Aid Plus Trade

What's wrong--and what's right--with the U.S.'s foreign-aid program? To get a cold-eyed answer to this $4.7 billion question that is already vexing Congress, President Eisenhower last September named seven eminent men as "Citizen Advisers on the Mutual Security Program." With Benjamin F. Fairless, ex-chairman of U.S.

Steel Corp., serving as coordinator, they held closed hearings in Washington, traveled around the world in an Air Force plane, talked with heads of governments and U.S. officials in 18 countries. Last week, keeping to their March 1 deadline, they presented the President with a thoughtful, coherent and admirably concise report (5,000 words). In its reasonable, middle-course findings it was unanimous--a remarkable fact, considering that the seven authors included Republicans, Democrats, big business, organized labor and education.*

While "engaged in an inescapable struggle for its existence," says the report, the U.S. "must abandon the false hope that collective-security costs are temporary." And "economic development is--in the long run--as important to the collective security of the free world as the military measures we have taken." But, while the U.S. "can afford the essential programs of foreign assistance which our national interest requires," it must balance foreign aid against other demands upon the economy, should aim toward cutbacks in future years.

How Much? Cutbacks in Government spending can be achieved by encouraging private industry to invest abroad (e.g., by easing up on taxation of income from abroad, by guaranteeing industry against abnormal risks) and promoting freer trade (e.g., by simplifying customs procedures, lowering tariffs). But even with increased private foreign investment and freer trade,

U.S. economic aid will still be needed "for some years to come."

How much, then, should the U.S. spend for foreign aid? Answers the committee: collective-security expenditures "need not exceed" the fiscal 1956 level. (Cost of military and economic aid that year: $5.6 billion. Estimate in the much-disputed 1958 budget: $4.7 billion.)

In general the report recommends:

P:Heavier emphasis on long-range economic development. For a start in that direction, the report puts forward the novel suggestion that aid programs be presented to each Congress, i.e., every two years, instead of to each session.

P:Reduction in the number of aid projects and concentration on the more promising.

P:Greater discretionary authority for the Administration in the spending of aid funds--a proposal that is certain to find Congress chilly.

P:Integration of the International Cooperation Administration into the State Department, a suggestion that will be welcome neither to State, which wants to keep the conduct of diplomacy separate from aid problems, nor to ICA, which has undergone half a dozen administrative reorganizations since Marshall Plan days, and wants no more.

Certain to stir up some of foreign aid's purest theorists is the report's conclusion that "a higher priority should be given to those countries which have joined in the collective-security system"--meaning that such neutralist nations as India and Yugoslavia would be far down on the list. The Fairless argument: Other countries have a right "to take whatever course they believe to be in their own national interest. Our Government is obligated to do likewise, and we should marshal our resources to that end."

*On the panel with Fairless: University of Virginia's President Colgate W. Darden Jr., onetime governor of Virginia; United Mine Workers' President John L. Lewis; New York Herald Tribune's Chairman Whitelaw Reid; Bank of America's Chairman Jesse W. Tapp; Procter & Gamble Co.'s Chairman Richard R. Deupree; American Machine & Foundry Co.'s Vice Chairman Walter Bedell Smith, Ike's wartime chief of staff.

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