be done in the Latin American schools, manned largely by Institute alumni.

To me, this is one of the most exciting undertakings in the history of the labor movement, for the future of more than half a hemisphere depends upon it.

LATIN AMERICA IN DANGER

Participants: President John F. Kennedy (report to the people on foreign aid); Teodoro Moscoso, U.S. Coordinator for the Alliance for Progress; Moderator: Harry W. Flannery.

Mr. FLANNERY. "Washington Reports to the People." President Kennedy on the House cut of half a billion dollars in foreign aid:

"President Kennedy: Under the terms of this bill, hopeful social and economic progress in Latin America will be stalled and our shield against Communist aggression in this hemisphere will be weakened. It will mean that the Soviet Union will be giving almost as much assistance to the small island of Cuba as the United States is to the whole of Latin America. This is no way to defeat communism in this hemisphere."

Mr. FLANNERY. What about the effects of the cut on the Alliance for Progress? The U.S. Coordinator of the Alliance for Progress,

Teodoro Moscoso, answers for this radio station and the American Federation of Labor and Congress of Industrial Organizations. The interview is in Mr. Moscoso's office in the

Department of State here in Washington. Your reporter, Harry W. Flannery. Mr. Ambassador, if the Senate went along with the drastic House cuts in foreign aid, would the Alliance for Progress be seriously affected?

Mr. Moscoso. Well, it has already been affected, psychologically speaking, of course, by the cut in the House, in Latin America. We are getting reports on editorial comment from prominent Latin American newspapers to the effect that there is a degree of disenchantment setting in with regards to the Alliance and to the creditability to the promises that the United States made at Punta del Este back in August 1961. I think that we can recoup and our image can be restored if the Senate gives us back a substantial amount of the cut made by the House.

Mr. FLANNERY. Is it true, Mr. Ambassador, as the Clay Committee indicated, that the Alliance couldn't use all the money originally requested?

We

Mr. Moscoso. One of the reasons why some of the Members of Congress believe that we cannot use these funds, and I believe the same reason applies to General Clay's statement is that last year we did not use a little over $50 million of our appropriation. didn't use it because we didn't think we could use it prudently. Now, I think that when a program is being administered in such a way as to get the utmost effect out of the taxpayer's dollar there should be confidence in the people who are administering the program and instead of cutting the funds for the next year, the funds that have been requested should be approved.

Mr. FLANNERY. I suppose the recent military revolts in Latin America haven't helped

the situation?

Mr. Moscoso. No, they certainly haven't. They have set us back, politically. Hopefully, we again may be able to come out of this very bad setback in such a way that we not only can recover but obtain some advantage from this experience. For instance, I can see where the democratic forces in Latin America will probably rally to the call of danger to the threat that democracy may disappear from the hemisphere unless those who believe in it defend it. I think that since the Alliance for Progress precisely encourages democratic forces, this is the time for the Congress to approve the funds which will permit the Alliance to move forward at utmost speed.

Mr. FLANNERY. Mr. Ambassador, is it true that foreign aid really means jobs and it also

means the prevention of the spread of Castroism in Latin America?

Mr. Moscoso. Well, there is no doubt that a very substantial number of jobs are created by the aid program right here in the United States; approximately 50,000 jobs are pretty much dependent on the aid program because we do not send dollars to Latin America-dollars do not help Latin America or the rest of the underdeveloped world. We send machinery, equipment, commodities of all kinds and, obviously, in the production of these commodities and of this equipment and machinery and so forth, Americans are employed. Now, to say that the program, insofar as the Latin American part of it is concerned, addresses itself to destroying Castroism, I think we are putting the cart before the horse. I think what we are trying to do is create independent Latin American nations and, as a byproduct, we will, undoubtedly, reduce the appeal of Castrocommunism.

Mr. FLANNERY. Might not a very effective appeal also be, Mr. Ambassador, the fact that this is a moral responsibility of the United States?

Mr. Moscoso. Well, yes. I think that both I must say that a things should be done. moral appeal is being made in this country in the good traditional democratic manner by private groups. I think there is hardly a community in the United States where aid and has supported it for humanitarian some civic group hasn't come out for foreign

reasons.

Mr. FLANNERY. Tell us about some of the conditions in the urban slums, Mr. Ambassador, if you can take a few examples.

In

Mr. Moscoso. Well, in the case of some of the cities of Latin America, a rim of huts depending on what country you are talking which are given rather picturesque names, about, surrounds these capital cities. many instances, no water is available, the death rate is very high, the average lifespan is very low, the literacy rate is also very low and, in general, a feeling of desperation permeates the atmosphere of these slum areas. That is why, even from an economic point of view, housing may be a low produc

tivity investment. We are interested in help

ing Latin American countries begin to attack strong program in Latin America of housing this problem of slums. We have a very construction, both the AID agency and the Inter-American Development Bank have put up close to $250 million in the past 2 years to assist Latin America in beginning to solve this problem.

Mr. FLANNERY. Has the American Institute for Free Labor Development, Mr. Ambassador, been a help in the progress of the program in Latin America?

