477. Memorandum of a Conversation, Department of State, Washington, August 12, 1955, 10–10:30 a.m.1


  • Ambassador Sarasin
  • General Phao
  • Mr. Thambu
  • General Phao’s Aide
  • Mr. Hollister
  • Mr. FitzGerald
  • Mr. Loren

Mr. Hollister welcomed General Phao and indicated that he and Mrs. Hollister tentatively planned to visit Thailand in October. He expressed the hope that either Under-Secretary Hoover or Assistant Secretary Robertson would be able to make the trip at the same time.2

General Phao stated that the Prime Minister had requested him to make a courtesy call on Mr. Hollister as head of the new agency which will be responsible for administering U.S. assistance to Thailand.3

In describing Thailand’s situation, General Phao indicated that the economy is experiencing a “decline” as a result of the reduced price of rice exports, the source of about 75% of the country’s foreign exchange earnings. Thailand’s market is limited because of the country’s refusal to trade with the Communists. Prices of other important Thai exports, rubber and tin, have recently risen slightly, but the Thai anticipate keen competition in marketing these products in the future. On the other hand, Thai military expenditures have increased. As a result of the intensified training program, operating costs of the military establishment are mounting. General Phao emphasized that in these circumstances Thailand is dependent on U.S. assistance and expressed the hope that the level of aid would be maintained and, if possible, expanded.

Mr. Hollister asked if the training and mechanization of the Army would make it possible to reduce the number of soldiers. The [Page 831] General said that this would not be possible; that JUSMAG had advised Thailand to maintain 10 regimental combat teams.

General Phao described the need for strengthening the Gendarmérie Police Force and commented on this organization’s work. Mr. Hollister indicated that he was aware of the accomplishments of the Thai, and of General Phao personally, in this respect.

The General observed that because of some superficial appearances, Thailand might appear to be prosperous. However, the general level of living is low and economists see many weaknesses in the Thai economy. He noted that Ambassador Peurifoy and visiting U.S. Senators had stressed the importance of Thailand’s helping its neighbors, Laos and Cambodia. The Thai wonder in what way they can help when their neighbors are receiving more U.S. assistance than Thailand.

The General and Ambassador Sarasin expressed their regret at the death of Ambassador Peurifoy.4 Because of his quick grasp of the situation and his understanding of conditions in the area, they feel his death is a great loss to both our countries.

The General stated that details regarding the situation in Thailand would be submitted through Ambassador Sarasin. He suggested that any questions which Mr. Hollister might have on these details be discussed with Mr. Sessions who is fully informed on Thai economic conditions.

Mr. Hollister stated that he was sympathetic to Thailand’s situation and that this view was shared by the Congress and people of the U.S. He said that he and Mr. FitzGerald were currently reviewing: first, what we could do and, secondly, what we ought to do, within the limitations of appropriations made available by the Congress. It was not possible, therefore, to make any commitments regarding levels of aid at this time.

In replying to a specific question regarding the $12.2 million authorized for additional direct forces support to Formosa and Thailand,5 Mr. Hollister stated that this was a complex situation now being studied by the General Counsel and that it was too early to answer the question.

[Page 832]

General Phao inquired about Mr. Session’s replacement. Mr. Hollister replied that Mr. Sessions had accepted the position for one year only and that a successor had not yet been appointed.

  1. Source: Department of State, FE/SEA Files: Lot 59 D 369, Visit of General Phao Sriyanon. Confidential. Drafted by Loren on August 15.
  2. Together with Hoover, Hollister visited several Far Eastern countries during October. Hoover left the tour at Manila and only Hollister continued on to Djakarta and Bangkok. Hollister reported on his meetings on October 22 with Thai officials in Polto 42 from Bangkok, October 23. (Ibid., Conference Files: Lot 59 D 95,CF 538) Additional information on the HooverHollister trip is Ibid., Central Files, 110.12–HO, and Conference Files: Lot 59 D 95, CF 534–CF 541.
  3. The Foreign Operations Administration was abolished by Executive order on June 30, 1955, and its functions were transferred to the International Cooperation Administration.
  4. Ambassador Peurifoy was killed in an automobile accident on the outskirts of Bangkok on August 12.
  5. The Mutual Security Act of August 26, 1954, provided a maximum of $700 million in direct forces support for fiscal year 1955 to be distributed at Presidential discretion to those countries of Southeast Asia and the Western Pacific deemed to be threatened by Communist aggression. (68 Stat. 832) Of the $700 million provided for in the Act, $7,860,000 was provided in direct forces support to Thailand in fiscal year 1955. The Mutual Security Act of 1955, enacted on August 2, 1955, provided for an additional $12,200,000 in direct forces support for Thailand and Formosa. (69 Stat. 435)