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The new element is not so much the diagnosis as it is the growing resolve in Latin America itself to remedy these ills and to do so without delav
The Brazilian initiative for Operation Pan America gave special stimulus to hemispherewide attention to these problems. It set in motion the movement from mere study to affirmative action. The culmination of this movement thus far is the Act of Bogotá, subscribed to by representatives of 19 American Republics last September 12.
Without the action of Congress in authorizing the Inter-American Fund for Social Progress, the Act of Bogotá would have been impossible. Without further action by the Congress to provide funds for this program, the Act of Bogotá would become merely another empty declaration of vain hopes.
THE NEW PROGRAM The inter-American program for social progress is a new type of effort. It is in every sense a bipartisan and nonpartisan program--a truly national program in which our people can join with those of the other American Republics in building for a better future. Originally proposed by President Eisenhower, it now constitutes a basic step in President Kennedy's alliance for progress.
For many years, the United States has provided both technical assistance and investment funds to Latin America. Technical assistance was pioneered by the private foundations in the early part of the century, greatly expanded under the Coordinator of İnter-American Affairs beginning more than 20 years ago, and continued in recent years by point 4 and by the International Cooperation Administration.
A great deal has been accomplished through these programs in identifying the critical problems of agricultural improvement, public health, housing, and education and in pointing the way toward workable methods of attacking these problems. Without this previous work, the more comprehensive effort now proposed would be impossible.
As now conducted, technical assistance is on a less than adequate scale; it is not related to a coherent and systematic design for national economic and social progress; and it is not backed by sufficient financial resources, domestic or foreign, for the social investment needed to make it fully effective.
There has also been a substantial flow of private and public capital from the United States for economic development in Latin America. This capital flow has contributed to the building up of mining and manufacturing industry, power, transportation, and communications.
Such investments are indispensable to the growth of production and will have to play a large continuing part in Latin American economic development. It has become increasingly clear, however, that the benefits of such investments are not adequately diffused to major sectors of the Latin American societies, especially to the mass of agricultural workers and small farmers, and that à more direct attack on these lagging social sectors is indispensable to progress on a broad front.
These lagging sectors are the focuses of social unrest and political vulnerability. Although technical assistance and capital investment have made indispensable contributions, we have now come to realize that they alone cannot bring about the improvement in the conditions of life of the ordinary people with the rapidity which these times demand.
There must be an expanded effort to strengthen those institutions which make possible a decent and secure living from the land, adequate health and housing, and widespread educational opportunity. This is the purpose of the inter-American program for social progress.
What are the new elements in this program? There are four outstanding ones:
(1) The program is addressed squarely to the critical lags in social development recognized as urgent by the Latin Americans themselves.
(2) It calls for measures of self-help not only in funds contributed to individual projects but even more importantly related institutional improvements where needed to promote enduring social progress.
(3) It is to become part of a sustained cooperative effort, jointly planned through the Organization of American States and comprising sound national programs for long-term economic and social development.
(4) It grows out of the combined thinking of Latin and North Americans and its administration is to be handled mainly by the Inter-American Development Bank, a regional operating agency in which the Latin American part is predominant.
I cannot stress too strongly the importance of this inter-American institution to the success of the whole plan. The Bank is led by a Latin American, staffed mainly by Latin Americans, and recognized throughout the hemisphere as dedicated to the special needs and problems of this continent.
The difficult problems of institutional improvement related to loans for social projects can be far better worked out by such a cooperative institution with its own members than through bilateral means.
It is for this reason that the present administration, after carefully reviewing the proposals made by the former administration, fully supports the principle of relying on the Bank for handling the bulk of the funds-principle also welcomed by the Latin American representatives at Bogotá.
It is intended to allocate to the Bank for administration as a special trust fund $394 million out of the total $500 million.
There are, however, activities which should be financed mainly on a grant basis and for which Bank administration would be inappropriate. These fall mainly in the fields of education and training and public health. In these fields the International Cooperation Administration has long experience of a type directly applicable to the expanded program now required.
It is intended, therefore, to assign to the ICA responsibility for administering the funds for these purposes.
Finally, as President Eisenhower urged to the Congress last summer and as President Kennedy has urged in his message of last week, it is of the highest importance that these funds be made available as soon as possible and in the full amount.
Time is running out in the Americas. The winds of change are blowing over the continent. Millions of people have come to know that a better life is possible and they are determined to secure it. It is important to us, as it is to them, that they may gain this better life as free societies, dedicated to the dignity of man and led by governments of, by, and for the people.
The Act of Bogotá makes it clear that the will for progress in freedom exists. By making these funds available promptly, we will give assurance that our part in this program is being undertaken in earnest. By this action we will make it possible for our sister nations to move ahead with projects of sufficient size and duration to make a real attack on the most critical areas of social need.
There can be no absolute guarantee of success for this program, but the alternative to prompt and resolute forward action is certain catastrophe. I am confident that the Congress will do its part to help set in motion this alliance for fortifying the foundations of freedom in this hemisphere.
That completes our statement and leads to Mr. Dillon's.
STATEMENT OF SECRETARY OF THE TREASURY DILLON
Secretary Dillon. Thank you, Mr. Passman.
As Secretary Bowles said, I am here for an important but a limited part of this presentation, to present to you what happened at the Conference at Bogotá, which is a necessary background of your consideration and as Governor of the Inter-American Bank, to testify as to its competence in this field. I have not personally had any part in and I am not able to testify regarding individual projects which are being handled by the Department of State as such.
My statement is very short.
THE BOGOTÁ CONFERENCE
The conference held in Bogotá, Colombia, in September of last year was the third full-scale meeting of the Committee to Study the Formulation of New Measures for Economic Cooperation.
