257. Memorandum for the Record1

SUBJECT

  • Minutes of the Meeting of the Special Group, 12 May 1964

PRESENT

  • Mr. Bundy, Mr. Johnson, Mr. Vance, and Mr. McCone
  • Also present were Under Secretary Thomas C. Mann, Colonel J.C. King, and Mr. Desmond FitzGerald

1. Chile

a.
Mr. McCone referred to several meetings he had had in recent days with American industrialists with major interest in the Chilean economy. In one instance, David Rockefeller headed a group representing various companies. In another, he stated that he had been visited by Clyde E. Weed, Chairman of the Board, and Charles M. Brinckerhoff, President of Anaconda Copper Company. He had also received a visit from the Chilean copper magnate, Augustin Edwards. All were concerned with the closeness of the coming election, the amount of backing being funneled to Allende by outside interests, and the need to bolster candidate Frei with funds. Mr. FitzGerald, recently returned from Santiago, and Colonel J.C. King had also been in contact with business interests.
b.
Mr. Mann had recently been in New York, he said, and he, too, had talked to some of these businessmen. He felt that there was already too much open talk in these circles which was filtering back to Chile. Even Frei had pointed out that publicized large-scale U.S. business support for his candidacy would be a kiss of death. On the basis of the risks and the apparent lack of security, he felt the U.S. “private sector” should not engage in political action in this Chilean election.
c.
The concept of American commercial firms passing financial aid surreptiously to the U.S. government raised so many questions of ethics, financial and interrelationships that Mr. McCone said he felt the matter should be discussed in the Group. A lengthy exchange of views ensued, but the conclusion was that the legal aspects were too [Page 575]labyrinthine and the questions of tax benefits, conflicts of interest and corporation behavior were too murky to make any clear determinations. The risks of acting as an agent, in effect, of U.S. capital and the lack of assurance on security before, during, and after the election led to the agreement that McCone would convey to Mr. Weed the U.S. decision not to become a partner with business interests in covert political action but at the same time to assure him that the U.S. was making every effort, on a priority basis, to prevent the election of Allende.2
d.
It was determined that Mr. FitzGerald would then come up with specific proposals for a large-scale covert political action program in support of Frei at an approximate cost of $2,000,000. It was anticipated that this paper would be ready for submission to the Special Group later this week.3

[Omitted here is discussion of Haiti.]

Peter Jessup
  1. Source: Department of State, INR/IL Historical Files, Special Group Files, c. 120, May 14, 1964. Secret; Eyes Only. Drafted by Jessup. Copies were sent to Johnson, Vance, and McCone. The meeting was held at noon in the White House Situation Room. (National Archives and Records Administration, RG 59, U. Alexis Johnson Files: Lot 90 D 408, Date Books, 1964) No CIA action papers were prepared for the meeting. (Memorandum from Joseph W. Scott to U. Alexis Johnson, May 11; Department of State, INR/IL Historical Files, Special Group Files, May 14, 1964)
  2. President Johnson evidently approved this decision. At the weekly meeting between ARA and CIA representatives on May 21, FitzGerald referred to the President’s “desire that U.S. private business not become involved in the Chilean election.” Mann, alluding to Johnson’s views on the subject, agreed to FitzGerald’s proposal to meet Augustín Edwards in New York on the condition that the CIA bear “in mind the President’s admonition.” (Memorandum from Carter to Hughes, May 26; ibid., ARACIA Weekly Meetings, 1964–1965) No further evidence has been found on the substance or circumstances of this “admonition.”
  3. The outcome of the Special Group meeting was discussed on May 13 at the weekly meeting between ARA and CIA representatives. FitzGerald reported that earlier “he had almost been thrown out of McCone’s office” for characterizing the Special Group discussion on May 12 as “good.” FitzGerald concluded, however, that “the amount of private sector money involved was ‘too small’ and the proposal ‘too risky’.” Mann agreed with this assessment, adding that “it is now up to us to come up with a meaningful USG program to defeat Allende.” FitzGerald explained that the CIA had prepared a proposal to the Special Group “for an additional $1,250,000 for use in the Chilean election.” “Mann commented that that was very well as far as it went, but that we shouldn’t tie ourselves to that amount. FitzGerald said this was no problem, since we could get more if needed.” (Memorandum from Carter to Hughes, May 14; ibid.)