Special Message to the Congress Requesting Appropriations for the Inter-American Fund for Social Progress and for Reconstruction in Chile

To the Congress of the United States:

On September 8, 1960, at the request of the Administration, the Congress authorized the sum of 500 million dollars for the Inter-American Fund for Social Progress. On the basis of this authorization the United States, on September 12, 1960, subscribed to the Act of Bogota along with 18 other American Republics.

In the same bill the Congress authorized 100 million dollars for the long-term reconstruction and rehabilitation of those areas of Southern Chile recently devastated by fire and earthquake.

I now request that Congress appropriate the full amount of 600 million dollars.

The Act of Bogota marks an historic turning point in the evolution of the Western Hemisphere. For the first time the American nations have agreed to join in a massive cooperative effort to strengthen democratic institutions through a program of economic development and social progress.

Such a program is long overdue. Throughout Latin America millions of people are struggling to free themselves from the bonds of poverty and hunger and ignorance. To the North and East they see the abundance which modern science can bring. They know the tools of progress are within their reach. And they are determined to have a better life for themselves and their children.

The people of Latin America are the inheritors of a deep belief in political democracy and the freedom of man--a sincere faith that the best road to progress is freedom's road. But if the Act of Bogota becomes just another empty declaration--if we are unwilling to commit our resources and energy to the task of social progress and economic development--then we face a grave and imminent danger that desperate peoples will turn to communism or other forms of tyranny as their only hope for change. Well-organized, skillful, and strongly financed forces are constantly urging them to take this course.

A few statistics will illustrate the depth of the problems of Latin America. This is the fastest growing area in the world. Its current population of 195,000,000 represents an increase of about 30 percent over the past ten years, and by the 1980's the continent will have to support more than 400,000,000 people. At the same time the average per capita annual product is only $280, less than one-ninth that of the United States--and in large areas, inhabited by millions of people, it is less than $70. Thus it is a difficult task merely to keep living standards from falling further as population grows.

Such poverty inevitably takes its toll in human life. The average American can expect to live 70 years, but life expectancy in Latin America is only 46, dropping to about 35 in some Central American countries. And while our rate of infant mortality is less than 30 per thousand, it is more than 110 per thousand in Latin America.

Perhaps the greatest stimulus to our own development was the establishment of universal basic education. But for most of the children of Latin America education is a remote and unattainable dream. Illiteracy extends to almost half the adults, reaching 90 percent in one country. And approximately 50 percent of school age children have no schools to attend.

In one major Latin American capital a third of the total population is living in filthy and unbearable slums. In another country 80 percent of the entire population is housed in makeshift shacks and barracks, lacking the privacy of separate rooms for families.

It was to meet these shocking and urgent conditions that the Act of Bogota was signed. This Act, building on the concept of operation Pan America initiated by Brazil in 1958, introduced two important new elements to the effort to improve living standards in South America.

First, the nations of Latin America have recognized the need for an intensive program of self-help--mobilizing their domestic resources, and undertaking basic reforms in tax structure, in land ownership and use, and in education, health and housing.

Second, it launches a major Inter-American program for the social progress which is an indispensable condition to growth--a program for improved land use, education, health and housing. This program--supported by the special fund which I am asking Congress to appropriate--will be administered primarily through the Inter-American Bank, and guided by greatly strengthened regional institutions.

The 500 million dollar Inter-American Fund for Social Progress is only the first move toward carrying out the declarations of the Act of Bogota; and the Act itself is only a single step in our program for the development of the hemisphere--a program I have termed the Alliance for Progress-Alianza para Progreso. In addition to the social fund, hemispheric development will require substantial outside resources for economic development, a major self-help effort by the Latin American nations themselves, Inter-American cooperation to deal with the problems of economic integration and commodity markets and other measures designed to speed economic growth and improve understanding among the American nations.

Social Progress and Economic Development.

The fund which I am requesting today will be devoted to social progress. Social progress is not a substitute for economic development. It is an effort to create a social framework within which all the people of a nation can share in the benefits of prosperity, and participate in the process of growth. Economic growth without social progress lets the great majority of the people remain in poverty, while a privileged few reap the benefits of rising abundance. In addition the process of growth largely depends on the existence of beneficial social conditions. Our own experience is witness to this. For much of our own great productivity and industrial development is based on our system of universal public education.

