspects of its operation. Sales [Page 205] agreements have reached a large total in value, but shipments of commodities have experienced a time-lag; and even a longer delay has occurred with respect to loan agreements and the use of foreign currencies.
The discernible results of Title I are mixed—some favorable, some unfavorable. On the favorable side, a substantial quantity of commodities has already moved and even larger quantities of surpluses will be moved in the future. Importing countries have an opportunity to secure commodities with minimum expenditure of their own resources. They are able to finance economic development through long-term, low-interest loans. On the unfavorable side, in spite of the restraint exercised by the Department of Agriculture, there is the danger of displacing commercial markets, disrupting prices and discouraging economic production. Title I programs have disturbed our relations with a number of friendly foreign countries exporting the same or competitive products on a commercial basis. It is doubtful that the programs entered into have achieved or are likely to achieve additional consumption which would not otherwise occur. The enclosed memorandum is, for the most part, addressed to Title I.
The foreign policy interests of the United States have been well served by Title II and those divisions of Title III which authorize donations to non-profit voluntary agencies and international organizations, but even these programs have been criticized on occasion by exporting countries as interfering with normal marketing.
The barter operations under Title III are extremely complicated, and their difficulties are not easily identifiable. In total, these transactions present a danger of encouraging uneconomic production and displacing competitive trade. The barter operations would profit by closer interagency consultation and a more complete coordination of interdepartmental views. It is the view of this Department that the size of the barter program needs to be continued under strict limitations if disorganizations and distortions of production and trade are to be held within manageable bounds.
Sincerely yours,