Chapter X. Summary and Conclusions

LET US begin by recapitulating the principles and conclusions we have reached so far:

1.As the United States produces only 12 per cent of the world’s food supply, it is clear that America cannot feed the whole world.

2.The need for outside help to restore Europe’s capital structure has been greatly exaggerated. Its unused resources for creating its own capital are very great.

3.Help from outside to any country goes eventually to relieve the least urgent needs which the government of that country then decides to meet.

4.Food relief and financial help from the United States will be futile unless the country aided discontinues policies which unbalance its trade and discourage or prevent production.

5.As a contribution to revival, the economic policies followed by a country are much more important than any foreign loan.

6.The United States cannot consistently recommend sound policies to foreign governments as a condition for loans, when it is not following such policies itself. It can preach effectively only by example. And it can do more for world revival by making its own economy sound and strong and free than by trying to put temporary props under economies built on the treacherous foundations of totalitarian controls.

7.Inter-governmental loans increase and prolong governmental restrictions on the economy both in the borrowing and in the lending country.

8.The bulk of our past and prospective government “loans” to foreign governments are little better than thinly disguised gifts.

9.It is not true that the United States needs foreign loans to keep full production and employment at home. It is not true that we can get rich by giving our goods away.

10.Our excess of exports of goods and services has already caused a dangerous price rise, and cannot be maintained at the present unparalleled rate.

11.There is no scientific or objective way of measuring either Europe’s “needs” for aid or our “available resources” for supplying it. The report of the Paris conference of sixteen nations does not solve this problem. Any total arrived at must be arbitrary or sheer guesswork.

12.Making heavy loans or gifts to European nations is not the most effective way to fight world communism.

13.It will be a profound mistake to count on gratitude, or to believe that we are purchasing any permanent good will by government loans and gifts to Europe.

14.Inter-governmental peacetime loans become ambiguous and confused in purpose.

15.Inter-governmental loans raise insoluble dilemmas regarding the imposition of conditions.

16.All this must lead us to the conclusion that the business of international lending should be returned to private hands.

17.If it is thought necessary to provide public stopgap or emergency credits until the processes of private international lending can be fully resumed, then the best instrumentality for making loans to bridge such a gap would be the existing International Bank for Reconstruction and Development, under a modified charter. But this should be turned into an emergency institution only, and not authorized to make new loans beyond the next five years.

A POSITIVE PROGRAM

THIS resumé will serve as a reminder of the principal points in the course of the preceding argument. The argument has in the main necessarily been negative: it has sought to show that the proposed program of huge loans from our government to European governments will not only fail to achieve the results expected from it but may defeat the very ends its most disinterested advocates have in mind.

There are many readers, however, who will call for a more positive program. If loans from our own government to European governments are not the solution to world communism and economic chaos, they will ask, what is the solution? Such a problem is obviously too big to be answered in detail within the limits of a study of the present size, even if its author had the presumption to attempt a complete answer. One is sometimes disposed to wonder, indeed, what can be done to save people who are determined to have dictated economies and socialism, what can be done to save nations that are bent on destroying themselves.

In the course of the foregoing argument, however, “negative” as it is in its main contentions, a few positive recommendations have been explicitly stated and others have been necessarily implied. Perhaps it will help many readers if I merely list here in outline some of the main points which I believe ought to be a part of any positive program. The order in which the points are presented is not necessarily the precise temporal order in which they ought to be put into effect or the order of their inherent importance.

1.Make our own capitalism free and strong. Remove the government wartime controls that still hamper output and free markets. Strengthen especially the incentives to production.

2.Lower our own tariffs immediately, whether other nations do so or not.

3.Drastically revise our economic policy in Germany and Japan. Permit the Germans and Japanese themselves to restore their economies. Prohibit production only of direct weapons of war (for all production of any kind is of potential use in war) and stay to see that the prohibition is effective. Stop imposing socialism and Schachtism on Germany and Japan. Remove all strangling restrictions and restore incentives to output. Impose workable income reparations (not further capital seizures) to make our former enemies help the rest of the world instead of our having to support them.

4.Insist that the International Monetary Fund make two immediate minimum reforms: (a) remove the compulsion on all member nations to control exchange rates; (b) give the Fund managers power to impose conditions on borrowing governments. If these two reforms are opposed in other nations, either outright or by dilatory tactics, withdraw from the Fund altogether.

5.Return to a real instead of a merely technical gold basis for our currency.

6.Invite all nations to cooperate in returning to a world gold standard. Hold general or individual conferences with other governments to fix appropriate and maintainable parities, preferably related to each other in round figures.

7.Open our markets freely to foreign loans. Remove any unreasonable SEC requirements or other legal barriers.

8.Revise the charter of the International Bank to permit it to make stabilization loans under suitable conditions to countries contemplating eventual return to a gold standard. Make the Bank a short-lived emergency institution only.

9.Accept frankly the ideological and diplomatic challenge of Communist Russia. Defend capitalism without apology; attack the entire foundation of the Russian slave system. Recognize at last that appeasement of Stalin has been and will be as disastrous as was appeasement of Hitler.

10.Expose the fallacies of European statism and socialism by our own contrary example. Do not attempt to impose free enterprise on Europe either by coercion or by bribes. But if we can’t preach free enterprise to Europe, let us at least show the folly of a bankrupt Europe’s trying to preach socialism to us.

11.Respond generously as individuals to every justified European appeal for help.

12.If overriding emergency seems to demand it let our government give food (not money) to Europe. Demand no government reforms in exchange for it; but stamp an American flag, literally or figuratively, on every package. Insist that Americans administer or share in administering the distribution abroad. Make sure that the food is distributed in accordance with individual need rather than with any European government’s special political designs. Make sure that every European knows where the food comes from, and knows that it is a free gift without strings. Make sure that Communist lies about our aid will have a minimum political effect.