Global Spending Forever?

April 17, 1950

The amendments made up by the Senate Foreign Relations Committee to the House-approved Point Four program are nearly all in the right direction. The real question is whether they go far enough.

Certainly the committee was wise in rejecting the House provision for United States Government guarantees of private investments abroad. Such guarantees mean that we would allow private investors to keep the profits of their investment but would force the American tax-payer to assume the losses. This would be intolerable.

Listen to Secretary Acheson’s defense of this proposal: “Protection from some of the risks [to foreign investment] cannot be provided by treaty no matter how sincere the intentions of the participating governments. Therefore, a bill has been introduced [to guarantee and insure private investors] specifically against expropriation, confiscation and seizure, and against inability to convert local currencies.”

In other words, because these foreign governments sincerely cannot prevent themselves from seizing American property or forbidding currency conversion it is up to the American taxpayer to make good.

Chairman Connally of the Senate Foreign Relations Committee has expressed apprehensions that the initial $45,000,000 sought for the Point Four program for the coming year would be only the start of a more ambitious and costly program. “As time goes on,” he says, “I can feel the pressure coming in the window for big projects.”

So the committee put a five-year limit on Point Four. But will this time limit prevent pressure for further extension five years hence? The ECA, remember, was to last only four years. Of course, Administrator Hoffman reassures us, “ECA aid should be terminated on its schedule date of June 30,1952. . . . But even with ECA liquidated I doubt if expenditures for foreign aid can be held below $2,000,000,000 annually. “ECA aid,” in other words, will stop; but we are to continue global spending under some other name. “Point Four,” perhaps? And after five years of Point Four, “Point Forever”?

It is of the first importance that Congress reject the principle of Point Four. Once we accept the implied premise of that program—that it is the duty of the American taxpayer to subsidize “underdeveloped areas” everywhere, i.e., that the American taxpayer owes the rest of the world a living—we let ourselves in for endless and bottomless responsibilities.

It is impossible in this space to unravel all the fallacies and misconceptions behind the Point Four program. I have myself written a 48-page pamphlet analyzing these in detail.^* Here I can merely list some main conclusions:

1—The fact that Point Four so strikingly parallels the proposals of the official head of the Communists in this country in 1944 is at least reason for careful scrutiny.

2—Point Four will not add to the total invested capital of the world. It will at best merely divert that capital from one channel to another—largely from private projects to government or socialistic projects.

3—We cannot give our cake away and eat it too. We can speed up the capital development of other countries only at the expense of our own capital development. We cannot get rich by giving our exports away.

4—The British peanut fiasco and our own Lustronhouse loans illustrate in advance what typical Point Four projects would be like.

5—Even if a Point Four program were necessary, the International Bank for Reconstruction and Development and the Export-Import Bank already exist to do precisely what is proposed under Point Four, and are already doing it in ample prudent volume.

6—The assumptions that global government handouts or “loans” promote sound private international investment, accelerate a return to free enterprise, or speed up world recovery or world development, are the exact reverse of the truth.

^* Illusions of Point Four. Single copies on request from the Foundation for Economic Education, Irvington, N.Y.