90. Letter From the Assistant Secretary of State for Congressional Relations (Hill) to Senator Walter F. George1
Dear Senator George: You have requested the opinion of the Department of State regarding the amendment to H.R. 11356, proposed by Senator Smathers, to create a developmental fund in the amount of $50 million for Latin America. Of this amount, at least $37.5 million would be available for loans and the remainder for grants. The purpose would be to contribute to economic development in the twenty Latin American countries.
The Department of State is fully in accord with the objective of making a real, effective contribution to economic development throughout the other American Republics.
In the field of public developmental loans the Administration has encouraged Latin American borrowers to utilize the facilities of the Export-Import Bank and the International Bank. During fiscal year 1955 the Export-Import Bank authorized new credits in Latin America of $284 million and the International Bank $123 million, or a total of $407 million. The lending capacity of the Export-Import Bank is today $5 billion and its uncommitted funds available to satisfy future loan applications are at present about $1.6 billion. The foregoing figures give you an indication of the present rate of public developmental lending to Latin America, as well as of the resources available for that purpose.
The Department believes that any increase in loan funds for Latin America should be made to the Export-Import Bank. The Bank’s personnel is experienced and thoroughly familiar with Latin America and therefore should have the responsibility for the management of all loan funds.
[Page 392]The general field to which the proposed amendment extends is that of grant assistance. Latin America does not seek “hand-outs” from the United States. It prefers for its dollar income to rely upon such sources as trade, private investments and sound official loans. Nevertheless, the Administration has followed the policy of making available grant assistance in the hemisphere to cover emergency needs exceeding the resources available to the affected governments. For the ensuing fiscal year the Administration has requested $27 million for developmental assistance, $32 million for technical assistance and $35.5 million for military assistance. These requests have now been increased by the amount of $10 million, which the House of Representatives added to the $27 million requested for developmental assistance.
These sums of money, in the opinion of the Department of State, are adequate to meet all present and foreseeable needs during the coming fiscal year in the fields to which they relate. It is believed that any unforeseen requirements can be met from the proposed contingency fund of $100 million. If, nevertheless, the Congress deems it desirable to increase the appropriations, the Department would recommend that this be effected through the establishment of a contingency fund for Latin America, to be administered by the ICA.
Sincerely yours,