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least, that we must do everything possible to en-
courage the interchange of people, ideas, and goods
between this country and the other members of the
family of nations.

My remarks will now be directed to one of the
basic areas of United States foreign relations —
specifically, the economic relations of the United
States and the Argentine Republic. It is our pol-
icy to seek mutually advantageous means for ex-
tending financial and commercial transactions be-
tween these two countries. It is our conviction
that a well-balanced Argentine economy will
strengthen hemispheric stability and security.

The discussions now going on in Washington
between representatives of the United States and
Argentina are primarily concerned with the stimu-
lation of trade, and, of course, with financial as-
sistance to Argentina for this purpose There is
nothing new and "dramatic" in what we are doing;
on the contrary, it is perfectly normal. In a spirit
of mutual respect and the common realization of
the seriousness of the problems involved, repre-
sentatives of Argentina and the United States have
been getting together around conference tables in
Washington and Buenos Aires for the last 12
months. The economic problems have not been
easy to solve. We have had to deal in complete
frankness. Personal feelings and emotional atti-
tudes have had to be subordinated to cold facts.
I can assure you that no holds have been barred
and that the proverbial chips have fallen where
they would.

At this point, I would emphasize that the eco-
nomic health of the Argentine is important not
only to the United States but also to the Western
Hemisphere and Western Europe as well. Under
prewar conditions, Argentina had constant ex-
port surpluses to Europe and export shortages
to the United States. The disappearance of
currency convertibility made necessary drastic
changes in the Argentine economy and its com-
mercial policies. The magnitude of the changes
required was perhaps greater in Argentina than
in any other Latin American country. Inuncdi-
ately following the war, Argentina had ex-
ceptionally large foreign-exchange balances, both
in dollai'S and m Euroi)ean currencies. She also
had a large export surplus of agricultural prod-
ucts. A postwar resurgence of nationalism,



coupled with the memory of an almost complete
lack of imports during the war, resulted in an
overly ambitious program of industrialization in
Argentina. Millions and millions of dollars were
spent to obtain scarce and high-priced machinery,
equipment, and consumers' goods from the United
States. Argentina, banking on convertibility of
European currencies, bought far beyond her fore-
seeable income in dollars.

In Europe, Argentina was faced with blocked
currencies and a severe shortage of capital goods.
As a consequence, she used large amounts of her
blocked currency in the nationalization of British-
and French-owned railroads and other public util-
ities. The Argentine surplus of agricultural
products could not be sold through regular com-
mercial channels to be paid for by imports. Ar-
gentina, therefore, set up a huge government trad-
ing organization and extended over a billion
dollars of credit to tlie European governments to
enable them to purchase Argentine products. It
has been only in the last few months, however,
that Argentina has begun to receive payment in
terms of products which are essential to the Argen-
tine economy.

Argentina's foreign-exchange availabilities en-
abled her to play briefly the role of a creditor
nation in world affairs. In addition to the use
of war-accumulated foreign exchange for the pur-
chase of capital goods, and nationalization of pub-
lic utilities, Argentina also paid oti' all but a small
portion of her foreign debt. In addition, her mer-
chant marine and international air service were
built up through the purchase abroad of ships and
aircraft.

These nationalization measures, debt amortiza-
tions, and additions to the country's capital equip-
ment should reduce future demands for foreign
exchange on account of earnings, services, etc. At
the same time, they cut drastically into Argentine
gold and foreign-exchange holdings. Further-
more, the status of Argentina's foreign exchange
changed from that of convertibility to that of non-
convertibility.

It is significant that Argentina has abandoned
these erratic policies and now is facing realistically
her foreign and domestic problems. Industriali-
zation has been deemphasized in favor of agri-
culture. Export prices are generally at world
levels, though the necessity of engaging in foreign
barter deals obscures the price factor at times.



Chronological Summary of Negotiations

Now, I would like to give you a brief chronologi-
cal summary of negotiations which have taken
place over the last 12 months :

April 1949: At the request of the Argentine
Ambassador, Sefior Remorino, a Joint Argen-
tine-United States Committee of Commercial
Studies was set up in Washington.



