The Giveaway Mania Grows

November 29, 1954

When Secretary Marshall proposed his grandiose foreign-aid plan more than seven years ago, even he suggested that it should cover no more than “the next three or four years.” Marshall-Plan administrators constantly assured Congress that it would not run beyond four years. But when the four years were up the foreign giveaway continued; it merely kept changing its name and declared purposes. In the fiscal year ended June 30 last, our total foreign-aid expenditures were still above $5 billion—an amount greater than the total expenditures of the Federal government for any of the years from 1921 to 1933 for all purposes put together.

Yet the air is full of ever-more proposals for ever-bigger giveaways of indefinite duration. It is now considered the duty of the American taxpayer to support the entire world.

On Nov. 8, for example, Japan’s Premier, Shigeru Yoshida, delivered a speech before the National Press Club in Washington in which he advocated a Marshall Plan to multiply tenfold—to about $4 billion—the amount that we should pour annually into Asia to “tip the scales against Communism.” And a few days after this speech—on Nov. 11—it was announced from Washington that the Eisenhower Administration had given its blessing to a proposed $100 million international corporation to help finance private industrial enterprises in the so-called underdeveloped countries.

These ever-new schemes for ever-bigger handouts seem to be proof against all sober analysis and against all our experience, however disappointing. The arguments of Premier Yoshida for his new Asian Marshall Plan are depressingly familiar. Asia, he tells us, is eager to “break with the misery and poverty of the past.” This aim, of course, deserves the sympathy of everyone in the Western world. Asia’s effort to raise its living standards, he goes on, “is hampered by a lack of capital.” But he does not stop to analyze what it is that has caused this lack of Asiatic capital, not only now, but for untold generations past. He simply leaps to the familiar conclusion that the problem can easily be solved if the American taxpayer is forced to supply that capital.

Yet he does, inadvertently, reveal the basic reason not only for the shortage of capital in Asia but for the shortage of capital wherever it exists. “The economic climate in the proud new nationalistic countries of [Southeast Asia] is not, at this crucial moment, the kind that encourages private investment.” It certainly is not. Nor, we might add, is the political climate, threatened as those countries are by Communist infiltration, subversion, or invasion. It does not follow, however, that the American government can afford to overlook what private investors cannot afford to overlook. It is folly to throw in money that might only fatten up a country for Communist conquest. And it is folly to lend money to borrowers who will not adhere to the conditions necessary to make that investment productive or repayable.

On the other hand, as soon as the would-be borrowing nations do learn and offer the conditions and assurances necessary to attract private capital, they will begin to get as much capital not only from American investors but even from their own investors as they can profitably absorb. We do not need a Point Four, for example, in order to coax private American capital into Canada.

As for the Eisenhower Administration’s new lending scheme, it is perhaps not as bad as more pure giveaway; but it is certainly not sound. It is bad enough for our government, through such institutions as the World Bank and the Export-Import Bank, to lend money to foreign governments for projects too dubious to attract private capital. But it is much worse for our government to put money into foreign private enterprise. Surely we should have learned enough of a lesson from the errors and scandals of the RFC loans to American enterprises, where we had enormously better facilities for continuous supervision and control, and for assuring repayment, than we could possibly have in any foreign country.