DEPARTMENT OF STATE Memorandum of Conversation
Date: February 15, 1949
Subject: Farewell Call of the Indian Ambassador, Sir Benegal Rama Rau
Participants: Mr. Dean Acheson - Secretary of State Sir Benegal Rama Rau - Ambassador of India Mr. Joseph S. Sparks - SOA
Copies to: S NEA SOA
The Ambassador opened the conversation by referring to the current unsatisfactory economic situation in India and India's need for exchange assistance arising out of its deficit trade balance with the dollar area. I referred to the applications which I understood India was making to the World Bank and the Export-Import Bank and the Ambassador stressed that India was not asking for gifts and only needed assistance at all because its large sterling balance was, with the exception of $60,000,000 per year, being held inconvertible by the British. He said that India's adverse trade balance had been in the neighborhood of $200,000,000 last year and that the Indian Government was seriously concerned not only for economic reasons but because of the political situation. In this connection, he said that he was afraid that the success of the Marshall Plan in western Europe would mean that Communism would turn on the Far East and particularly India, with renewed vigor. He mentioned the new universal suffrage contained in India's draft constitution and said that unless substantial economic progress could be made by the democratic government currently in office, there was a definite possibility that the large majority of India's population, which is grossly under-fed and under- clothed would tend to carry the elections far to the left. I replied that I had some doubts as to the attribution of the Far East's problem with Communism to the success of the Marshall Plan in that I felt that under any circumstances and regardless of the Marshall Plan, Communism would probe for soft spots throughout the world and would tend to expand when it found them. In particular I discussed the Chinese situation and the amount of confusion which is apparent in current thinking regarding the degree of responsibility, either actual or possible, of the United States therefor.
The Ambassador said that the main difference between India and China in his opinion is that India has a strong central administrative system, whereas China's is chaotic. In this regard he conceded one inheritance of value which the Indians had from the British was the high caliber of the largely Indianized Indian Civil Service.
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I referred to a rather discouraging conversation which I had had with our Ambassador, J. Klahr Huddle, last week on the situation in Burma and mentioned the importance of Burma to India. The Ambassador said that the Burmese rice shipments were very important to India and that he felt very sorry for Burma, which he termed the "most exploited country" of which he knew. He said that the exploitation had come from "all outsiders, including India" and explained that Indian landlords own 75 percent of the rice-producing land in Burma, while the British own 100 percent of the rich timber lands. After mentioning the transportation difficulties and loss of capital goods during the war by destruction, the Ambassador said that in his opinion one of the main differences between Burma and India was that Burma had jumped too precipitously from a colonial state to independence. When he illustrated this point by citing the small percentage of Burmese who had been included in the Burmese Civil Service and the high percentage of Indians in the Indian Civil Service and said that the British should not have left until replacing the capital goods which had been destroyed during the war, I pointed out that the British probably could not have stayed regardless of their desires in the matter. The Ambassador agreed with this and said that the British had lost great prestige in their too-easy and sudden departure from Burma when the Japanese invaded the country. He said that as a result of abandoning Burma to the Japanese, the British still faced a great deal of antipathy in Burma.
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