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

ETA–34. Memorandum from Henry C. Ramsey of the Policy Planning Staff to the Assistant Secretary of State for Policy Planning (Smith)¹

Washington, July 6, 1960

SUBJECT

• Latin American Initiative: Mr. Mann’s Reaction

I showed Tom Mann the S/P memorandum of July 5 on a new Latin American initiative last evening. After reading it and expressing great enthusiasm, he made four points:

1. It would be “good politics” to ask for $500 million. Loans should be soft. After a good deal of discussion, he concluded it would be best to channel the loans through the Inter-American Development Bank but, since the Bank has not opened for business, he thinks Congress may demand some DLF veto on loans over a certain amount. We should make clear that the fund would finance social overhead projects and that it would supplement hard loans through the World Bank, Ex-Im Bank and IADB.

2. Psychologically and politically, it is very important that the new fund be earmarked for social overhead projects and be used as leverage to develop sound projects.

3. We must carefully draft a broad statement which would make it crystal clear that the U.S. purpose in making the fund available is to enable countries to finance projects which will lead to a more equitable distribution of the national income. One of the criteria for loans from the fund should be that they advance the well-being of the lower classes. Mann thinks we should use the fund as leverage to accomplish, among other things, more equitable tax structures.

4. It is also highly important that we support land reform but that we not set our sights too high or make it appear that land reform will solve the un- and under-employment problem. Mann thinks land reform will alleviate the employment problem and is vital in view of the population explosion but that we cannot expect new recipients of land to rise above the subsistence level too soon. (His views on this subject coincide with those of Milo Perkins.²)

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I think all these points are sound and I passed them on to Achilles³ and Rubottom and Mallory. Rubottom goes along with Mann and believes that the IADB should be the chosen instrument. He thinks the fund might be utilized to spur the Bank into opening sooner. All of us agree that the above points can be woven into the President’s special message to Congress and, thereafter, can be amplified by Mr. Dillon at Bogotá.

1. Source: Department of State, PPS Files, Lot 67 D 543, “American Republics 1960–1961.” Confidential. Drafted by Ramsey.
2. Milo R. Perkins was a foreign investment consultant who had held various positions in the Department of Agriculture, 1935–1941, and also served as Executive Director, Board of Economic Warfare in 1941.
3. In a memorandum to Smith, dated July 5, Theodore C. Achilles, Counselor of the Department of State, had expressed his “hearty agreement” with the basic idea of the new initiative. We also stated his belief that the program should be described in “human terms of benefit to the individual,” that it should serve as a pump-priming operation for local capital and a stimulus to Latin American governments to undertake their own programs, and that it should focus on raising living standards. “In public presentation,” he said, “maximum emphasis should be placed on the program being good in itself and absolute minimum on its negative anti-Communist and anti-Castro aspects.” (PPS Files, Lot 67 D 548, “American Republics 1960–1961”)