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

ETA–40. Memorandum for the Record, by Henry C. Ramsey of the Policy Planning Staff¹

Washington, July 25, 1960

SUBJECT

• New Latin American Aid Program: Meeting of July 24, 1960, at the Under Secretary’s Home²

I was called around 2 o’clock yesterday (Sunday) afternoon by Mr. Mann’s staff assistant (subsequently by Ted Eliot³) and invited to attend a 5 o’clock meeting at Mr. Dillon’s home. Ted had flown up to Newfoundland on Saturday with the product of the Mann task force,⁴ in order that Mr. Dillon might study the plan en route Washington Sunday morning. Others attending were Mr. Achilles, Mr. Mann, Mr. Bell, Mr. Saccio (ICA), Mr. Hart (DLF), and Dixon Donnelly. No representative of ARA had been invited.

Mr. Dillon had read the rather voluminous briefing book prepared by the Mann task force. He noted that there was no firm agreement as between Mann, ICA and DLF on the administration of the new program. He invited Mann to speak.

Administration of Fund

Mann acknowledged that the task force had not been able to reach agreement on how the new fund should be administered: some preferred DLF, some the Inter-American Development Bank (IDB), some ICA. He would advance a “revolutionary plan”—the reactivation of the Institute of Inter-American Affairs,⁵ the appropriation of funds to the IIAA, and the administration of the new program by the IIAA through use of ICA, DLF, and especially IDB, as executive agencies. Mann stated his belief that we should rely on the IDB to the greatest extent possible.

This proposal held certain advantages. First, the IIAA was popular in Latin America, had done fine and pioneer work in technical assistance under Nelson Rockefeller, was still associated with the Rockefeller name and was a “politically good thing” to reactivate (The IIAA lapsed as of June 30, but the consensus was that it could easily be reactivated by Congress during the August session, or next year). Second, since the Assistant Secretary for ARA chaired the IIAA, putting both the funds and the power to act at his disposal made sense administratively: it would permit ARA to marry political and programmatic considerations and to act quickly and decisively and would restore to ARA the power which had gradually eroded through Departmental reorganizations in the postwar period. Mann emphasized that, if ARA was to have the power to negotiate, it must have the power to administer the funds.

Achilles strongly supported Mann’s proposal. (It was obvious that the two had concerted before the meeting, as the IIAA approach has been Ted’s since his return from Peru.⁶)

Saccio, Hart and Bell then tried to shoot IIAA down. Their arguments boiled down to three: (1) existing agencies could do the job if given the money and the policy direction, (2) the executive agency concept was spurious since the agencies would be serving two masters and this would result in downgrading IIAA directives in controversial fields, and (3) Mann’s proposal would inevitably lead to a new super-structure of personnel in IIAA. These arguments had some effect on Dillon.

Finally what Dillon decided should be done and which Mann and Saccio agreed to was this:

IIAA should be reactivated and funds appropriated under the new program should be granted to it. This would place firm control in State. ICA in Latin America should be the field-arm of IIAA in Washington. A small (about four to six) staff should be set up in ARA, headed by a Deputy Assistant Secretary for Economic Affairs, to run the IIAA and to marry ARA-ICA (Latin America) to the closest extent possible. (Dillon said he wanted this worked out in the other bureaus and areas also, once ICA and State got together under one roof.) ICA, in turn, would keep its Latin American program more or less separated from its other programs. The purpose would be to compartmentalize Latin America and put the whole special assistance, technical assistance and “social infrastructure” program under the IIAA umbrella. This would be without prejudice to other programs which DLF, Ex-Im Bank or the IRDB or IMF now participate in.

Role of DLF

DLF came off rather badly. Dillon had some rather sharp things to say about its inability to come to the rescue in the past in building roads because of the local costs and “Buy-America” problems.⁷ I gathered that Dillon did not feel that DLF had much of a role to play in the social infrastructure field.

Amount of fund: Authorization or Appropriation

Dillon bought the $500 million figure (Mann pleaded unsuccessfully for $1 billion) as a no-year fund exclusive of what might be asked for Chilean reconstruction. He laid down two conditions. It should be explained to Congress that $500 million would be a starter and that we would come back for more after we had studied the matter further. We would, for instance, know more after Bogotá. We would leave the question of Chilean reconstruction open for the moment (Some thought we should go to Congress on this matter in August, others that we should wait until next year).

Dillon thought we might try to get an ICA increment of $50 million during August for Latin America and outlined a strategy for obtaining it at the last moment without going to Passman. No definite decision was made.

He was fuzzy on whether to ask that the DLF appropriation be increased from $550 to $700.

I concluded that he did not believe we could or should request any appropriation during August, though he blew hot and cold on the subject. I believe he is thinking along these lines: Use the contingency fund to the extent possible during the next six months and, possibly, ask at the last moment for an ICA increment of $50 million.

Forward Approach

Dillon asked Mann to put this new plan down on paper. Since the President was visiting Denver after his Chicago appearance,⁸ we should plan to approach the President early next week (week of August 1). He said the President would probably “not be firm one way or the other”, would probably say he was all for the plan if Congress had no objection.

Hence it would be necessary to discuss the plan with the Presidential candidates⁹ and Congressional leaders. It was agreed that the plan should be put forward as a non-partisan program. Dillon seemed to feel that Treasury and Budget could be approached after the plan had been outlined to the President.

Dillon laughingly observed that there should be no difficulty in obtaining the Vice President’s concurrence, since “he and Nelson are now for a confederation in the hemisphere and this is certainly a little less than that” (a reference to the Nixon-Rockefeller platform talks of last Friday evening).¹⁰

1. Source: Department of State, PPS Files, Lot 67 D 548, “American Republics 1960–1961.” Confidential; No Distribution Outside S/P.
2. On July 23, Assistant Secretary Mann’s task force completed preparation of the proposed new Latin American program, and an extensive briefing book for Under Secretary Dillon containing supporting papers. In the covering memorandum to Dillon, dated July 23, Mann stated in part the following: “The book represents our best efforts to reach interdepartmental agreement on the major issues regarding the proposed new Latin American Program. A lot of underbrush has been cleared away but there are major decisions regarding three or four issues that should be taken only after discussion. A discussion of approximately two hours on Sunday [July 24] afternoon with as large or as small a group as you wish would, I think, be helpful. If not, I hope we can meet soon thereafter.” ARA Files, Lot 62 D 302, “Latin American Program” (Prior to Bogotá Conference).
3. Theodore L. Eliot, Jr., Special Assistant in the Office of the Under Secretary of State.
4. Reference to the briefing book and program proposal cited in footnote 1.
5. The Institute of Inter-American Affairs was originally incorporated in 1942 and became a U.S. Government corporation in 1947. It was established to aid governments in the Western Hemisphere by promoting technical programs and projects for health, sanitation and food supply.
6. Achilles was Ambassador to Peru, March 29, 1956 to January 27, 1960.
7. “Buy American” provisions in U.S. legislation required U.S. Government agencies in securing supplies for public use or for construction of public works within the United States to purchase only domestic materials unless they were commercially unavailable, their purchase would be inconsistent with the public interest, or their cost was unreasonable.
8. President Eisenhower was in Chicago on July 26 and 27 to address the Republican National Convention and to attend the Republican National Committee Breakfast, respectively; on July 28 he visited Denver.
9. The respective candidates of the Republican and Democratic Parties were Richard M. Nixon and John F. Kennedy.
10. Another memorandum of this meeting, without drafting information, listing the conclusions reached by the participants is in ARA Files, Lot 63 D 210, “Latin American Social Economic Development Program July–Sept 1960.”