Thus the purpose of our special effort for social progress is to overcome the barriers of geographical and social isolation, illiteracy and lack of educational opportunities, archaic tax and land tenure structures, and other institutional obstacles to broad participation in economic growth.

Self-Help and Internal Reform.

It is clear that the Bogota program cannot have any significant impact if its funds are used merely for the temporary relief of conditions of distress. Its effectiveness depends on the willingness of each recipient nation to improve its own institutions, make necessary modifications in its own social patterns, and mobilize its own domestic resources for a program of development.

Even at the start such measures will be a condition of assistance from the social fund. Priorities will depend not merely on need, but on the demonstrated readiness of each government to make the institutional improvements which promise lasting social progress. The criteria for administration of the funds by the Inter-American Development Bank and the ICA will explicitly reflect these principles.

For example: the uneven distribution of land is one of the gravest social problems in many Latin American countries. In some nations 2% of the farms account for 3/4 of the total farm area. And in one Central American country, 40% of the privately owned acreage is held in 1/5 of 1% of the number of farms. It is clear that when land ownership is so heavily concentrated, efforts to increase agricultural productivity will only benefit a very small percentage of the population. Thus if funds for improving land usage are to be used effectively they should go only to those nations in which the benefits will accrue to the great mass of rural workers.

Examples of Potential Areas of Progress.

When each nation demonstrates its willingness to abide by these general principles, then outside resources will be focused on projects which have the greatest multiplying effect in mobilizing domestic resources, contributing to institutional reform, and in reducing the major obstacles to a development in which all can share.

In housing, for example, much can be done for middle income groups through improved credit mechanisms. But, since the great majority of family incomes are only $10 to $50 a month, until income levels as a whole are increased, the most promising means of improving mass housing is through aided self-help projects--projects in which the low-income worker is provided with low-cost materials, land, and some technical guidance; and then builds the house with his own labor, repaying the costs of materials with a long-term mortgage.

Education is another field where self-help efforts can effectively broaden educational opportunities--and a variety of techniques, from self-help school construction where the entire village contributes labor, to the use of local people as part-time teachers can be used.

In the field of land use there is no sharp demarcation between economic and social development. Improved land use and rural living conditions were rightly given top place in the Act of Bogota. Most of the Latin American peoples live and work on the land. Yet agricultural output and productivity have lagged far behind both industrial development and urgent needs for consumption and export.

As a result poverty, illiteracy, hopelessness and a sense of injustice--the conditions which breed political and social unrest--are almost universal in the Latin American countryside.

Thus, there is an immediate need for higher and more diversified agricultural production, better distribution of wealth and income, and wider sharing in the process of development. This can be partly accomplished through establishing supervised rural credit facilities, helping to finance resettlement in new lands, constructing access roads to new settlement sites, conducting agricultural surveys, and research, and introducing agricultural extension services.

Administration of the Inter-American Fund for Social Progress.

It is fundamental to the success of this cooperative effort that the Latin American nations themselves play an important role in the administration of the social fund.

Therefore, the major share of the funds will be administered by the Inter-American Development Bank (IDB)--an organization to which nearly all the American Republics belong.

Of the total $500 million, $394 million will be assigned to the IDB, to be administered under a special Trust Agreement with the United States. The IDB will apply most of these funds on a loan basis with flexible terms, including low interest rates or repayment in local currency. The IDB's major fields of activity will be land settlement and improved land use, housing, water supply and sanitation, and technical assistance related to the mobilizing of domestic financial resources.

In order to promote progress in activities which generally are not self-liquidating and therefore not appropriate for .loan financing, the sum of $100 million will be administered by the International Cooperation Administration (ICA). These funds will be applied mainly on a grant basis for education and training, public health projects, and the strengthening of general governmental services in fields related to economic and social development. Funds administered by the ICA will also be available to assist projects for social progress in dependent territories which are becoming independent, but are not yet members of the IDB.