802



Department of State Bulletin



May 1949: Argentina iinihiterally afjreed to re-
serve all of its dollar receipts to be utilized in
providing exchange for payment of commercial
arrears to United States businessmen.

May 1949: Strict import controls were imposed
by Argentina eliminating prior excliange permits.
This prevented any increase in the backlog.

August 1949: The percentage of Argentine dol-
lar exchange reserved for payment of commercial
arrears was raised from 20 percent to 30 percent.

September 1949: Two Argentine Government
experts, Dr. Juncosa Sere and Dr. Brignoli, ar-
rived in Washington to carry on technical discus-
sions in the Joint Committee. From September
6 to December 23, these experts from Buenos Aires
sat down daily with representatives from the De-
partments of Commerce, Treasury, Agriculture,
and State. A detailed technical report covering
mutual problems was prepared and handed to
both Governments for further study. I can assure
you that further studies have been made by both
Governments.

October 1949: On October 1, 1949, Argentina
revalued its various foreign-exchange rates. It
maintained its basic rate (grains, meat, oilseeds,
etc.) at the former relationship to the dollar,
rather than devalue, in an effort, thereby, to pro-
duce more soft-currency exchange, especially
sterling. It changed the dollar-sterling cross-
rate so as to encourage exports to hard-currency
areas and to give least discouragement to imports
from soft-currency areas.

November 1949: Various of the export commis-
sions charged by the Argentine Trade Promotion
Institute were reduced or eliminated. As a re-
sult, exports to the United States increased during
November and December and reached the total of
18 millions in December.

December 1949: The Joint Committee report
was handed to both Governments. Payments on
the backlog of commercial arrears had been made
regularly on a strictly chronological basis since
May and. through December, had totaled approxi-
mately 25 million dollars. During January and
February of 1950, the payments totaled 15 million
dollars.

February 1950: During Assistant Secretary
Miller's visit to Argentina in February, the results
of the Joint Commission studies were discussed
in detail at Cabinet level. You are, I am sure,
familiar with the success of these discussions. A
permanent Joint Committee was established in
Buenos Aires to carry on.

March 1950: Following Mr. Miller's visit, the
Argentine Government sent a delegation to this
country headed by Dr. Ramon Cereijo, Minister
of the Treasury and President of the National
Economic Council of Argentina. Accompanying
him were, among others, the Under Secretary of
Economj', the Under Secretary of Finance, the
head of the Economic Department of the Argen-
tine Foreign Office, and Drs. Juncosa-Sere and



Brignoli, who were here last fall. This group
had worked long and hard before leaving Buenos
Aires and came up hero ready to take positive
action.



"Record" of Achievements

The following is the "record" as it stands today :

1. In March 1950, Argentina authorized Swift
International to transfer its holding company
from Argentina to the United States.

2. In March 1950, Argentina gi'anted Pan
American and Panagra the right to remit at the
predevaluation rate the proceeds of sales made
prior to devaluation. The companies have re-
ceived the first quarterly payment in dollars.

3. In March 1950, Argentina granted Braniff
the right to fly into Argentina through Asuncion
over its United States certificated route.

4. Argentina and the United States in April
1950, began bilateral air transport route negotia-
tions.

5. Argentina and the United States engaged
in conversations for the negotiations of a treaty
of friendship, commerce, and navigation.

6. Argentina and the United States have agreed
to negotiate a double taxation agreement as soon as
United States tax experts can proceed to Buenos
Aires.

7. In April 1950, Argentina and officials of the
United States motion picture industry agreed on
a plan which will allow United States films to
be imported into Argentina.

8. Argentines and officials of American and For-
eign Powers have discussed a solution of the lat-
ter's investment problem and further discussions
have been arranged to take place in Buenos Aires
during May.

9. Argentines and officials of United States pe-
troleum companies have arrived at a mutually
satisfactory solution of their immediate operat-
ing difficulties and are discussing a long-range
solution.

