The Folly of Point Four: II

July 18, 1949

The basic assumptions of Point Four, like those of the Communist proposal by Earl Browder which it imitates, are collectivist and statist. This is evident throughout the text of Mr. Truman’s message. It allows a role for private capital, but it is the role of a junior partner. Point Four “will call upon private enterprise . . . as well as the government. . . . It will be necessary to utilize not only be resources of international agencies and the United States Government, but also the facilities and experience of private business,” etc.

Private enterprise, which has now learned to be grateful for any role in Mr. Truman’s great plans, is to be “encouraged.” How? By authorizing the Export-Import Bank to “guarantee United States private capital . . . against the risks peculiar to those [foreign] investments. . . . Some investments may require only a guarantee against the danger of inconvertibility, others may need protection against the danger of expropriation and other dangers as well.”

What is Mr. Truman here proposing? He is proposing that in order to induce American private investors to risk their funds abroad, we are to allow these private investors to keep the profits of their investments, but to force the American taxpayers to assume the losses. Such a proposition needs merely to be stated plainly to show that it would be preposterous and intolerable. The private investors and investment bankers who applaud this proposition are shortsighted beyond belief. It could only lead to the eventual nationalization of all foreign investment.

Such an arrangement, moreover, would not remove or in the least reduce the risks of foreign investment. It would merely transfer those risks from the investor to the taxpayer. Point Four exists on the assumption that government could do more to reduce such risks than private investors could. This is the exact reverse of the truth.

“We are negotiating agreements with other countries,” says Mr. Truman, “to protect the American investor from unwarranted or discriminatory treatment under the laws of the country in which he makes his investment.” If a foreign government is prepared to deal honestly and fairly with private investment, foreign or domestic, we do not need such an agreement. If it is not, it will in one way or another violate or wriggle out of the agreement.

And what will our government do then? We do not need to ask. The history of the EGA already tells us. It will be afraid to do practically anything at all. For the most timid and delicate hints on the part of our government representatives will be denounced as outrageous “pressure” on the borrowing government, as interference in its internal affairs, as an effort to halt its glorious socialist planning, to reimpose a discredited capitalism, and so on.

Private investors, lending at their own risk, have a more effective way of dealing with such matters. They do not dictate. They do not interfere. But as long as a foreign government levies confiscatory taxes, expropriates private property, socializes, nationalizes, imposes a strangling network of exchange and trade controls, or forbids its own nationals to repay their honest debts, private investors respectfully decline to make loans. They are not impressed by elaborate signed agreements to be honest, but only by an actual record of honesty.

It remains to be pointed out, finally, that our own government is itself heavily biased in favor of statism and socialism. Mr. Truman wants the Export-Import Bank to guarantee private capital against the risks of foreign lending. But the loans of that bank have been overwhelmingly government-to-government loans, or loans to government agencies, or loans with a government guarantee, and often for government projects directly competitive with private enterprise.

The Point Four program would inevitably drive the world farther into national socialism.