Mr. Moscoso. Yes. The Institute has been working very closely with the AID agency and with the Latin American countries in two major ways: First, of course, the Institute runs a series of training centers, both here in the United States and in the major countries of Latin America to train demo

cratically oriented labor leaders. About five groups have already been graduated from the U.S. center, and a new building is going to be dedicated within the next few days to house the Institute. We now have branches of this training center in five Latin American countries and, hopefully, we will get branches in other countries. Now, the second major thrust of the Institute's effort is in the social service field, primarily in assisting democratically oriented labor unions in putting together housing developments for the members of the democratic labor unions in that area.

Mr. FLANNERY. Has there been a change, Mr. Moscoso, in the attitude of the wealthy class in Latin America? Many have opposed reforms, as we know, and some had even lacked a national spirit so much that they were sending their money over to Swiss banks.

Mr. Moscoso. We have evidence of a number of very wealthy Latin Americans beginning to recognize their social responsibilities, which come with great wealth, and not only are they no longer, in many instances, opposing reforms but, in some instances, they are espousing reforms or leading them. Now, hopefully, as the program progresses and as these more privileged classes realize that it is in their self-interest to see that the masses of the people get a better break, we are going to see an increasing response of the wealthy classes to the social needs of their country and a greater participation and even the providing of more leadership on their part for the undertaking of reforms.

Mr. FLANNERY. One of the needed reforms is tax reform. Has this been accomplished to some extent?

Mr. Moscoso. Over 11 countries already have very substantial tax reforms either on their way or about to be undertaken. We should give them credit for having initiated so strongly and so well tax reform programs in some of their countries.

Mr. FLANNERY. Mr. Ambassador, you are suggesting that the Alliance for Progress has made considerable progress. Is this the case?

Mr. Moscoso. Well, I would say that it has made a lot more progress than the people who criticize the program are willing to concede. The ability is there now-140,000 houses have been built, 8,000 schools, 12,000 miles of road, we are now conducting schoollunch programs and other child-feeding programs among some 15 million people in Latin America. Even more important than that, I think that the Alliance is starting to take psychologically-it is starting to penetrate. It is becoming the object of sometimes acrimonious debates but that is all right; that is fine. I think that it is good that a program of this impact and of this dimension be debated and those who are against it have every right to say so, but those who are in favor are now coming out and defending it. And that is one way of making a program of this type well known.

Mr. FLANNERY. What is the hope for the next several years, Mr. Ambassador?

Mr. Moscoso. Well, in the first place, I hope that a greater degree of political stability will be achieved by the knowledge that the Government of the United States will not give economic assistance to military governments that unseat a democratically elected government. I think that with a greater degree of political stability, it will be able to perform much more rapidly in the economic and social field. Many countries will have introduced reforms within the next few years and many of them will have finished their national economic and social development plans, and it will be much easier then for our Agency and other credit agencies to finance these programs as they are embodied in these long-term plans.

Mr. FLANNERY. Thank you, Teodoro Moscoso, Coordinator of the Alliance for Progress.

This interview was in Mr. Moscoso's office in the Department of State here in Washington. This is Harry W. Flannery inviting you to listen each week at this same time for this public-service program, brought to you by this radio station and the to AFL-CIO-"Washington Reports the

People."

CHALLENGE IN LATIN AMERICA Participant: Joseph A. Beirne, president, Communications Workers of America. Moderator: Harry W. Flannery. Mr. FLANNERY. As we see it.

Mr. BEIRNE. The American people are getting tired of carrying the burden of foreign aid, so we slash by $500 million off Latin America. The result will be that 15 years from now we can carry the burden of the war that will go on, of the troops that will be necessary.

Mr. FLANNERY. Joseph A. Beirne, president of the Communications Workers of America, and secretary treasurer for the American Institute for Free Labor Development. In his talk to the 36th annual conference of the Catholic Association for International Peace on "The Christian Challenge in Latin America," Mr. Beirne called upon the Congress and the American people to preserve and continue the Alliance for Progress. Mr. Beirne warned that without action in the United States and reform in Latin America, Latin America will go Communist. For this radio station of the ABC network and the AFLCIO, he declared:

Mr. BEIRNE. It was in the days of Franklin Roosevelt that we made famous the good neighbor policy. What is the good neighbor policy? To shake somebody's hand and say, "Go ahead starve, fellow. I am with you. I am your friend. I am here today and gone tomorrow. I will come visit you once in a while. I will eat your food and compare it with mine and tell you how lousy yours is." Is that a good neighbor policy? To me it's not. To me the significance of Latin America in the U.S. affairs has not come home to -- our political leaders.

One of the greatest things that has received a boost was Kennedy's declaration of the Alliance for Progress. What do you think is the result, when people see that only 2 years later the politicians of America got tired of Latin America and are not going to provide any more money?