All of us in "Washington who have taken part
in many, if not all of these discussions — whether
directly or indirectly, are highly encouraged.
And, I feel safe in saying that the individual
businessmen affected by the actions taken are
also encouraged.

These negotiations are not intended to be a "fi-
nal act" in so far as it closes an era during which
economic relations have been far from mutually
advantageous.

These discussions have been aimed at inaugurat-
ing a new phase — of putting our economic rela-
tionships back on the track. It is the starting
line — not the finish line; the first inning, not the
ninth. Both Governments have signified their de-
sire to go forward with a clear understanding of
each others' problems, needs, and aspirations.



May 22, 1950



803



Point 4 and Research in Latin America



hy Willard F. Barber

Deputy Assistant Secretary for Inter-American Affairs '



It has been more than a year since the President
enunciated his now famous Point 4 of United
States foreign policy. Authorizing legislation
to carry out the policy has now been approved by
the House of Representatives and, with certain
modifications, by the Senate Foreign Relations
Committee. A fundamental purpose of the
policy is the furnishing of aid to foreign govern-
ments through experts, technicians, and trainees
in such a way as to promote a balanced increase
in the productive capacities of underdeveloped
areas.

When President Truman called for "making
the benefits of our scientific advances and indus-
trial progress" available to underdeveloped coun-
tries, as a security measure in our enlightened
self-interest he but underlined the considerable
debt that we owe to those elements in our society
which have already engaged in various fields of
research. To a large extent, it is to the tradition
and encouragement of research in this country
that we may attribute the skills and technical
know-how that we are preparing to share with
other countries. This research element is now an
integral part of our business enterprises, our edu-
cational institutions, and the Government. Its
role and responsibilities under Point 4 are of vital
importance. Scores of business organizations,
universities, and private foundations (the Car-
negie, Rockefeller, and, more recently, the
Armour Research Foundations) have furnished
technical assistance to other countries for a long
time. The amount of theoretical and practical
research accomplished by some mining and manu-
facturing enterprises before making investment
commitments involves thousands of man-hours
and a considerable expenditure. The counsel and
cooperation of each of these groups are necessary
to the success of the Point 4 Pi'ogram.

The concrete results which may be derived from

' An address made before the Second National Confer-
ence on the Study of World Areas, New York, on May 5,
1950, and released to the press on the same date.



Point 4 activities might be gauged from the ex-
periences we have had during the past 10 years in
working with the countries of Central and South
America. This work was carried out by the
Institute of Inter-American Affairs and by a
number of departments and agencies of the
Government working through the Interdepart-
mental Committee on Scientific and Cultural
Cooperation.

Record of Accomplishments

The Institute and its predecessor agencies have
expended approximately 59 million dollars as the
United States participation in technical coopera-
tion with Latin American governments from 1940
to 1949. There is an impressive record of accom-
plishments in the three fields in which they func-
tion : agriculture, health and sanitation, and
education. Since 1942, food supply programs
have been carried on in 10 countries of Latin
America. In four countries, current joint activi-
ties include methods of soil conservation and
cultivation, food storage and marketing, agricul-
tural education. In cooperative health and sani-
tation, the Institute employs 8,000 physicians,
sanitary engineers, and nurses. Five hundred and
fifty projects are now going on in 14 countries in
this field. Its cooperation in vocational and rural
education is conducted in seven countries of the
hemisphere.

Through the Interdepartmental Committee on
Scientific and Cultural Cooperation, the Govern-
ment spent approximately 18 million dollars from
1940 to 1948. During this period, more than
1,550 United States Government experts were sent
to the other American Republics on technical co-
operation projects. These covered an excep-
tionally wide range, as indicated by the following
partial list: plant entomology, forestry, public
health, social welfare, vocational rehabilitation,
geological surveys, reclamation and irrigation,
fisheries, tidal and magnetic observations, census
and statistical procedures, civil aviation, highway



804



Department of State Bulletin



I



lanning and construction, industrial safety, la-
lor inspection and icfrislution, liousin;;. telecom-
innnications, taxation, and fiscal jiolicy.

