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

ETA–10. Letter from the Assistant Secretary of State for Inter-American Affairs (Rubottom) to Milton S. Eisenhower¹

Washington, November 19, 1958

Dear Milton:

Three draft replies to your letter of October 27² have been overtaken by the swift march of events. Moreover, I’ve had difficulty consulting with some of the officials concerned with economic and financial matters due to their prolonged preoccupation with the IMF-IBRD meeting in New Delhi and other matters like the Colombo Plan Conference.³

Now, however, we are at grips with the Latin American economic problems in the Special Committee of the Council of the OAS⁴ which convened Monday.⁵ Attached is a copy of Doug Dillon’s very good speech of yesterday with certain key parts underlined for your convenience.⁶ The fact that we are engaged in our meeting demonstrates again the rapidity with which we are moving in our efforts to find constructive solutions, on a cooperative basis, to Latin America’s problems. This is truly an operational phase of our relationship.

You should know that a rather serious problem has arisen with the Treasury Department over the handling of the discussions regarding the Inter-American Development Institution. We are pledged, and have constantly reiterated this pledge as in the case of Dillon’s speech, to negotiate and draft the outline for this Institution in the Committee of Experts of the Inter-American Economic and Social Council which will convene on January 8. Treasury, at least the working level officials there, holds that this precludes any discussion prior to that meeting. The Latin Americans are determined, with possibly two exceptions in Mexico and Cuba, to discuss the Institution at least along general lines during this present meeting of the Special Committee of the OAS Council. I do not see how we can avoid listening to their observations, and perhaps expressing a few views ourselves as to its general character and outline without in any way committing our Government. The Treasury Department is against this and even complained about the references to the Institution in Dillon’s speech, simply in the form of questions which will have to be faced by us all.

I want you to know about this matter because we may have to enlist your quiet support if the issue becomes more serious. Tom Mann and I intend to see Secretary Anderson today or tomorrow, if possible. If we are unable to resolve the problem, we shall have to take it up with the Secretary, with Doug Dillon’s support, of course.

I am certain that we have nothing to lose, and much to gain, by taking a positive approach on the discussion of this Institution, without committing ourselves to anything, especially bearing in mind that it is only six or seven weeks until the other committee will meet in January. Great resentment will build up against us if we should attempt to hold back discussion of this Institution in this present forum, in fact, I doubt that we would succeed.

I think that the prospect mentioned under point no. 3 of a bifurcated development institution offers real hope. None of the Latin American countries are going to want to put in money to be repaid in some other kind of currency; therefore, most of them want the strictly banking side of the institution to be a hard loan entity. Mexico, Cuba and Venezuela have been very outspoken on this point, as you might expect, in view of their relatively hard money. On the other hand, everybody wants to be able to get soft loans through the institution and we, of course, are the only source of that kind of money. We could lend money from the DLF to the institution and it could make soft loans. After a few years, it would have repayments coming in in the various kinds of currency which could be revolving and our contributions could cease.

With warmest regards,

Very sincerely yours,

R. R. Rubottom, Jr.

Enclosures:

1. Memorandum

2. Mr. Dillon’s speech.

1. Source: Department of State, Central Files, 398.14/11–1958. Confidential and Personal. Source text is a carbon copy bearing Rubottom’s typed name.
2. Not found in Department of State files.
3. Reference is to the 10th ministerial meeting of the Consultative Committee of the Colombo Plan, representing 18 countries and 3 dependent territories in South and Southeast Asia, held in Seattle, Washington, November 10–13, 1958.
4. The Special Committee to Study the Formulation of New Measures of Economic Cooperation was established under the auspices of the Council of the Organization of American States pursuant to a recommendation approved at the informal meeting of the 21 Foreign Ministers of the American Republics, held in Washington, September 23–24, 1958. The Special Committee subsequently held its first meeting in Washington, November 17–December 12, 1958. Documents pertaining to the Special Committee are in decimal file 363.
5. November 17.
6. No attachments were found with the source text. For the text of Under Secretary Dillon’s address before the Special Committee on November 18, see Department of State Bulletin, December 18, 1958, pp. 918–922.