This is really no coordination; those in the AID program, like Ambassador Moscoso, are trying desperately to do a job, but are frustrated at every turn of the game. And by what? Basically by the apathy of the American people. It all starts there. Those fellows in Congress just reflect what they have found out, in whatever way it is that they find out what you and I think, and their judgment so far this year has been that the American people want the Congress to do nothing. The American people are getting tired of carrying the burden of foreign aid, so we slash $500 million off Latin America. We began something here for, it is my belief, that every American has an obligation and responsibility to do his part in the whole world scene, as well as Latin America but particularly in Latin America because we are connected to the continent. We have the obligation to sacrifice, and I mean sacrifice the way in which, at times, it hurts us, not the lipservice that is so often given by too many who are in a position to give more than lipservice.

Mr. FLANNERY. The secretary treasurer of the American Institute for Free Labor Development told of the beginning of the institute.

Mr. BEIRNE. We have got workers who are leaders—some 16 of them from 12 countries. From our own resources we trained them for 3 months in the fundamentals of democratic trade unionism, the responsibility that goes with leadership and that goes with what they call power. Having trained them for 3 months, we carried them for 9 months on our payroll and had them go back to their own native lands to transmit to their own colleagues that which they retained from 3 months of training.

Our experiment worked. Of those 16 men-15 of them stuck it out-for they had to leave their homes and their families to come up here for 3 months and when they returned they had to stay away from their homes and their families as they traveled throughout their country, not on fast jets and planes and 19-foot cars-like we have in the United States-but sometimes on the backs of mules, sometimes hoofing itwalking it all the way-20 miles, 30 miles, 40 miles, living in the fields. They made the sacrifice of staying away from their homes to teach their own colleagues. And we were greatly impressed with what was revealed

as the capacity of those men-people down there to sacrifice in carrying out the philosophy, the words and the ideas of free men.

So, a few years later, with a grant from the executives council of the AFL-CIO, securing the services of a professor from the University of Chicago, we studied the whole problem of setting up an institution, a continuing institution to carry out this kind of work. For the last 18 months to 2 years, we have such an institution. It is called, as your program suggests, the American Institute for Free Labor Development.

It's an organization in which the American labor movement, through the AFL-CIO was able to convince certain enlightened business leaders, certain men in the public domain, certain professors in North America and in South America, to join together in a board of trustees for the purpose of raising money to carry out, on a continuing basis, the education, the work attached to carrying the message of free institutions under law.

I am happy to be able to tell you that the pattern is the same as I outlined in our first experimental class 3 months ago here in the United States. Likely candidates have been sent to Israel and to Germany for 3 more months to pursue studies of certain aspects of movements that can be carried out in Latin America like the cooperatives, the credit unions. They had their further studies and then spent the balance of their time on internship, paid for by the American Institute for Free Labor Development, to carry out their work in their own country.

We have had four such courses up here in Washington. One hundred and fifty-one people-mostly men, some 11 women-spent their 3 months up here and are now down doing the job in Latin America of reaching others in their own native lands. We have a class that starts this Monday morning, right over here on 19th Street, off Connecticut Avenue, for those who come from Washington, in the old John Hopkins School for International Studies-the American Institute has taken over one of their buildings— and Monday morning, 31 more will be going and Monday morning, 31 more will be going through the fifth class for 3 months.

At the same time, we established institutes down in Latin America; we have some 11 already in operation in 11 different countries. through those 11, we have already trained 1,682 men and women. What are we teaching there? We are trying to teach them that which is lacking in the curriculums of Latin America. Not only how to set up free institutions, not only how to fight to maintain them and continue them, but also that which has been lacking in Latin American life, the responsibility that goes with leadership-responsibility to an organization, responsibility to people, responsibility to a nation, responsbility toward the carryng out of an idea.

We remember reading in our newspapers here a few years ago about Richard Nixon, when he was Vice President. He went to Latin America and was stoned and spit on. Well, it took us, through our own means, about a month to determine that there were only four people-none of whom came from the nation-who organized that whole demonstration. Four Communist-trained men. And they were able, in a short period of time, to get hundreds of people, who didn't know who Richard Nixon was any more than they know what constitutes the powers of a nuclear warhead, but who were ready to spit at, ready to throw stones at him, as we remember seeing on our television and in our newspapers. Four Moscow-trained agents.

Now, the American Institute for Free Labor Development has only been in existence, as I say, operating for about 18 months or 2 years. The Communists have been there for 10 years. Thousands of men were taken to Warsaw, to Moscow, some used to

go to Peiping before the big split, trained not for 3 months, trained for a year, trained for 2 years. What will be one of our big problems in Cuba? Two years ago, 3 years ago, the whole fourth grade of the public schools-practically every child-was shipped over to Moscow to go to school. Many of them haven't come back yet. Now, when they come back, and they go to the schools in Cuba today, you and I should both know that when they grow up and reach the age of 16, 17 or 18 they will be dyed-in-the-wool Communists of the type that you can't touch. They have so many trained already that they are exporting them to other parts of Latin America.

Our universities in the United States have been doing a lot of things, but not enough. What we are doing is not enough.

Mr. FLANNERY. Joseph A. Beirne, president of the Communications Workers and secretary-treasurer of the American Institute for Free Labor Department, cosponsored by the AFL-CIO and American business leaders, in a talk at the 36th annual CAIP conference at the Sheraton-Park Hotel in Washington.

