Mutual (Really) Security

The U.S. Treasury has repeatedly proclaimed that the outflow of gold from the U.S. gives no cause for alarm. Last week there were signs of a shift in this attitude by the Administration, and with it a possible shift in U.S. foreign economic-aid policy. The change was prompted by the fact that the U.S. loss of gold from Jan. 1 to July 24 was $898 million; the U.S. foreign-payments deficit this year will run $4.9 billion. Much of the deficit comes from the $5.5 billion the U.S. will spend this year in foreign aid, loans and military help.

Shaping up is a drive not to pare but to share the aid burden with Germany, Britain, France, and even some of the underdeveloped nations. This would be done by creating an International Development Association, dubbed "Ida." Ida was introduced to last fall's meeting of the World Bank (TIME, Oct. 20), but failed to get far because the U.S. did not push it with vigor. Now the U.S. expects to plump hard for Ida at the World Bank's September meeting in Washington, set it up with initial capital of $1 billion (one-third contributed by the U.S.) by late 1960, gradually make it shift more and more of the aid burden from individual nations.

Because developing nations have a growing need for all kinds of capital--not just dollars--Ida would make loans and accept payments in soft currencies as well as hard. To get a loan, a borrower would have to ante up some of his own money. Having a stake in Ida, the soft-currency countries would have a real incentive to spend Ida's money with prudence.

This file is automatically generated by a robot program, so reader's discretion is required.