In a number of respects, the suggestions offered by Mr.
Wallich parallel those which were presented by
Henry Holland at the White
House dinner on March 29, which you arranged to discuss steps that might
be taken to increase U.S. capital investment in Latin America. I am very
much concerned that the impetus you provided on that occasion should not
be allowed to lapse through inertia in the Federal establishment.
That you send a follow-up memorandum along the lines of the attached to
Secretaries Dulles, Humphrey and Weeks, with copies to General Edgerton of the Ex-Im Bank, Under Secretary Hoover and Assistant Secretary
Holland.
[Attachment]
Draft of Proposed Memorandum from the President to
follow up on White House Dinner on U.S. Capital for Latin American
Development
Memorandum For:________________
[Page 328]
On March 29 at a White House dinner,4 a number of us
discussed the relationship between the growth trend of the Latin
American economies and the flow of United States investment and loan
capital to that area.
From the data assembled as a background for that discussion it was
indicated that, if United States capital were to continue to provide
the same relative stimulus to Latin American growth as it had in the
recent past, a progressive step up in combined private direct
investment and public development loan disbursement from the 1947–54
annual average of $500 million, to a $700 million level by 1958 was
called for.
In our discussion of the prospects, it was suggested that there was
reasonable expectancy that U.S. direct private investment in Latin
America, under the stimulus afforded by the current Administration
program, would increase in the next few years from the $275 million
level of 1954 to at least the $400 million of its annual average
during the post-war period; there was the further expectancy that
IBRD loan disbursements will
average $100 million or more per year.
Thus, if Export-Import Bank disbursements in Latin America can be
stepped up from their 1954 level of $110 million to about $200
million over the next few years, we would be in a position to
demonstrate that the United States was continuing its capital
support of a healthy growth economy in the twenty Republics. Since
the Export-Import Bank operations are most directly amendable to our
policy direction, I should [like] very much to have your opinion as
to the practicality of setting up a $200 million annual rate as a
target goal for Export-Import Bank loan disbursements in Latin
America by 1958.
I am fully conscious of the limitations of translating such
generalized target aims into sound and effective action, since the
flow of private direct investments will necessarily be determined by
judgments of the balance between earning opportunities and risks,
and the volume of development loans by the merit of applications
submitted from individual countries weighed against their respective
capacities to service additional foreign debt. Nevertheless, I
believe that economic progress in Latin America is sufficiently
important to our national interest to warrant exceptional efforts to
assure that all measures are taken that promise to increase U.S.
capital flows to Latin America by at least the indicated dimension
without departing from sound practice.
[Page 329]
I shall be very appreciative if you will give this suggestion your
attention, and let me have your reaction, first as to its
feasibility, and second as to the measures that might be taken to
give it effect.
I have been reminded of this by a memorandum upon the Export-Import
Bank by Mr. Henry C. Wallich that has been
brought to my attention, and a copy of which is enclosed.5 I was
genuinely interested in Mr. Wallich’s
suggestions as to how the operations of the Bank might be expanded
and utilized to promote increased private foreign investment. In a
number of respects his suggestions seemed to me to parallel closely
those presented by Henry
Holland at the March 29 White House dinner.
Again I should be very appreciative of your advice and comment upon
the merit of the Wallich and Holland proposals and the degree to which you think
it is practicable to put them to use.
