161. Memorandum of a Conversation, Department of State, Washington, January 15, 19581

SUBJECT

  • Monetary Reform in Laos

PARTICIPANTS

  • Prince Souvanna Phouma, Prime Minister of Laos
  • Ngon Sananikone, Minister of National Defense, Laos
  • Tiao Souk, Minister of Public Works, Laos
  • Leaum Insisiengmay, Minister of Finance, Laos
  • Ourot Souvannavong, Ambassador of Laos
  • Mr. Walter S. Robertson, Assistant Secretary for Far Eastern Affairs
  • Ambassador J. Graham Parsons
  • Mr. Eric Kocher, Deputy Director, Office of Southeast Asian Affairs

After the final meeting between the Lao Prime Minister and the Secretary, Mr. Robertson met privately with the Lao Delegation. He inquired whether he had understood correctly that the Lao Prime Minister had stated at the end of the conference with the Secretary that monetary reform in Laos would be put into effect after the forthcoming elections in May. When Souvanna nodded agreement with this interpretation, Mr. Robertson stated that he wished to stress once again that before he went before the Congress to support the aid program for Laos we would have to have an agreement in effect on a realistic effective exchange rate. Only the previous evening at a dinner at the Laos Embassy Admiral Arleigh Burke had told him that in a meeting with Senator Russell, on naval matters, the Senator had returned again and again in his conversation to the monetary problem in Laos. Russell was one of the most influential Senators; he was in opposition to the entire aid program and could use the case of Laos to attack this whole program. Mr. Robertson stressed that this was one more evidence of an alert Congress which intended to scrutinize all aid requests most carefully this year. Without reform in Laos the outlook appeared dark for that country.

The Prime Minister indicated his understanding of our Congressional problem. At the same time, he stressed that any monetary reform which caused serious economic consequences in Laos before this spring’s elections would have a disastrous political effect. Mr. Robertson recognized the urgency of both problems—the Lao political one, and ours involving Congressional demand for progress in monetary reform. Our aim is the same as the Lao, and both of us must now search for a reform which will take into consideration the problems of [Page 423] the two countries. Mr. Robertson stated that he could not believe that we lacked the resourcefulness and wisdom to find a solution which took care of both points of view.

In conclusion, the Prime Minister stated his agreement with Mr. Robertson’s statement and indicated that from Paris he would be able to keep in constant touch with the negotiations in which his Minister of Finance would participate next week here in Washington. He reiterated that Minister Leuam would have full authority to conclude an agreement in Washington.

  1. Source: Department of State, Central Files, 751J.5–MSP/1–1558. Secret. Drafted by Kocher and concurred in by Robertson.