The simple recitr.l of the various fields in which
we have worked with other governments gives
little idea of the accomplishments. I note the
virtual eradication of tvphoid fever and dysen-
tery in a large valley in l3razil ; the provision of a
sewage system to a metropolitan district of
200,000 persons in Chile previously without ade-
quate sanitation; safe drinking water in Venezue-
lan communities and the development in Cuba of
a new fiber (kenaf ) as a substitute for jute. These
are concrete and even spectacular instances of our
aid. They have been repeated many times.

There are in the laboratories of the Mexican
Government two mining engineers, supplied by
the United States Bureau of Mines, who are help-
ing the Mexicans work out processes for extract-
ing or reducing ores, so as to make mining less
expensive.

The Civil Aeronautics Administration has field
parties in five Latin American countries, advising
other governments on the location and construc-
tion or airfields and the maintenance of airways
communications.

We have a solid back^ound and experience of
cooperative endeavor. Prospects are promising
for passage of legislation which will enable this
work to be broadened in scope and extent.

The legislation, furthermore, would authorize
our participation in a multilateral as well as in a
bilateral way. The United Nations is about to
expand in this field. The specialized inter-Amer-
ican agencies have engaged in these tasks for sev-
eral years. Studying the possibility of extending
much needed technical assistance on a multilateral
and regional basis, the Inter-American Economic
and Social Council, at an extraordinary session in
March-April 1950, agreed to set up a special board
and separate budget to handle technical coopera-
tion. In both these international bodies, the
United States will participate actively, recogniz-
ing that the multilateral approach, in some cases,
offers advantages the bilateral does not possess.
The salient fact remains, however, that the mem-
ber nations of these organizations offer their re-
search facilities and the services of their trained
personnel to a joint endeavor.

The Role of Research

Research will have an important function in the
expanded program as in the past. It will, for in-
stance, be essential, in most cases, to have a clear
idea of a country's economic potentialities. This
undertaking would demand basic research on prob-
lems of population, natural resources, agriculture,
fuel ana power, mining, trade, labor, transporta-
tion, fiscal policy, and in many other disciplines.



An example of a comprehensive survey of a na-
tion's needs and its possibilities was the Joint
United States Brazilian Economic Committee (the
Abbink Mission) which was, in essence, a research
body. Other examples are the Klein Mission in
Peril and the Bolian Mission, of several years ago,
to Bolivia. Detailed research on soil surveys and
extensive laboratory tests may be a prerequisite
to proper technical assistance on farm manage-
ment problems. The intensive research and ex-
perimentation in the Inter-American Institute of
Agricultural Sciences at Turrialba, Costa Rica, has
already led to improved techniques in soil ero-
sion control, land drainage, the drying and storage
of seeds and grains. Turrialba has brought out
new plant strains of greater productivity, resist-
ant to disease or drought.

These are but a few instances of the role research
has been and will be called upon to play in the
development of the Point 4. Its full and effective
participation is basic to success.

In many countries in Latin America there is in-
sufficient information and analysis upon which a
comprehensive and specific country program for
economic development can be based. A number of
countries also lack sufficient trained personnel of
their own to make all the necessary economic,
sociological, and engineering studies.

I believe that considerable emphasis should be
put on the trainee portion of the Point 4 Program.
This training would assist the collaborating couri-
tries in expanding the number of their own citi-
zens not only with proper technical training but
also with an appreciation of the research meth-
ods necessary in a modern economy. In turn the
training would be a contribution both to the self-
help principle involved in Point 4 and to the long-
run economic development of the other countries.

Finally, not only must research be made of
specific practical projects adapted to local condi-
tions but research must also properly relate those
projects to the external regional and world econ-
omy. It would be wasteful to encourage a large
expansion of an agricultural crop for export when
that crop is approaching a world market surplus
position perhaps due to expanded production
elsewhere.