This is Harry W. Flannery, speaking for the AFL-CIO and inviting you to be with us next week at this same time for "As We See It." This program, a presentation of ABC public affairs, has been brought to you by the ABC radio network and the affiliated

station to which you are listening.

LATIN AMERICAN INTEGRATION

Mr. HUMPHREY. Mr. President, the Alliance for Progress represents, as I have stated earlier in this debate, the most important part of our foreign aid program. In the continuing struggle for political and economic improvement now going on in Latin America, there are many problems to be solved in this crucial area and one of the foremost is the problem of economic integration.

The President of the Inter-American Development Bank, Mr. Felipe Herrera of Chile, a man well acquainted with the problem of economic integration in Latin America, recently discussed the problem in a lecture at the University of Chile.

With the notable exception of the Central American common market, the 20 separate nations of Latin America have thus far had little success in coordinating economic and political decisions essential to the process of development. The discouraging and frustrating effects of this unsatisfactory arrangement have been felt here in the United States as well. In carrying out development programs such as the Alliance for Progress, we have been hampered in our efforts by the lack of cooperation and coordination among the states of Latin America. It is a grave error to imagine that such programs can achieve maximum results under the existing situation. As Mr. Herrera says:

This is the error of believing that it is possible for a country as expansively developed as is the United States (which in effect is an integrated nation comprised of 50 States) to have a relationship without frustrations and mistrust with each of the 20 disunited countries of Latin America.

Both interested Americans and Latin American development leaders realize that only through integration can Latin America become an equal partner in the Alliance for Progress.

Several organizations in Latin America have begun to lay the groundwork for the first necessary steps toward integration. These groups are working to coordinate monetary and fiscal policies and to attract more private investment in Latin American development programs. An attempt is also being made to encourage freer trade among the nations of Latin America. This program would utilize the experience of the Common Market nations of Europe to establish a Latin American common market, an arrangement which I have advocated on the floor of the Senate.

The Inter-American Development Bank has acted as a central coordinator for all agencies interested in Latin American integration. A concerted effort is now being made to obtain maximum use of the technical resources of each agency in order to attain the common objective of integration. These measures represent only a beginning of the solution of the problem of Latin disunity.

This whole problem of Latin American economic integration is being discussed this week at the meeting of the OAS Inter-American Economic and Social Council in São Paulo, Brazil. I hope that out of this conference will come some guidelines for hastening economic integration on the South American Continent. It is time for South America to catch up with its Central American neighbors.

I ask unanimous consent that Mr. Herrera's address, "The Financing of Latin American Integration," be printed

in the RECORD.

There being no objection, the address was ordered to be printed in the RECORD, as follows:

THE FINANCING OF LATIN AMERICAN
INTEGRATION

(Address delivered by Mr. Felipe Herrera, President of the Inter-American Development Bank, at the University of Chile, May 22, 1963)

Mr. President, ladies and gentlemen, President Gómez Millas was perfectly right when he said that it is pleasurable and rewarding to rise to positions of responsibility so that one may be able, even if partially, to realize the dreams of one's youth. Therefore, I am deeply grateful to all of you who have shown a willingness to listen to me this afternoon here at the University of Chile, my alma mater, where on so many occasions we, the men of my generation, discussed our dream of Latin American unity. True, it was not a dream of our own making, for it had also been cherished earlier by the generation of 1920 under the leadership of Santiago Labarca, with the same impassioned faith with which the youth of today continue to cherish it in these same halls. The only difference is that today the events of history have provided positive steppingstones toward giving tangible form to those ideals, to such an extent that in this momentous period in the life of Latin America, we are talking concretely of the unification of our countries.

As I look back and think of the ideological inspiration of those past generations; as I recall the times, not so long ago, when the necessity of our integration was nothing more than a theory advanced in the lecture room; as I compare that situation with the position today, when we can meet to discuss in concrete terms "the financing of Latin American integration," I cannot help but urge you to ponder on the tremendous process of acceleration that has occurred.

THE UNIVERSITY'S TASK: GIVE INTEGRATION PHILOSOPHICAL AND POLITICAL SUPPORT

Aside from these personal reasons which are so dear to me, I am also happy to have this opportunity to meet with you here, beI have made it a habit to visit the univercause in my travels through Latin America sities. I believe that in these turbulent times, these times of heated debate, of the violent clash of ideas, doctrines, and attitudes, it is in the Latin American university that we still are able to communicate. Tolerance must be protected there where the unceasing restlessness of the young people is combined with the positive accomplishments of the more mature generations.

In that always significant and fruitful dialogue that I have been holding with Latin American university groups, I have noted that, along with the pragmatic concepts of integration, there is a desire a desire not yet expressed in so many words-to nourish those technical schemes with a philosophical and political line of thought that will endow integration with the sense of cohesion it now lacks. We want a kind of integration that will go beyond that based on the concepts of the common market, regional planning, coordination of monetary policies, cusments. What is urgently needed is an overtoms agreements, and other such arrangeall design that will bind together Latin America's materials needs with clearly defined philosophical and political concepts such as will give meaning to the unitary solution. I should like to make my words forceful enough to encourage not only the young students but their teachers as well, so that through their thinking, through their intellectual processes, we, the men of Latin America, might be able to find that philosophical and political content so sorely needed in the present-day life of our hemisphere. Such a synthesis is essentially a task of the university. It is the inspiring task which the universities of Latin America have today within their grasp.

