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

ETA–7. Letter from the Managing Director of the Development Loan Fund (McIntosh) to Milton S. Eisenhower¹

Washington, August 7, 1958

Dear Dr. Eisenhower:

In response to your request that those of us who had the honor of accompanying you on your recent mission to the Central American countries² give you a memorandum with our comments regarding U.S. programs and policies in any of the countries visited, I am very glad to submit some comments of mine with the hope that they may be helpful.

It seems unnecessary for me to refer to the present political and economic situations in the various countries, both because you are personally well informed in this connection, and also because you already have rather complete information contained in the reports submitted to you and to the other members of the mission by the various governments and by our Embassies and our ICA Missions. Instead, I am pleased to submit the following suggestions regarding possible courses of action which I feel we should consider in connection with certain of the problems we are facing in the Central American area. Incidentally, for ease of reference in this letter, I am including Panama among the Central American countries.

From the brief survey we were able to make of the Central American area, I am personally convinced that the countries involved need economic assistance from an external source at this time. The economies of each of the Control American countries have been adversely affected by the serious drop in the price of coffee and in some cases also by lowered production and declining sales of bananas. I believe that each of the countries is in a position to do more for itself than it has done; more could and should be done by the governments and by the wealthy citizens. Nevertheless, I feel that they are in acute need of economic aid and that it is in the interest of the United States that we extend some economic assistance to the Central American countries at this time.

In my opinion, economic assistance should be given to the Central American countries in the form of loans from three sources, namely:

1. The Export-Import Bank

2. The International Bank for Reconstruction and Development

3. The Development Loan Fund

Although the lending activities of the above named institutions are already coordinated to some extent, particularly through the National Advisory Council, I feel that a greater and well-coordinated positive effort is desirable. Conferences should be arranged between executives of the three lending institutions to study the economic problems of the Central American area, to compare notes and opinions, and particularly to consider projects in each country which would most quickly and effectively aid the economy of the country. More particularly, I feel that in the proposed conferences between the three lending institutions, the following factors and conditions should be studied:

1. The present economic and financial condition of each country.

2. Economic projects most urgently needed in each country.

3. Estimated capacity of each country to repay additional loans in dollars and possibly in local currency.

4. Recommended allocation of essential projects to the three lending institutions, or possible participation by DLF and the Export-Import Bank and/or the International Bank wherever this seems advisable.

In my opinion such a joint study would be of considerable value, and it should be possible to reach an agreement among the lending institutions as to the approximate amount of loans to be considered by each institution and the specific projects to be covered by each of such loans.

In addition to the extension of economic assistance by the three lending institutions, I feel that ICA (International Cooperation Administration) should be urged to increase, if possible, the amount of its technical assistance in each of the Central American countries. In my opinion it would be helpful if through ICA some experts could be sent to the Central American area to give advice to the various countries in connection with the possible diversification of agricultural crops in each country in an effort to broaden the economic base and to lessen the degree of dependence on coffee.

I also feel that the development of a common market in the Central American area is a highly desirable and constructive step. An organization, namely ODECA, has already been created for this purpose, but progress is being made very slowly. The creation of a common market, with the elimination of customs barriers, free movement of labor between countries, the possible establishment of a single common currency, the allocation of industries to specific countries, and other necessary steps can only be brought about by the efforts of the Central American countries themselves, but I feel we should give them all possible encouragement and assistance. Perhaps new loans and technical assistance can be extended in such a manner as to support these regional efforts. Further in this connection, I suggest that the State Department contact the OAS (Organization of American States) and suggest the possibility of the OAS sending one or more qualified persons to Central America to work with and advise the present ODECA staff so that more rapid progress may be made in bringing about a common market in the Central American area.

I trust that the above suggestions may be of some value. Let me take this opportunity to tell you how such I appreciated the honor of accompanying you on your mission to the Central American countries and how much I enjoyed the opportunity of serving under your direction. The trip was both interesting to me and valuable to the Fund, and was an experience which I will always recall with a great deal of pleasure.

Sincerely yours,

Dempster McIntosh
Managing Director

Copies to: Hon. C. Douglas Dillon, Under Secretary, State

Hon. J. H. Smith, Jr., ICA

Hon. Roy R. Rubottom, ARA, State

Mr. Henry Hoyt, ARA, State

Mr. Bayard King, MID, State

Mr. Rollin Atwood, C/LA, ICA

1. Source: Department of State, Rubottom Files, Lot 60 D 553, “Development Loan Fund 1958.” Copies of this letter were also sent to Under Secretary Dillon, James H. Smith, Jr., Director of the International Cooperation Administration (ICA), Assistant Secretary Rubottom, Rollin S. Atwood, Regional Director for Latin American Operations, ICA, Henry A. Hoyt, Special Assistant in the Bureau of Inter-American Affairs, and Bayard King of the Office of Middle American Affairs. The source text is unsigned.
2. Milton Eisenhower visited the countries of Central America between July 12 and August 1, 1958, as the personal representative of the President; for documentation, see Documents ETA–7; CO–1; CR–6–9; ES–2; 5–6; GT–8; HO–3; NI–4, 7–9; PM–3; PA–7.