As Point 4 gets under way in other parts of the
world, the demand on United States specialists
in agriculture, sanitation, education, engineering,
and science will become greater. These special-
ists must be more than simply technicians. They
need to know how to work effectively in the for-
eign countries which need them. There is, thus,
an immediate and urgent need that the foreign
area studies of the universities be made at once
comprehensive and practical. The incentives are
obvious. There is every reason, therefore, for
this Conference to go forward at once with its
timely and important work.



May 22, 1950



805



Design of the New World Economy



hy Francis H. Russell
Director, Office of Public Affcuirs ^



I want to take this opportunity to explore our
approach to the economic problems of our time
which intrude directly on the lives of all Ameri-



cans.



The Economic Picture In 1945



Let's take, as a starting point, the picture as it
looked in 1945 as we came victorious out of the
Second World War of the twentieth century.

Now, there were three essential facts about that
picture that should have hit us squarely between
the eyes. But because we are less than all-wise
and because our experience in dealing with world
problems of great scope and complexity was lim-
ited, we had to come to an understanding of these
facts by slow and painful stages.

The first fact was that the old economic philos-
ophy of "letting things alone" was obsolete. The
economic philosophy of "making things happen"
was new and not wholly understood or trusted.
We were still not quite at home with it.

Another fact to be recognized — a fact that has
since become almost a platitude — was that the vis-
ible damage to factories and farms and homes and
to the lives of people was only a part of the war's
total destruction. The intricate network of in-
ternational trade, the old business relationships,
and the old financial structure had also been
shattered.

Only when the completeness of the ruin became
clear, did we realize that no ordinary remedy, no
relief program, no conventional approach of any
kind would stop the process of economic decay.

Moreover, it was not simply a question of re-
storing the old economic order. The world be-
tween the wars was a sick world. This fact is
often forgotten or ignored. We use the years
1937 or 1938 as bases for statistics measuring post-

' An address delivered before the National Association
of Mutual Savings Banks, New York, N.Y., May 4, 1950,
and released to the press on the same date.



war progress in trade and production — as though
they were golden years. But they were golden
only in the sense that the world was beginning to
come out of a deep depression.

In those years, Europe was able to balance its
trading accounts only with the help of its foreign
investments and because the world prices of the
raw materials on which its existence depended
were abnormally and unhealthily low. In those
years, the system of empire which had contributed
so much to Europe's wealth was already begin-
ning to tremble and shift uneasily on its founda-
tions. The peoples of Asia were already in fer-
ment with new ideas about political independence
and economic progress.

And so, when we looked out at the world of
1945, with its millions of hungry and homeless
and jobless people, we might have seen, as we have
since come to see, that the problem was not to
restore an old world economy but to plan and cre-
ate and build a new world economy.

Design of New Economy

Now I would like to discuss the design of tJiis
new world economy, as we have seen it taking
shape over the past 5 years. I am not suggesting
that we have anything as clear or precise as a blue-
print. But we do have an over-all design. And
this design grows out of three broad lines of effort
that will take us in the direction we want to go
if we pursue each of them vigorously and all of
them together.

CREATION OF MODERN EUROPE

Tlie first broad line of effort is the creation of
a modern Europe. And by a modern Europe, we
mean a far healthier, far more productive, and
more cooperative European society than any other
that the people of Europe have known in their
lifetime.

There are several facts to be noted about the cre-
ation of a modern Europe. One of them is that



806



Department of State Bulletin



this is a work of many years. No 4-year recovery
program, however sucoessfui, can accomplish it.
The unique and indispensable contribution of the
Marshall Plan is that it is setting the people of
Europe firmly on their feet and starting them off
in the direction that, in the interest of their own
survival, they must go.

Another fact to be noted is that only the people
of Europe themselves can create the kind of mod-
ern society that will serve their own particular
purposes. Only they themselves can do this job,
and they can do it only if they know beyond a
doubt that we will stay with them, that we will
not walk out on them if the going is hard.

Still another fact to be noted is that, while the
Europeans have performed a miracle of production



Online LibraryUnited States. Dept. of State. Office of Public CoDepartment of State bulletin (Volume v. 22, Apr- Jun 1950) → online text (page 57 of 116)