TOWARD A HEMISPHERIC NATIONALISM

It is from such perspective that we can speak, as indeed we are speaking, of a hemisphere nationalism in Latin America; a nationalism that comes, not as it did in times gone by, from dismemberment, from atomization, from the proliferation of frontiers, but from a concept and process of reintegration.

I had occasion some months ago to outline these ideas at the University of Bahia, when I said that "Latin America is not 20 nations; it is 1 great dismembered nation." It may be added that there are many cases in history where the tendency toward national identity has been nourished not by the idea of separation or the desire for individualization but rather by a tendency toward association, a movement toward a new rendezvous with a historic destiny clearly indicated by centuries of time but lost from sight or thrown off course by events. If one seeks a current example, one need only look at the process of reunification now at work in the old Arab world which in recent centuries had been fragmented.

However, we must make it very clear that this hemispheric nationalism cannot be a mere emotional concept based on the spiritual ties and mutual interests of our countries. It is not the old nationalism-bound by the traditional canons that identify the people who comprise a state by their similarity of origin and custom and by their common love for the land lying within the national borders-it is not that type of nationalism that should be translated to the hemispheric level, simply by exchanging narrow borders for wider ones. We must be able to give the new concept of integrated nationalism a dimension in depth that will cause the process of integration to produce a genuine impact on the great masses of the Latin

American people, on their welfare. Otherwise the idea of integration will be nothing more to those people than theoretical discourses from the study halls, far removed from their interests and their prospects.

The integration of Latin America must not be looked upon as an alternative to the urgently needed structural transformation which, to a greater or lesser extent, should be initiated, carried out, or completed in our countries. Integration must not be regarded as the remedy that will make it possible to overcome the present crisis without facing up to the integrating task itself from with

in, from its very roots. We must not forget

that despite all the progress made by our hemisphere in the process of acculturation, in its effort to bring great groups of marginal populations into civilized life, Latin America still has an illiteracy rate of 40 percent; that is, 40 percent of the people still have not been integrated into the scale of ideas and values that determine the trends of public opinion among the more culturally advanced groups. Let us not forget that there are still some 20 million Latin Americans who live under the most primitive conditions, equivalent to those that prevailed among the indigenous precivilizations that antedated the more developed ones found by Columbus and those who followed him. To them, clearly enough, this recovery of Latin America through its process of integration has and will have no meaning if at the same time they are not incorporated into the cultural and material way of life that will identify them with and bring them into the more developed sectors. Integration must simultaneously have both depth and breadth. The mystique of hemispheric nationalism will create fraternal bonds among the Latin American masses when they become fully aware that integration is not only going to give them a common market but will also widen their horizons toward well-being and hope.

It is certain that without integration there will be no economic development in Latin America. But I would venture to say with equal emphasis that if at the same time we fail to create the social conditions appropriate to development; if our countries fail to transform their structures; if they do not achieve a better distribution of national income; if they do not expand the benefits of education; if they do not improve welfare and health conditions, we shall likewise have no integration.

It is dangerous to distort the meaning of integration-as certain groups, by definition its enemies, are seeking to do-by claiming that the process of integration can be turned into an alternative for the responsibility that is incumbent upon modern governments to satisfy the demands and needs of the great masses who aspire to something better than their present situation. It is necessary to insist that if on the one hand we shall find the solution for many of our problems only through integration, on the other hand it is imperative that the benefits of integration be distributed and spread out among all levels of Latin American society. INTEGRATION AND THE ALLIANCE FOR PROGRESS

What I have just said is closely related to two topics that have come up in practically all the conversations I have had in Chile in the course of this official visit as President of the Inter-American Development Bank, whether with high Government officials, with outstanding representatives of private enterprise, representatives of labor and cooperatives, men from the various regions of the country, with the authorities, or with the faculty and students at the universities. These two topics are the Alliance for Progress and the Latin American Free Trade Association. And obviously there are concepts and opinions about them that merit analysis.

The Charter of Punta del Este, which set the legal framework for the Alliance for

Progress, attempts to lay out the common paths by which the Latin Americans may advance to find new horizons. Thus, there is clearly a connection between the Alliance and the concept of integration that I have defined.

In the conversations which I mentioned, the attitude of my questioners has been the same in essence although cast in different molds: "The program of the Alliance is not working out, or it is working badly, or it is a failure, or we have no faith in its results."

At first glance, and from the way in which the problem is brought up, it is not difficult to appreciate the reason for such opinions. And still further, if the program of the Alliance is regarded as a unilateral decision of the United States to provide assistance to the countries of Latin America through bilateral arrangements with each of them, one can perfectly well explain the feeling of frustration to be noted on all sides.

