ETA–32. Memorandum from the Acting Secretary of State to the President1
SUBJECT
- Inter-American Development Bank
Regarding your question concerning the desirability of increasing the funds which we supply to the Inter-American Bank, I have been giving thought to this matter for some time.2 It seems clear that in one way or another we should increase our flow of capital to Latin America. It also seems probable that the supply, of ordinary hard loans available from the Export-Import Bank and the World Bank is substantially adequate to meet the demand for this type of loan. The problem is to find more funds for use on a flexible basis as is possible through our own Development Loan Fund, or through the Special Fund of the Inter-American Bank. The use of the Development Loan Fund in Latin America has been complicated by the necessity of avoiding any appearance of competition with the Export-Import Bank. For this reason I agree that it would be better to use the Inter-American Bank as a channel for additional funds.
I mentioned this as a possibility at last meeting of the National Advisory Committee on Inter-American Affairs, and the suggestion seemed to root with general favor. Since the Inter-American Bank is only beginning to get organized and will not be fully under way until fiscal year 1962, it is not yet practical to do anything about this. However, it would seem to me to be both appropriate and advisable to request extra funds for this purpose in the next budget. If we make this [Facsimile Page 2] decision and it should seem advisable to do so we could inform the Latin American countries of our intentions at the meeting of the Committee of Twenty One which is scheduled for August.3
I do not feel that this course of action should result in a reduction in the request for funds for the Development Loan Fund. The Development Loan Fund has used less than 10 percent of its funds for Latin America and the needs of the underdeveloped countries in Asia, and Africa at the very least will require the $700 million which [Typeset Page 89] we requested this year. If we do not recommend additional funds for the Inter-American Bank I think our request for the Development Loan Fund should be increased by $150 to $200 million for the specific purpose of increasing its efforts in Latin America. In the overall Mutual Security Program this increase would be offset at least to some extent by continued reductions in our front aid programs.
I discussed this briefly with Secretary Anderson some time ago and I will now pursue the subject further with him4 and keep you advised.5
- Source: Department of State, Central Files, 371.814/5–1060. Official Use Only. Drafted by Dillon.↩
- A memorandum from President Eisenhower to Under Secretary Dillon, sent through and noted by Secretary of State Herter, dated May 10, 1960, reads as follows: “In view of the importance we attach to the Inter-American Bank and the desirability (I assume) of keeping the Development Loan Fund out of this area, why would it not be a good idea to transfer some of the capital we have been contemplating for the DLF to the Inter-American Bank” (371.814/5–1060)↩
- Reference is to the Third Meeting of the Committee of 21, held in Bogotá, Colombia, September 5–13, 1960; for documentation, see Documents ETA–32–34, 38, 42–44, 47–49, 55; GT-31; HA–29; NI–11.↩
- Under Secretary Dillon summarized the content of this memorandum in a telephone conversation with Secretary Anderson on May 18, at 10:20 a.m. (Secretary’s Memoranda of Conversations. Lot 64 D 199)↩
- A memorandum from the President’s Staff Secretary, Brig. Gen. Goodpaster, to under Secretary Dillon, dated May 24, reads as follows: “The President has received your memorandum of May 17, 1960 on ‘Inter-American Development Bank.’ He asked me to tell you that he agrees generally that it would be better to use the Inter-American Bank, rather than the Development Loan Fund, for soft loans in Latin America.” (Eisenhower Library, Whitman File, Dulles-Herter Series)↩