Foreign Relations of the United States, 1961–1963, Volume XII, American Republics

353. Memorandum of Conversation¹

Washington, January 10, 1963, noon.

SUBJECT

• Conversation Between the President and Dr. Juan Bosch, President-Elect of the Dominican Republic

PARTICIPANTS

• U.S.
  • The President
  • Mr. Ralph Dungan—Special Assistant
  • Assistant Secretary Martin—ARA
  • Ambassador Duke—U/PR
  • Mr. Van Reigersberg—LS
• Dominican Republic
  • Dr. Juan E. Bosch

The President congratulated Dr. Bosch on his campaign victory.

Dr. Bosch replied that it was now up to the new Administration to prove to the people and to the whole hemisphere that democracy really works. He briefly analyzed his political campaign, stressing its educational contents and objectives. He said that, economically, the situation in the Dominican Republic was better than that of other countries since its balance of payments situation was good and its public financial standing reasonably sound. He added that the main problem was the lack of “working capital” which is needed to increase employment and production as soon as possible. He described himself as “cautiously optimistic” with regard to the economic future of his country.

The President asked what the United States could do to assist the Dominican Republic.

Dr. Bosch responded with a strong endorsement of the Alliance for Progress, emphasizing the value of its long-term goals. He noted, however that the country had short-term needs as a result of unemployment, under-investment, a lack of farm-to-market roads and inefficient and slow production. Continuing, he said that if the Dominican Republic could obtain from 35-40 million pesos (1 peso is equal to $1) to begin with, it would be able to handle effectively most of these problems. He referred to the inflationary pressures that would be created by the recent increase in the Dominican budget from 136 million pesos to 168 million pesos, while production remained static. Clearly, production must be increased substantially. Dr. Bosch cited a recent conversation with the Director of the Dominican Agricultural Bank who had suggested that he needed from 20-24 million pesos for small loans to farmers, whereas the bank had only 9 million pesos. He pointed out that during 1962, the Agricultural Bank, with the assistance of the Inter-American Development Bank, had made 47,000 loans of 100-250 pesos each for a total of 11 million pesos. Dr. Bosch argued that although five million pesos had not yet been recovered and this might appear as a loss to the bank, it also represented a net gain to the people. If the bank were to operate at a level of 24 million pesos, it could make 100 thousand loans in 1963, and while it might lose from 6-8 million pesos, the people would gain 18 million pesos. He indicated that he realized that the Alliance for Progress did not intend to lose money, but that, in certain circumstances, money had to be lost as had been the case in the United States during the first Franklin Roosevelt Administration, when the Treasury lost money but the American people had gained it.

The President observed that the Dominican Republic was now getting some 40 million pesos in loans and grants and asked whether this assistance was effective enough.

Dr. Bosch replied affirmatively, but declared that most of it was devoted to long-term projects. Two million pesos he said, had been devoted to small loans to farmers but more money would be needed to satisfy the farmers’ need for credit. He referred to his conversations with Mr. Moscoso and indicated that there appeared to be a possibility that 12 million pesos out of the 22,750,000 pesos grant could be set aside for small farm loans. He added that although he had not yet received a final answer from Mr. Moscoso, he expected it to be favorable.

The President briefly discussed the American balance of payments problem and the sizable gold and dollar drain of the last few years. The United States, he said, finds it easier to provide assistance that does not represent a net gold loss. Therefore, loans devoted to the construction of roads are more difficult to provide.

The President then asked what would happen to the former Trujillo properties.

Dr. Bosch stated that the sugar mills would be placed in the hands of the workers and administered through cooperatives. He expressed concern about the sugar situation and the gradual decrease in preferential prices on the U.S. market. He commented that the basic property question was complicated by such factors as the high cost of Dominican sugar production, world competition, domestic corruption and the Dominican people’s firm belief that the properties should not return to private hands. He added, that each enterprise would be considered on its own merits. He stated that some of the Trujillo land would be administered by the Development Corporation, some would be devoted to the agrarian reform program and some would be placed in the hands of the Property Recovery Ministry. He explained that the measures to be taken would have to be eclectic. The guiding philosophy would be that while these properties should not be in government hands, they could not be in private hands, therefore, they would be run “in a way that is similar to that of a private enterprise which is not completely private.”

The President inquired as to the military needs of the Dominican Republic.

Dr. Bosch indicated that he needed equipment and training scholarships for members of the Armed Forces. Specifically, he said that there was a need for patrol vessels and Grumman (amphibious) aircraft for coastal surveillance, and helicopters for transporting troops into mountainous areas where roads were not available. The number of helicopters, he added, could be small. Dr. Bosch insisted that the U.S. Military Mission could and should play a vital role in stressing to their Dominican counterparts the need to support democracy. This concept should be extended to the police whose situation was very delicate. He pointed out that police strength had more than doubled since Trujillo’s time so that it now includes some 15,000 members. This expansion, he stated, had been the result of General Antonio Imbert’s desire for power and of his need for a group of armed men who will be personally loyal to him. In this connection, Dr. Bosch declared that the police item in the new budget had been increased by $10 million over 1962. Dr. Bosch stated that the most delicate and urgent task for his administration would be to reduce the size of the police force and to appoint new leaders for it. He recognized that this might well lead to a crisis, and, if so, the sooner it came the better. In Dr. Bosch’s judgment, Imbert considers himself the natural heir of Trujillo not only as a political leader but also with respect to his wealth, methods and allegiances.

Returning to military needs, Dr. Bosch stated that the Armed Forces also need communication equipment, such as micro-wave and telephone facilities, and transport. He pointed out that he wants to decrease the number of men in the Armed Forces and increase their efficiency. In this context, he referred briefly to the very bad situation in Haiti and to President Duvalier’s readiness to destroy everything he has rather than to act rationally.

The President asked whether the military forces were stronger than the police.

Dr. Bosch replied that the police, spread out in the countryside, were in close touch with the people and that the armed forces were on their best behavior and very discreet. He explained that there was nothing intrinsically wrong with the police unless they are used by Imbert to further his own ambitious purposes. Commenting that the whole question was an internal political affair, Dr. Bosch expressed the belief that he could cope with it.

[Here follows discussion of the proposed Standard Oil refinery in Santo Domingo and of Cuba.]

1. Source: Department of State, Central Files, 739.00/1-1063. Secret. Drafted by Crimmins and Van Reigersberg. Approved in the White House on February 15.