If the program of the Alliance for Progress were of that ilk, it would not be worth the trouble it took to formulate it. The Alliance

would have no reason for being, had it not been conceived as it was, that is, as an interAmerican program. It would not be worth the time spent on discussing its effectiveness if the entire plan of Punta del Este were to develop into a series of isolated bilateral actions of the United States with each Latin American country. But on the contrary, if we look upon the Alliance as a program of Latin America in which the United States participates, then the Charter of Punta del Este and the whole plan it outlines have meaning. It is imperative, then, for us to Latin Americanize the Alliance for Progress. And to do that, it will be sufficient for us to recover that regional sense which is the very essence and basis of the Charter of Punta del

Este.

In fact, anyone who reviews the charter will note that it brings together aspirations toward which Latin America has been struggling through many long years, to which the United States and Europe had so far given no response, and with regard to which not even we, the Latin Americans ourselves, had been able to come to agreement. The charter speaks of the need of achieving the economic and social development of Latin America and the right of the people to enjoy the benefits of that development; it points out the urgency of having greater public and private investment and guarantees the minimum external assistance required for development; it emphasizes that there can be no solution to Latin America's problem if a formula is not found to insure stability of export earnings and fair prices for our raw materials; and finally, the charter states that economic development will not be enough if, at the same time, there are no social development and social reforms, and that consequently governmental investments should not be confined exclusively to the fields of production but must also help to provide homes, education, and good health.

It is a Latin American program to which the United States has pledged to give financial assistance and support to help solve the problems of greatest concern to our countries, provided the program takes on meaning for us, the Latin Americans.

What is happening, as I have said before from other platforms, and I repeat it today here, in my own alma mater, is that within the program of the Alliance, the same error is being committed that has been repeated over and over in inter-American relations throughout our history. This is the error of believing that it is possible for a country as expansively developed as is the United States (which in effect is an integrated Nation comprised of 50 States) to have a relationship without frustrations and mistrust with each of the 20 disunited countries of Latin America.

Therefore, I believe that the program of the Alliance can have meaning only if Latin America comes to agreement within itself, sets itself up as a regional bloc, and thus established, agrees on common and reciprocal action with the United States in order to attain the objectives of the Charter of Punta del Este. Western Europe has already shown the way and we can also see it today in the new states of Africa which, boldly and without hesitation, are laying the political foundations of the Pan African process.

The program of the Alliance-under that name or any other-is not a program for the United States. It is a program for us, and nobody is going to make it for us if we do not make it ourselves. Chile, our country, has an important role to fulfill in that program and I am sure that you, and all of the other responsible and representative sectors of this Nation, so understand it. INTEGRATION AND THE LATIN AMERICAN FREE TRADE ASSOCIATION

The activities of the Latin American Free Trade Association are being judged in terms similar to those used in criticizing the Alliance. It is not functioning, or it is func

in this respect; the physical, mathematical, and biological sciences were progressing much more rapidly than the processes of social organization. But today I would venture to say that perhaps the processes of adjustment, readjustment, and revolution of our contemporary society are trying to make up for the long delay, or even to forge ahead at uncontainable speed, as compared with the advance of the sciences and of their application that became so marked beginning in the 19th century.

So I feel, my good friends, that I am not addressing myself to tomorrow, to our children or our grandchildren. I am talking, we are talking, on behalf of ourselves, on behalf of those of us who today have the responsibility of shaping the destiny of Latin America. If we Latin Americans ignore the urgency of the situation, we shall remain outside the margin of history. We shall see history pass us by, offering opportunities to other men, to other nations, to other regions that will not waste them through timidity, through cautiousness, through fear of the future, through conformism.

Ours is the time of integration. In a document that has made history in our era,

Obviously, no one can deny that those who think this are right. But they forget that what the Latin American Free Trade Asso

ciation is doing today is carrying out the terms of reference which the countries that comprise the Association set for it in 1958, that is, less than 5 years ago. In that short time we have advanced so much that what we approved only yesterday now seems insufficient to us. We should congratulate ourselves on this, because it is clearly a sign that a conscious feeling for integration is taking shape at a much faster pace than even the most optimistic would have dared to think.

What happened in 1958 when the Association was established was the same that had happened to us so many times in the past. As on other occasions, we Latin Americans were attracted by the results that Western Europe was obtaining through its process of integration. But, as had also happened so many times in the past, we erred in imitating. Instead of drawing from the approach of the "Inner Six," with their Rome Treaty, their Common Market, their administrative and technical integrating agencies set up in Brussels, we went only halfway and followed the more restrained arrangement of the "Outer Seven," as adopted by those countries that were not in a position boldly to join a common market, which presupposes not only many reciprocal relinquishments and, consequently, immediate sacrifices, but also the maintenance of common policies in the principal aspects of economic activity and even of social advancement.