Up to $6 million more is to be used to help strengthen the Organization of American States (OAS). To reinforce the movement toward adequate self-help and institutional improvement, the Inter-American Economic and Social Council (IAECOSOC) of the OAS is strengthening its secretariat and its staff. It is also working out cooperative arrangements with the United Nations Economic Commission for Latin America (ECLA) and the IDB. These three regional agencies will work together in making region-wide studies, and in sponsoring conferences directed toward bringing about tax reform, improved land use, educational modernization, and sound national development programming.

Many of the nations of the Americas have already responded to the action taken at Bogota by directing attention to their most pressing social problems. In the brief period since the meeting at Bogota, United States Embassies and Operations Missions, after consultation with Latin American governments, have already reported proposals for social development projects calling for external assistance totalling about $ 1,225 million. A preliminary selection from this list shows some $800 million worth of projects which are worthy of early detailed examination by the Bank and the ICA.

In the Bank's area of activity these selected projects total $611 million; including $309 million for land use and improved rural living conditions, $136 million in the field of housing, and $146 million for water supply and sanitation.

Selected proposals in fields to be administered by the ICA total $187 million; of which $136 million are for education and training, $36 million for public health, and $15 million for public administration and other assigned responsibilities.

So that each recipient nation will live up to the principles of self-help and domestic reform outlined above, funds will not be allocated until the operating agency receives assurances that the country being aided will take those measures necessary to ensure that the particular project brings the maximum social progress. For the same reason we can make no firm forecast of the rate at which the funds will be committed. Thus, if they are to be used most efficiently and economically, they must be made available for obligation without limitation as to time.

Urgency of the Need.

Under ideal conditions projects for social progress would be undertaken only after the preparation of integrated country plans for economic and social development. Many nations, however, do not possess even the most basic information on their own resources or land ownership. Revolutionary new social institutions and patterns cannot be designed overnight. Yet, at the same time, Latin America is seething with discontent and unrest. We must act to relieve large scale distress immediately if free institutions are to be given a chance to work out long-term solutions. Both the Bank and the ICA are ready to begin operation immediately. But they must have the funds in hand if they are to develop detailed projects, and stimulate vital measures of self-help and institutional improvement.

The Bogota conference created a new sense of resolve--a new determination to deal with the causes of the social unrest which afflicts much of the hemisphere. If this momentum is lost, through failure of the United States to act promptly and fully, we may not have another chance.

The Role of Private Organizations.

Inter-American cooperation for economic and social progress is not limited to the actions of government. Private foundations and universities have played a pioneering role in identifying critical deficiencies and pointing the way toward constructive remedies. We hope they will redouble their efforts in the years to come.

United States business concerns have also played a significant part in Latin American economic development. They can play an even greater role in the future. Their work is especially important in manufacturing goods and providing services for Latin American markets. Technical expertness and management skills in these fields can be effectively transferred to local enterprises by private investment in a great variety of forms--ranging from licensing through joint ventures to ownership.

Private enterprise's most important future role will be to assist in the development of healthy and responsible private enterprise within the Latin American nations. The initiation, in recent years, of strikingly successful new private investment houses, mutual investment funds, savings and loan associations, and other financial institutions are an example of what can be done. Stimulating the growth of local suppliers of components for complex consumer durable goods is another example of the way in which domestic business can be strengthened.

A major forward thrust in Latin American development will create heavy new demands for technical personnel and specialized knowledge--demands which private organizations can help to fill. And, of course, the continued inflow of private capital will continue to serve as an important stimulus to development.

Chilean Reconstruction and Rehabilitation.

Last May more than 5000 Chileans were killed when fire and earthquake devastated the Southern part of that Republic. Several of the American Republics, including the United States, provided emergency supplies of food, medicine and clothing to the victims of this disaster. Our country provided almost 35 million dollars in emergency grants and loans.

However, these emergency efforts did not meet the desperate need to rebuild the economy of an area which had suffered almost 400 million dollars worth of damage. In recognition of this need, Congress authorized 100 million dollars for long-term reconstruction and rehabilitation. Since then the people of Chile have been patiently rebuilding their shattered homes and communications facilities. But reconstruction is severely hampered by lack of funds. Therefore, I am asking the Congress to appropriate the 100 million dollars so that the task of rebuilding the economy of southern Chile can proceed without delay.

JOHN F. KENNEDY