Office of the Historian

131. Memorandum From the Administrator of the Agency for International Development (Hamilton) to President Kennedy0

Washington, February 9, 1962.

SOURCE

  • Terms of AID Development Loans

The purpose of the accompanying memorandum1 is to provide you a summary of the results of the reappraisal of AID loan policy that you requested.

The memorandum reflects in general the views of Douglas Dillon, Harold Linder, Eugene Black and myself. George Ball has expressed doubt about the position taken herein and he thinks that AID loan terms might be made somewhat harder now and that by such action we might be in a better position to influence other lending countries to soften their terms.2 While our views represent our best judgment, they are not free from doubt; and as we further study these matters, they may change.

The memorandum may serve as a basis for consideration by the National Advisory Council3 and for such discussion as you may desire. We would suggest that any such discussion include the Secretary of the Treasury and the President of the Export-Import Bank.

In the meantime there is no rigid rule on AID loans, but in general loans are being granted on the basis of a 40-year maturity, 3/4 of 1% credit fee in lieu of interest and 10-year grace period with substantially differing terms in special situations.

Fowler Hamilton
  1. Source: Washington National Records Center,RG 286, AID Administrator Files: FRC 65 A 481, Development Financing, FY 1962. Official Use Only. The source text, which was sent through the Secretary of State, bears the notation “DR per GWB” in the Secretary’s handwriting. The source text also bears a second date, February 12, 1962, which is elsewhere given as the document control date and is presumably the day the memorandum was forwarded to the White House. (Memorandum from Easum to Executive Staff (AID), March 13; ibid.).↩
  2. Document 132.↩
  3. For Ball’s detailed comments on an earlier February 6 draft of the accompanying memorandum, which he sent in a memorandum to Hamilton, February 8, see the Supplement.↩
  4. Reference is to the National Advisory Council on International Monetary and Financial Problems.↩