We copied badly and it should not surprise us that the Latin American Free Trade Association is having to cope with the limitations that we ourselves imposed upon it. Because of our cautiousness, we copied badly, as so many times in the past. And we did so because, unfortunately, our decisions are still influenced by the timid, by sions are still influenced by the timid, by those who believe that to move quickly is dangerous, who think that we can take a long view of these processes over a 50-year period: Those who will say to me, "How interesting your speech was, but what a pity that we shall have to wait 40 to 60 years, at least, to see your ideas materialized."

I believe that those persons are unaware of the fact that the pace of our times is much faster than the rate of improvement in science and technology. For many years a very great imbalance could be observed

out through the course of all time to comethe last encyclical of the late Pope John XXIII, Pacem in Terris, Peace on Earthit is most profoundly pointed out-and I believe that it is not by chance that this encyclical is related in large part to the last Ecumenical Council-that mankind is

inevitably and irrevocably moving toward a process of unification of political doctrines, of ways of life, of regional blocs.

I am convined of the reality of that approach and therefore I believe that if Latin America proves incapable in the next 10 to 15 years of bringing itself together into a political bloc of its own, our countries will find it necessary, perhaps individually and disjointedly, to form part of some sort of world integration. In other words, the usual thing would happen to us: a hemisphere apparently full of prospects would lose the opportunity to bring them to fruition because it was waiting for the right time, like those young girls of marrying age who let marriage, which would complete their lives and carry them into the future, pass them by because they are waiting for the ideal husband, one who can give them security. That ideal prospect is the one who quite generally never appears.

I repeat that I believe that the time for action in Latin America is today, not tomorrow. And I sense, I divine this same conviction in your unanimous uneasiness, in your interest in these subjects, in your presence at this conference. It is apparent, too, in our governments. Good proof of this is the significant declaration recently signed by Presidents Alessandri and Goulart. I believe that the proposal to convene a meeting of Ministers of Foreign Affairs to consider a new approach to the need of institutionalizing the slow process of our economic integration may well have very important outgrowths.

The Foreign Ministers of the Latin American Free Trade Association countries may find a good example right here in Latin America. The five countries of Central America were more daring, less cautious than the members of the association. They are creating a genuine common market. Their organs of consultation, working on a continuous basis, are accelerating the process day by day. Very appreciable and concrete benefits are already being felt. They were not content in Central America with talking about economic integration. They are integrating. A new spirit of integration has taken hold of the people of Central America and they are confident that after all the present obstacles and limitations have been overcome, they

will see the development of an integrated nationalism having both breadth and depth-which is exactly what we should like to see projected throughout all of Latin America.

The process of Latin America's integration requires political decisions that will encourage, work out, execute, and make possible the implementation of the plans of the technical experts. The technicians can plan and study integration, but it is the governments, as the leaders of public opinion in each country, that will have to put it into effect.

THE RAW MATERIALS PROBLEM

Before beginning to consider and analyze the machinery for financing economic integration, we must make this point very clear: such machinery by itself, no matter how efficient we make it, is not going to solve certain basic problems of our present regional economic situation. These problems existed before we began to make an effort to establish intraregional organizations, and their solution cannot be found exclusively within our own community.

Regional financing is very important; in this respect, although I am an interested party, I believe that the establishment and functioning of the Inter-American Bank are of paramount significance. The stimulation of Latin American exports within our own area represents a positive advance; in fact, great importance may be attached to all the various mechanisms of this type that we have established, and many others that we have not yet set up, which I shall discuss later on. But there are essential aspects of our financial situation that must be given priority if we wish to make regional development possible.

Such is the case of the problem, foremost in importance, of our raw materials. It is utopian to think that Latin America will be able to emerge from its underdevelopment if the present international trade structure, in which the facts seem to say that the countries producing raw materials are condemned to stagnation, is maintained.

At the close of World War II it was honestly believed that the advances in technological development, in a climate of international understanding that then seemed very simple to preserve, were going to be spread throughout the world, making it possible, thanks to that technological progress, for the more backward countries rapidly to rise to the levels of the more advanced coun

tries. The real situation, as you know, has

been otherwise.

The backward underdeveloped countries have been and continue to be relegated perhaps to a greater distance behind the others today than they were yesterday. In the final analysis and reduced to its least complex terms, the explanation is very simple. They are countries which continue to sell cheap and buy at constantly higher prices. This definition may seem elementary, but essentially it is correct. Worse still, this equation shows no immediate possibilities of change. It seems that there are factors inherent in the relationship between industry and the production of raw materials that determine this situation-an intrinsic relationship between manufacturing productivity and the production of raw materials that will always work to the advantage of the former and to the detriment of the latter.

In the face of this situation, one of the principal concerns in the economic policy of many countries of the world, beginning with the most advanced ones, has been precisely this problem of balancing the returns from the labor of the raw-material producing sectors against industrial productivity. This has been and continues to be so in the United States, in Western Europe, in the Soviet Union, and in Communist China. The United States has traditionally upheld the

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system of free prices; nonetheless, we see that throughout its history, particularly in the last 30 years, agriculture in the United States has continuously been receiving a subsidy; that is to say, it has required a policy of income redistribution in order to enable those who engage in the production of these primary products to have a level of purchasing power similar to that created by industry or services.

