The Great American Giveaway

November 6, 1950

In Newsweek of Oct. 23 this column pointed out that though the so-called world “dollar shortage” had cured itself, there was still no suggestion from our own ECA that we now terminate or taper off our outward flow of gift dollars. In the same issue Newsweek carried an article and charts on the dramatic suddenness with which the “dollar gap” had been closed. Here are some further developments:

On Oct. 22 the joint Senate-House committee on Federal expenditures, under Senator Byrd, reported that $42,591,000,000 had been expended for foreign aid since V-J Day. This adds up to about $283 for every American man, woman, and child. It almost equals the cost of operating the Federal government for the whole six years preceding the second world war.

Senator Byrd said these figures were up to the minute and covered 28 programs of military and economic aid. However, they didn’t cover other programs that President Truman has in preparation. These are expected to include more foreign arms help, another round of Marshall-Plan assistance, reconstruction funds for Korea, and food for Tito’s Yugoslavia. Any reader curious about such matters will find half a dozen new proposals for giving away American money in almost any day’s newspaper. Giving away American money still seems to be, in fact, the Administration’s main solution for every foreign problem.

Lately, however, the American people have begun to wonder what they are getting for all this money. When they see the dollar weakening on world markets, when they see Britain’s “forward” sterling selling at a premium, when they see our (paid-for) imports exceeding our (partly-given-away) exports for the first month in thirteen years, when they see us losing gold at a rate of about $2,000,000,000 a year, they are beginning to ask just why our officials continue to give away dollars to bridge a gap that has already been closed.

Some of them are beginning to wonder what we are getting in return even for our military-aid programs. Three days before the publication of the joint Senate-House committee report just cited, former President Hoover warned that we “cannot long endure the present drain on our economy.” He bluntly raised the question whether, in view of the actions and statements of their leaders, the nations of Western Europe, outside of Britain, “have the will to fight, or even the will to preparedness.” And he proposed, for one thing, that “we should say, and at once, that we shall provide no more money until a definitely unified and sufficient European army is in sight.”

Still another recent development has emphasized the fact that the more zealous apostles of the Great American Giveaway in the last few years have not known what they were about. It is only a few months ago that the European Payments Union was started with great fanfare to solve all the problems of intra-European trade. It was on this argument that Congress was persuaded to throw $600,000,000 of American money into the scheme. And now it is found that West Germany has used up in three and a half months all the credits allotted to it for an entire year’s operation of EPU. The union is “faced with a major crisis.” And the suggested solution is that America throw in more dollars.

The real trouble, of course, is that the European Payments Union is a needless and amateurish piece of bureaucratic gadgetry set up on an unsound basis. (See the analyses in this column of March 27 and April 10.) The real solution of the problem with which the EPU was supposed to deal was not still more bureaucratic machinery but the simple abolition of exchange control. This would have brought at once the full and free convertibility of currencies and the expansion and balance of foreign trade that the EPU has failed to achieve.

The final irony of most of our government giveaway programs is that their effect, on net balance, has been to set back, not to advance, world economic recovery and production.