Foreign Relations of the United States, 1958–1960, American Republics, Volume V

301. Memorandum of a Conversation, Department of State, Washington, December 27, 1960¹

Washington, December 27, 1960

PARTICIPANTS

• Department of State
  • Mr. Thomas C. Mann, Assistant Secretary, ARA
  • Mr. Wymberley DeR. Coerr, Deputy Assistant Secretary, ARA [Attended part time]²
  • Mr. Alton W. Hemba, EST [Attended part time]
  • Mr. George R. Phelan, Political Officer, U.S. Embassy, Rio de Janeiro
• Visitors
  • Dr. Augusto Marzagão, Secretary to President-elect of Brazil
  • Dr. Luciano Machado, Lawyer, Bank of Brazil
  • Dr. Fernando Pereira da Silva, Brazilian Industrialist
  • Dr. Jacques Elmaleh, U.S. Citizen, from New York

The following subjects were discussed:

1. U.S. Ambassadors. Dr. Marzagão began the conversation by indicating his hopes that the Kennedy Administration will use the same high standards in selecting its Ambassadors to Latin American countries that it used in selecting Mr. Rusk as the new Secretary of State. He added that, with rare exceptions, U.S. Ambassadors are not true representatives of the American people and the American way of life. A large number of ambassadorial appointments have been given to wealthy men as rewards for financial contributions to political campaigns; many do not possess a real knowledge of Latin America. They, instead of representing the American people, limit themselves to representing economic groups, “trusts”, that by and large have created, through their actions and behavior, a negative attitude toward the U.S. in most Latin American countries.

2. Inflation. Dr. Marzagão referred to the present inflationary spiral in Brazil, attributing 70 to 80% of it to the building of the new capital, Brasilia, and pointed out that Dr. Quadros intends to take stern measures to prevent further inflation, that the Quadros Government will be one of austerity, honesty and patriotic dedication. Quadros’ actions to combat inflation, he said, will have to be applied progressively to avoid serious social chaos in the country. In attaining stability and maintaining Brazil’s much needed economic growth, the new Brazilian Administration will not ask favors of the U.S. but will need much U.S. understanding, cooperation and confidence.

Mr. Mann suggested that the new Brazilian administration may wish to consider sending some of its economic and financial experts to Washington to conduct exploratory, preliminary, informal discussions with U.S. officials on economic and financial problems. Dr. Marzagão seemed to like this suggestion and promised to present it to the President-elect for his consideration.

3. International Monetary Fund. Dr. Marzagão said that the IMF, when approached by the present Government of Brazil in 1959 regarding assistance, set as a prerequisite strong deflationary measures to which President Kubitschek could not agree since he was at that time engaged in the building of Brasilia, the main source of inflation in the country. Dr. Marzagão said, however, that he hopes the IMF “to which the U.S. is closely linked” will recognize the economic predicament of the incoming administration and will exercise greater understanding in possible future requests for loans. Dr. Marzagão added that while Quadros will combat inflation it would take one or two years to put an end to it.

Mr. Mann explained that the IMF was an independent, international organization and in no sense of the word under the control of the U.S.

4. Exchange Program. Dr. Marzagão made reference to labor leaders in Brazil who have not been invited to the U.S. because of present or past leftist tendencies and/or participation in leftist movements. There are many promising and very important young labor leaders, Marzagão said, who are being invited to Sino-Soviet countries who could be brought to the side of democracy if they were given an opportunity to familiarize themselves with the American way of life and the people of the U.S. Dr. Marzagão mentioned that out of one group of eighty labor leaders under consideration, only eight were qualified for grants.

Mr. Mann replied that the Department placed much importance on the exchange of persons program. He agreed that flexibility in its administration is essential.

5. Treatment of Latin American Ambassadors in Washington. Dr. Marzagão said that Ambassadors of Latin American countries should be received more often and given more personal attention by the Secretary of State. Dr. Marzagão suggested that the U.S. could gain much by doing this. He went on to explain that this suggestion was based on criticisms he has often heard from Latin American diplomats in social and diplomatic functions in Brazil. Dr. Marzagão indicated that other Ambassadors (i.e., French, British, German) were received often by the Secretary.

Mr. Mann agreed with the principle brought up by Dr. Marzagão and at the same time explained the practical difficulty which the Secretary of State faces in finding time to give frequent personal attention to the large number of Ambassadors in Washington. Mr. Mann endorsed the desirability of Washington officials giving more personal attention to the Brazilian Ambassador.

6. U.S. Favoritism. Dr. Marzagão suggested that the U.S. maintain a position of equal partners with the Latin American countries and avoid giving preferential treatment to any of them. He added, in this respect, that today the U.S. has Mexico as its favorite “child” and that it has also shown much favoritism toward Argentina.

Without agreeing that the U.S. plays favorites, Mr. Mann replied that a stronger spirit of unity, cooperation and understanding must be attained among the nations of this hemisphere, adding that the U.S. stands firm in its desire to cooperate with all countries in Latin America in bringing about a better future for their people.

7. Third Force. Dr. Marzagão referred to two forces surrounding Dr. Quadros: One, very powerful and active, is recommending that he assume leadership of a “third force”, or neutralism, in the Americas. The other favors continuance of the “status quo” in Brazil’s relations with the U.S., and is working toward that end. Dr. Marzagão expressed his grave concern about this situation. He indicated that he strongly favors the continuance of Brazil’s friendly relations with the U.S. He also said that the “third force” group had already submitted to the President-elect a thorough plan of action. This plan, according to Marzagão, includes the recommendation that Brazil negotiate a substantial loan from European countries to repay the U.S. in full and later obtain a loan from the Sino-Soviet bloc to pay up the European country. Dr. Marzagão went on to say that the “pro-third force” group is so strong that many of the people opposed to it have decided to remain behind the scene for fear of future unhappy consequences to them if Quadros should accept the scheme.

Mr. Mann said that he had spent a large part of his life working for better hemispheric understanding and cooperation. He was glad to know that Dr. Marzagão was on this same side. All proponents of the inter-American system must renew their efforts for hemispheric understanding and solidarity.

8. Speech by Secretary of State. Mr. Marzagão suggested that the new Secretary of State make reference, in his formal speech at the time he assumes office, to the cordial relations existing between the U.S. and Latin America and the desire of the U.S. to be of assistance to the American Republics in achieving their much wanted economic development. He added that if particular mention were to be made of Brazil this would constitute a heavy blow to the “third force” supporters.³

1. Source: Department of State, Central Files, 732.00/12–2760. Confidential. Drafted by Phelan and Hemba.
2. All brackets in the source text.
3. Augusto Marzagão made similar statements in a conversation with Secretary of State-designate Dean Rusk at the Department of State on December 27. (Memorandum of conversation; Department of State, Central Files, 110.11–RU/12–2760)