92. Memorandum From the Under Secretary of the Treasury (Barr) to President Johnson1
SUBJECT
- Asian Bank Proposal
In my memorandum to you of August 26 (copy attached),2 I described to you what I consider to be a classic example of how foreign assistance legislation should be developed. I used as an example the history of the Inter-American Bank proposal.
It is probably unrealistic to go through this rather elaborate procedure every time we go for funds for the international financial institutions, but some of the ingredients should be present.
The most important ingredient that is lacking in the Asian Bank proposal is the announced willingness of any other nation to join with us in [Page 226] this concessional loan fund. It would help us mightily in our Congressional presentation if we could announce that at least Canada, Japan, Australia and New Zealand were joining us in creating this new “soft loan” operation.
Subsequent to Mr. Blackʼs visit with Congressman Widnall, the Minority Clerk of the House Banking and Currency Committee said that they would like to know the answers to some of the following questions:
- 1)
- Is the Bank organized and in a position to run a $200 million “soft loan” operation? (The answer is no—as of two weeks ago they had only a skeleton force in their loan operation.)
- 2)
- Has the Bank made any loans from its ordinary capital? (The answer again is no.)
- 3)
- Has the Bank prepared any studies as to how it would use these funds? (The answer is that studies on agriculture and transportation are underway, but not complete.)
- 4)
- Has the Bank made a formal proposal to its member nations asking for support for this fund? (The answer here is that President Watanabe has had informal discussions with a few nations but has not submitted a formal proposal to the Board of Governors.)
Conclusion
I am deeply concerned that we can damage the prospects of an extremely useful Asian institution by rushing in prematurely before tying up some of the loose ends that I have indicated above.