157. Memorandum of Conversation0


  • Abortive Summit Conference and Economic Matters


  • President Josip Broz Tito
  • Ambassador K.L. Rankin
  • Secretary General Leo Mates (Interpreter)

I called on President Tito at ten o’clock this morning and spent nearly an hour and a quarter with him. Aside from his usual chain-smoking of cigarettes and normal slightly fidgety manner, he looked well and seemed if anything more friendly than on the previous occasions I had talked with him. Much of the time he was almost affable. He evidently understood nearly everything I said in English, and often answered without waiting for Mates to interpret. However, he spoke invariably in Serbo-Croat.

After a few pleasantries, during which I told President Tito that I was flying to Washington the day after tomorrow, I read a statement on United States policy. It followed rather closely the outline of the Department’s telegram 5032 to Paris, dated May 251 and was repeated in Belgrade’s 1076 of May 30.2 I read it slowly and Tito seemed to understand everything. Meanwhile, however, Mates made rapid notes. All of the more significant political points raised in the conversation were covered in Belgrade’s telegram mentioned above. A further comment of some interest, however, resulted from my remark that the decision to cancel out the Summit Conference evidently had been reached in Moscow before Khrushchev’s departure. Tito agreed that this probably was true, and said that it demonstrated the pressures under which he had operated.

After most of our political conversation had been completed, Tito asked what I thought about Yugoslav economic progress, particularly in agriculture. I replied that evidently great progress had been made, and that I looked for further accomplishments. The President said that the results were due to better farming methods, particularly to better seed. [Page 415] Weather conditions had not been favorable so far this year, and if the same methods had been employed, the virtual crop failure of 1952 would have been repeated. As it is, the state farms and the peasants in cooperatives anticipate an average wheat yield of 30 quintals per hectare (over 40 bushels per acre, presumably applying to the Vojvodina where he was traveling last week), while other peasants may not get over 10 quintals.

I remarked that with better farming methods Yugoslavia should be able to keep ahead of other countries in Eastern Europe (Tito interrupted, with a laugh, “We want to”) on condition that the genuine, voluntary cooperation of the peasantry is obtained. I thought their success to date was due in no small means to progress along this line. Tito agreed. I added that compulsion would not work, and repeated the need for seeking genuine voluntary cooperation.

Since we had touched upon one aspect of the “private sector” in Yugoslavia’s economy, I ventured to mention another way in which progress could be made. I referred to the small shopkeeper or artisan, employing perhaps two or three people, and performing various services on too small a scale to interest the various social enterprises. I thought these people too should be encouraged. Tito laughed and said that they were making plenty of money already. I observed that everyone said exactly that, which probably explained why these small businesses were special targets for the tax collector. If they could only be encouraged instead of penalized, the economy would benefit greatly.

I remarked that I had been in the Soviet Union when Lenin inaugurated the New Economic Policy. I had seen some of the effects in Tiflis. The shops had been empty; business was stagnant. Yet simply by giving people some freedom the situation improved remarkably.

Tito then referred to the current visit of a mission from the International Monetary Fund.3 Its report would be submitted next week, and he had great hopes of being able to liberalize and strengthen Yugoslavia’s economy by various measures to be agreed on with the Fund.

  1. Source: Department of State, Central Files, 611.68/6–160. Confidential. Drafted by Rankin and sent to the Department of State as an enclosure to despatch 656 from Belgrade, June 1.
  2. See footnote 2, Document 156.
  3. Document 156.
  4. A joint IMFIBRD mission to study Yugoslavia’s economic situation, led by Pieter Lieftinck, Netherlands’ Executive Director of the Fund, visited Yugoslavia during May 1960.