This group, popularly known as the Committee of Twenty-one, was first convened by the Organization of American States in November 1958 in Washington, to give specific form and content to Operation Pan America. This was the name given by the then President of Brazil to the stirring appeal he had voiced in June of that year for closer cooperation within the Americas, in order to preserve and defend Western values of democratic government and personal freedom by joining in a concerted attack on underdevelopment and poverty. The Committee met again in the spring of 1959 in Buenos Aires and, for the third and last time, last summer in Bogotá.
The Brazilian appeal embodied in Operation Pan America-like the call of President Kennedy for an "alliance for progress"--dramatized the growing desire through the hemisphere for a collective attack upon the social and economic problems of the Americas.
The U.S. delegation went to the Bogotá Conference with an unusually favorable opportunity to present a positive and forwardlooking program to the other American Republics. This opportunity existed because of the action of the Congress last September in authorizing appropriation to the President of $500 million to be used in assisting those Latin American countries which were prepared to support programs designed to further social progress in their respective countries.
Early in the conference, the U.S. delegation introduced a draft document proposing a great cooperative effort to achieve these goals. After intensive consideration, based on this draft, the Act of Bogotá was evolved and approved by the Conference. You will find the full text in annex B of the presentation book.
I should like to stress at this point the emphasis which the Act of Bogotá as finally agreed placed upon self-help measures. The preamble of the act recognizes that the success of a cooperative program of economic and social progress will require maximum self-help efforts on the part of the American Republics. Chapter I consists of an outline of a program for social development in which the participating countries undertake to examine existing legal and institutional systems dealing with land tenure legislation, agricultural credit institutions, tax systems, and fiscal policies as they affect use of land. Similar examination is called for in connection with measures for improving housing and community facilities, the reexamination of educational systems, measures for improving public health, and measures for mobilizing domestic resources with a view to providing additional revenues to assist in accomplishing the purposes of the act.
In chapter II of the Act of Bogotá, the other American Republics welcome the decision of the United States to establish a special interAmerican fund for social development "to support the efforts of the Latin American countries that are prepared to initiate or expand effective institutional improvements and to adopt measures to employ efficiently their own resources, with a view to achieving greater social progress and more balanced economic growth."
The introduction of the U.S. proposal to the meeting rapidly set the tone of the entire Bogotá Conference. All other topics on the agenda were subordinated to the task of drafting the "Act of Bogotá." The tone of the conference was one of enthusiastic and friendly cooperation in working out agreement on detailed areas of activity in which the Latin American countries recognized the need for self-help measures in support of which the proposed fund for social progress would provide assistance.
The only discordant note was sounded by representatives of the Government of Cuba. Cuba did not sign the act of Bogotá and will not be eligible for assistance from the proposed social progress fund so long as it continues to isolate itself from cooperative efforts in this hemisphere. The Dominican Republic was not present at the Conference and will not be eligible for assistance so long as it is subject to economic or diplomatic sanctions by the Organization of American States.
Chapter III of the Act of Bogotá, which deals with measures for economic development, emphasizes a very important point—that the social progress program is designed to supplement, not to supplant in any degree, the essential measures needed for economic development.
Social progress and economic development are not separate and independent efforts. They are mutually reenforcing. Fundamentally, social progress is an added dimension to economic growththe dimensions of a broader distribution of the benefits of growth
and genuine participation in the development process by all segments of the population. Economic development can take place without adequate social progress. But sustained social progress cannot take place without economic development.
I think we will find as the years go by that the Act of Bogotá will be regarded as one of the truly historic documents of human progress in this hemisphere. It is taken very seriously by the Latin American countries. One very encouraging development since the close of the meeting in Bogotá is the agreement of the Organization of American States and the United Nations Economic Commission for Latin America to sponsor a long-range program to strengthen Latin American tax systems within the context of the Act of Bogotá. This work will be carried out in cooperation with the Harvard Law School's international program in taxation. The Inter-American Development Bank will participate in certain phases of the program. A conference in Latin America on tax administration is planned for this fall to be followed by another conference on tax policy early next year.
USE OF THE INTER-AMERICAN DEVELOPMENT BANK AS A PRIMARY
MECHANISM IN ADMINISTERING THE PROPOSED FUND
Secretary Bowles has rightly stressed the desirability of using an inter-American agency for administering a substantial portion of the proposed fund for social progress.
When the social development program was presented to the Congress last year it was suggested that a substantial proportion of the funds available should be channeled through the Inter-American Development Bank. The same proposal was enthusiastically endorsed by representatives of the Latin American governments at the Bogotá Conference and the Act of Bogotá contemplates that the Inter-American Development Bank will be the "primary mechanism” for the administration of the proposed fund.
Operating on the conviction that social progress is an added dimension to economic growth it appears highly appropriate that the InterAmerican Development Bank, which was created “to contribute to the acceleration of economic development in Latin America,” should be entrusted with additional funds to handle this additional dimension of the problem. Both economic development and social development must be carried on with due attention to the total allocation of a nation's resources, both those domestically available and those provided through external assistance. The staff of the Bank is highly qualified to deal with both these problems.
The Act of Bogatá emphasizes necessary improvement of institutions for mobilizing domestic resources. Such improvement will involve consideration of tax systems, the stimulation of capital markets, the organization of savings and loan institutions. These are all areas in which the Inter-American Development Bank and its specialized personnel will have particular competence.
The Inter-American Development Bank is already showing its ability to handle the important functions with which it has been entrusted. It opened its doors for business on October 1, 1960. By the end of January 1961, the Bank had received nearly 250 applications for loans. It had selected 108 of these for active consideration as