Today efforts are being made to find an international equivalent to this domestic search for a measure of balance between the production of primary commodities and industrial productivity. Fortunately Latin America, there are men who are currently studying these problems and working to find progressive solutions. Within a short time at the beginning of next year-a World Conference on Trade and Development will be held for the declared purpose of dealing with this very important question. The very name of that conference is most expressive, because in fact the idea of development without a prior study

of trade relations would result in these times in nothing but artful dodgery. Dr. Prebisch has just officially terminated his duties with ECLA which he has inspired and guided for 15 years to make his experience and his broad knowledge of Latin America available in a wider field, the organization of this conference.

Let us hope that to that meeting, which may well have a decisive effect on our future, Latin America will come united, forming a bloc capable of bearing the combined weight of our region and of making its intrinsic importance felt in world trade. The day when we Chileans can place our copper on the balance along with the coffee of Brazil and Colombia, Bolivia's tin, the wool and meat of Argentina and Uruguay, the sugar and fishmeal of Peru, and similarly with all the Latin American countries, we shall really have advanced toward a solution of our raw materials problem. Otherwise, suspicion among us is again going to darken the outlook for the common interest. If we arrive disunited at this forthcoming world conference, the chances are that we shall return from it lamenting once again the lack of understanding of the other blocs and then we shall continue to repeat our complaints about the increasingly more serious deterioration in our terms of trade.

The inexorable facts, as shown by hard statistics, urgently call for action on our part. Latin America's share in world trade

decreasing in significant proportions. Looking at the last 30 years, we see that Latin America's share in world trade, which generally used to fluctuate around 10 percent, has fallen since 1955 to 6 percent, with no signs of recovery.

LATIN AMERICA'S GROWING INDEBTEDNESS There is one direct consequence of the crisis in the terms of trade, which is not always borne in mind or immediately noted, but the incidence of which is evidenced every day at the Inter-American Bank and in other international financial organiza

tions.

Is it

This evidence is as follows: The loan applications submitted by our countries are increasing daily, and year by year the volume of external indebtedness of our region grows larger. What is the reason for this? only an old incurable readiness to go in debt as the easiest way to obtain funds that can immediately be applied to tangible works? We at the Inter-American Bank do not believe that is the reason.

The answer lies in the raw materials problem to which I was just referring. Deterioration in the prices of our exportable basic products generates these now so familiar balance-of-payments crises. The more difficulties a country has in its balance of

payments, as its available foreign exchange declines and its internal rate of growth decreases from the effects of these crises in its foreign trade, the more that country will have to move toward international indebtedness.

This is a situation that we find not only in Latin America but in general in all underdeveloped countries. Figures were submitted at a recent meeting of the Development Assistance Committee, at which the representatives of 12 capital-exporting countries expressed concern at the fact that the annual service on the debt of the countries in the process of development has more than doubled during the last 5 years, having reached an annual sum of $2.5 billion.

In the case of Latin America, the external public debt of the member countries of the Inter-American Development Bank increased from $3.7 billion in 1955 to $9.2 billion at the end of 1962. And services on that debt increased from approximately $550 million in 1955, equivalent to 7.4 percent of the value of these countries' exports that year, to an annual average of almost $1.2 billion in 1961-62, which is equal to 14.5 percent of the average value of their exports in those 2 years.

I have tried not to overload this presentation with figures, but I think it is imperative to cite these in order to give a clear picture of the financial consequences of the raw materials problem. Let us look at these figures and measure their importance: 7 years ago, out of each $100 that Latin America obtained for its exports, $7.50 were used double the earlier amount, must be allocated to pay international debt; today almost $15, to that same purpose. In my opinion this is due basically to the fact that Latin America has been unable to find through ordinary channels and the natural sources of its foreign trade the external resources it needs to promote its internal development.

THE PROCESS OF CAPITAL FORMATION Without discounting the decisive influence of foreign trade in the process of capital formation, there is, of course, another, autonomous form of capital formation in our countries. Such capital is derived from two sources: Domestic savings and investment, and investments from abroad.

In this respect, it is well to remember that the process of capital formation in Latin America has depended fundamentally on its own domestic effort. Proof of this is

found in the fact that in the 10-year period 1951-60, almost 90 percent of capital investments came from domestic sources. This explains why, despite critical balance-ofpayments problems, the relatively more developed Latin American countries have been able to accelerate their domestic growth.

Of course, in order to build up domestic savings and their subsequent investment in the country itself, it becomes necessary to adopt a fiscal and monetary policy that will stimulate savings and investment instead of discouraging them. On this point one cannot lay down rigid rules, that will act like a straitjacket, but it must be understood that a sound fiscal policy, joined with an equally sound monetary policy that will protect the internal purchasing power of the savings, can create conditions that will stimulate the dynamic process of investment.

of domestic sources of capital does not mean The fact that we recognize the importance that we deny the importance of investments think, as unfortunately many people in coming from foreign sources. We do not Latin America do, that our process of development can be financed only with a

1 A specialized agency of the OECD whose function is to coordinate the action of the capital-exporting countries.