Spanish Desk files, lot 58 D 344, “Negotiations: U.S.–Spanish, Jan.–Mar. 1952”
No. 831
Memorandum by Edgar J. Beigel of the Office
of Western European Affairs
Summary and Comments on the Sufrin Report
i
The Sufrin report on Spain* proposes a one-year aid program amounting to $130 million, with another $195 million spread over four subsequent years (79–66–37–13). The report states that the first $130 million “would probably result in an increase of industrial production by 6–8 percent within twelve months, and an increase in agricultural production by 12–20 percent within one crop year.” The report suggests, however, that only $70–80 million of economic aid funds might actually be required for such a program (during the first year) since “a conservative estimate would indicate that somewhere in the neighborhood of $50–60 million will accrue to Spain in the form of free dollars as a result of military operations” and such dollar earnings could be applied to the rehabilitation program outlined in the report.
The $130 million program, according to the report, is required “to put the Spanish economy on a firm enough basis so that it will be able to support a growing US and Spanish military machine with all the incidental positive adjustments to the civilian economy.” The essential purpose of the recommended program appears to be summarized in the following sentence: “The dollar estimates [Page 1779] which are viewed as necessary and desirable sufficiently to rehabilitate the economy so that it may bear the complex burden of US military activity, complex because the burden includes civilian economic requirements whose importance is political and social in their ultimate consequences—these estimated dollars are for imports; the remainder of the expenditures are assumed to be direct charges against the Spanish economy.”
The report states that the $130 million estimate of requirements assumes that “US economic activity is directed toward supporting and assisting the US military activity, and not directed to other goals.” An examination of the commodity composition of the program suggests that only about $35 million of the total bears some direct relation to possible military activities: equipment for the Sevilla power grid and six semi-mobile steam generating stations, parts and supplies to rehabilitate 200 locomotives and 10,000 freight cars and increase the supply of steel rails and ties, and a small amount of highway repair equipment. The rest of the program would consist of $80 million for petroleum, coke, steel scrap, rubber, automobiles, trucks and buses, mining equipment, equipment for the production of chemicals, mules, tractors and agricultural machinery, hybrid seed corn, fertilizer and insecticides; and a “kitty” of $15 million for machine tools.
The report contains the following statements about the railroads, highways and electric power parts of the $130 million program: 18 to 36 months would be required to complete the Sevilla power grid and install the steam generating stations; the highway equipment requirements “bear no relationship to the highways the US military authorities would select for reconstruction (which) information is unavailable” to the study group; the JMST estimated that $8.5 million worth of parts, rails and ties would be sufficient “for an emergency program to place the rail system on a functioning basis” although the study group costed these materials at $15 million and then raised the figure to $25 million for inclusion in the $130 million program. The study group did not have access to a report which the RENFE is supposed to have prepared for the JMST regarding the length of track that would have to be laid and bridges that would have to be replaced to support 1600 H.P. locomotives with an axle load of 18.5 metric tons; and sidings that would have to be built to accommodate trains of up to 1500 metric tons.
ii
The similarity of the Sufrin program to a program drawn up in WE in March 1951, is remarkable. The WE program (TF I D–14, [Page 1780] March 7, 19511) was at that time not accepted by the inter-agency Foreign Aid Steering Group (Task Force I). A copy of the WE program was available to Mr. Sufrin from the ECA files, before he left for Spain.
iii
The Sufrin report has little to say about the administration of an economic aid program in Spain, or about inducing the Spanish Government to accept the aid program as outlined in the report. The report makes no particular contribution to the solution of this problem. The report however, contains the following statements:
- 1.
- “To protect against (too rapid an increase in money incomes in Spain as a result of any US military expenditures) it is suggested that arrangements be made with the Spanish Government not only to restrict the money supply, but also that rather sharp restrictions be placed on the building of unnecessary structures (such as high-priced apartment houses) and the production of luxury goods (such as luxury trinkets and consumer goods).”
- 2.
- “As soon as appropriate (military) agreements have been arrived at with the Spanish Government, four million dollars should be made available for the import of comestibles, including wheat. Other consumer goods such as hand tools and other simple equipment for the farm and small hand industry, beans, sugar, rice, some household equipment, gasoline, and such like items, should be included in this category. The immediate importation of consumer goods … should be designed …2 to keep the price level from getting out of hand, and assure the population that the US is concerned with its welfare.” All the foregoing is lumped in the $4 million figure, which in turn is included in the food sector of the $130 million program (see table attached).
- 3.
- “Low-cost housing and other consumer expenditures near or at military bases are a proper charge to military activity; hence, no estimate is given.”
- 4.
- “Closely connected with the entire program should be pressures brought upon the Spanish Government to restrain the banks and the budget-making offices of the Government from overextending the supply of money, including bank deposits. Mortgage, especially building mortgage, control is essential.”
- 5.
- “As a result of the military intervention, (some) items which normally would have to be exported for dollars will be sold in Spain for pesetas, as a result of the increase in the standard of living.”
iv
The Sufrin report contains the following proposals with regard to the administration of any US military construction program in Spain:
- 1.
- “The US should institute some system of administrative control to assure the maximum benefit from its expenditures” and to resist the “administrative and public policy of the Spanish Government designed to assist and benefit (vested) interest groups and particular persons and companies.”
- 2.
- “A monopsonistic policy by the US will do much to stabilize the economy, i.e., prevent price gouging, not only for US purchases, but for the economy at large. This stabilizing procedure will be strengthened insofar as the US deals through contractors whose business interest will induce them to act as prudently on US account as on account of their other clients.”
- 3.
- “All funds available to Spanish firms through the Spanish Government should be publicized … to limit favoritism and graft in the expenditure of US funds.”3
- “Report on the Spanish Economy” submitted by the Temporary (ECA) Economic Study Group, Madrid, December 20, 1951, consisting of 575 single-spaced, legal-size mimeographed pages bound in two volumes. Report prepared by Sidney C. Sufrin in collaboration with Messrs. Petrasek, Curry, Crouse, Flott, Hamilton, Nemzek, Lynton, Unger, Andrews, Esteves, Alexander, Sutherland and Minneman. The letter of instruction to Mr. Sufrin from Mr. Foster (dated August 6) said that “the group should not exceed eight officers at any one time.” The report consists of thirteen chapters: conclusions and recommendations, introduction, national accounts, foreign trade, electric power, coal, non-ferrous metals, agriculture, chemicals and fertilizer, iron and steel, railroads and highways, miscellaneous supplies, and syndicates. [Footnote in the source text. The Study Group had its origins in a directive contained in the basic U.S. policy statement on Spain, NSC 72/6 of June 27, 1951, whereby economic assistance was to be provided Spain as a part of the effort to integrate it into the European Defense Community. For the text of NSC 72/6, see Foreign Relations, 1951, vol. iv, Part 1, p. 820. The Economic Cooperation Administration created the Study Group to survey the requirements of the Spanish economy within the context of this policy. For a description of the Study Group’s authority and mission, see telegram 90 to Madrid, Aug. 2, 1951, ibid., p. 850. A copy of the Sufrin Report is in ECA–MSA files, lot W–745, “Spain”.]↩
- Not printed; regarding the interdepartmental Foreign Aid Steering Group and its task forces, which developed the Fiscal Year 1952 foreign assistance program for Congressional presentation, see the editorial note in Foreign Relations, 1951, vol. i, p. 286. A copy of Task Force I D–14 is in S/ISA files, lot 52–51, “TF I—(Documents) D–14”.↩
- These and following ellipses are in the source text.↩
- Attached to the source text was a table in which the figures contained in the foregoing summary were broken down into more detailed categories.↩