20 Ways to Giveaway

September 15, 1958

Administration policy is difficult to follow. On Aug. 27, President Eisenhower told reporters that he would campaign for a Republican Congress this fall on the issue of “getting down these deficits and keeping our money sound.” On the same day he deplored the cut by Congress in foreign-aid spending as “my greatest disappointment.” On the day after that, the Administration announced it would participate in a $350 million aid plan to keep India’s grandiose socialistic development program afloat. And on the day before that, in an exchange of letters with Secretary Anderson, the President had urged a still further addition to an expansion of government agencies devoted to pouring U.S. taxpayers’ money into foreign countries.

There is already a bewildering maze of agencies for this purpose. There is the World Bank, the International Monetary Fund, the International Finance Corporation, the U.S. Export-Import Bank, the Development Loan Fund, the Agricultural Trade Development and Assistance Act. Now the Secretary and President propose to set up still another agency, an International Development Association, to make “loans” so soft and dubious that even the existing government agencies are forbidden to make them. In addition, larger U.S. Government guarantees are to’ be made to the World Bank and still more money is to be poured into the International Monetary Fund.

ALL PILED ON TOP

The proposal to expand the facilities of the Bank and the Fund might have something to be said for it, as a transitional measure, if it were meant to replace our foreign-aid program. But there is not the faintest suggestion of such a replacement; all these new schemes are to be piled on top of existing foreign aid. And that foreign aid—which in all forms has already run to more than $60 billion since the end of the second world war—is presumably to be itself enlarged and perpetuated.

What is the purpose of all this aid? Does experience show that the aid has helped to accomplish its purpose? The President’s letter declares that two of the purposes are to encourage “financial policies that will command the confidence of the public, and assure the strength of currencies” and “to avoid hampering restrictions on the freedom of exchange transactions.”

We have now had these institutions and foreign aid for more than a decade. The public never had less confidence in the financial policies of governments. If this were not so, governments could borrow all they really needed from private sources. Inflation is still rampant everywhere. The war that gets the blame ended more than a decade ago. Latin America, where some of the worst inflations are still going on, was relatively untouched by the war. Restrictions on the freedom of exchange transactions were never more widespread. They are all but universal. They are built into the very concept of the International Fund.

RESCUING SOCIALISM

The truth is that not only have the Fund and foreign aid done nothing to cure this condition; it exists largely because of the Fund and foreign aid. If the restrictionist, spendthrift, and socialistic governments of the world did not know that these guardian angels were standing by to rescue them from the results of their own folly, if they knew that there would be nobody to go to but hardheaded private lenders with a prejudice in favor of getting their money back, or of getting solid guarantees, they would long ago have been forced to return to the path of fiscal sanity. In brief, dramatic “rescues” effected by the Fund and our own foreign aid have encouraged the very socialistic planning and fiscal irresponsibility that have made the rescues necessary.

Instead of adding further to our foreign-aid and intergovernment lending institutions, which subsidize foreign socialism, inflation, and exchange control, we should be thinking of how to taper off and terminate such programs; how to stop confusing political with economic goals, and how to return the business of foreign investment to private hands. Not until we have done this will the world get back to stable, hard, and convertible currencies, to private enterprise, and to real economic progress.