were present and voting he would vote "yea"; if I were permitted to vote, I would vote "nay." I therefore withhold my vote. The rollcall was concluded. Mr. HUMPHREY. I announce that the Senator from New Mexico [Mr. ANDERSON], the Senator from Alaska [Mr. BARTLETT], the Senator from Indiana [Mr. BAYH], the Senator from Nevada [Mr. BIBLE], the Senator from Mississippi [Mr. EASTLAND], the Senator from Indiana [Mr. HARTKE], the Senator from Washington [Mr. JACKSON], the Senator from Louisiana [Mr. LONG], the Senator from Arkansas [Mr. MCCLELLAN], the Senator from Wyoming [Mr. McGEE], the Senator from Montana [Mr. METCALF), the Senator from Utah [Mr. Moss], the Senator from Florida [Mr. SMATHERS], the Senator from Mississippi [Mr. STENNIS], and the Senator from Texas [Mr. YARBOROUGH] are absent on official business. Arizona would vote "yea," and the Senator from Kentucky would vote "nay." On this vote, the Senator from Nebraska [Mr. HRUSKA] is paired with the Senator from Kentucky [Mr. COOPER]. If present and voting, the Senator from Nebraska would vote "yea," and the Senator from Kentucky would vote "nay." On this vote, the Senator from New Mexico [Mr. MECHEM] is paired with the Senator from Iowa [Mr. MILLER]. If present and voting, the Senator from New Mexico would vote "yea," and the Senator from Iowa would vote "nay." On this vote, the Senator from Pennsylvania [Mr. SCOTT] is paired with the Senator from Utah [Mr. Moss]. If present and voting, the Senator from Pennsylvania would vote "yea," and the Senator from Utah would vote "nay." The result was announced-yeas 29, nays 46, as follows: Bennett I further announce that the Senator from California [Mr. ENGLE] is absent Byrd, Va. due to illness. I further announce that, if present and voting, the Senator from California [Mr. ENGLE], the Senator from Montana [Mr. METCALF), and the Senator from Florida [Mr. SMATHERS] would each vote "nay." On this vote, the Senator from Alaska [Mr. BARTLETT] is paired with the Senator from Nevada [Mr. BIBLE]. If present and voting, the Senator from Alaska would vote "nay," and the Senator from Nevada would vote "yea." Cannon [No. 202 Leg.] YEAS-29 Gruening Johnston Clark Cotton Morse Mundt Ellender Nelson Ribicoff Ervin Gore Aiken Allott Robertson NAYS 46 Hickenlooper Hill Holland Humphrey Brewster Burdick Carlson Inouye Javits On this vote, the Senator from Indiana [Mr. BAYH] is paired with the Senator from Mississippi [Mr. EASTLAND]. present and voting, the Senator from Indiana would vote "nay," and the Senator from Mississippi would vote "yea." On this vote, the Senator from Indiana [Mr. HARTKE] is paired with the Senator from Washington [Mr. JACKSON]. If present and voting, the Senator from Indiana would vote "nay," and the Senator from Washington would vote "yea." Douglas Fong Edmondson Fulbright Hart Hayden Anderson Bartlett Beall Bible Eastland Engle On this vote, the Senator from Wyoming [Mr. MCGEE] is paired with the Byrd, W. Va. Senator from Louisiana [Mr. LONG]. If present and voting, the Senator from Wyoming would vote "nay," and the Senator from Louisiana would vote "yea." On this vote, the Senator from Utah [Mr. Moss] is paired with the Senator from Pennsylvania [Mr. SCOTT]. If present and voting, the Senator from Utah would vote "nay," and the Senator from Pennsylvania would vote "yea." Mr. KUCHEL. I announce that the Senator from Maryland [Mr. BEALL], that the Senators from Kentucky [Mr. COOPER and Mr. MORTON], the Senator from Arizona [Mr. GOLDWATER], the Senator from Nebraska [Mr. HRUSKA], the Senator from New Mexico [Mr. MECHEM], the Senator from Iowa [Mr. MILLER] and the Senator from Pennsylvania [Mr. SCOTT] are necessarily absent. The pair of the Senator from Maryland [Mr. BEALL] has been previously announced. On this vote, the Senator from Arizona [Mr. GOLDWATER] is paired with the Senator from Kentucky [Mr. MORTON]. If present and voting, the Senator from Kennedy Kuchel Lausche Long, Mo. Magnuson Mansfield McCarthy McIntyre McNamara Goldwater Hartke Hruska Russell Simpson Symington Talmadge Tower Monroney NOT VOTING-25 Jackson Long, La. McClellan McGee Mechem Metcalf Miller Morton Moss Scott Smathers Stennis Yarborough So Mr. MORSE'S motion to recommit was rejected. Mr. FULBRIGHT. Mr. President, I move that the vote by which the motion was rejected be reconsidered. Mr. DIRKSEN. Mr. President, I move to lay on the table the motion to reconsider. The motion to lay on the table was agreed to. LEGISLATIVE PROGRAM Mr. DIRKSEN. Mr. President, I should like to ask the distinguished majority leader about the schedule and what he anticipates for the remainder of this afternoon and about as much of the schedule for next week as he can state at this time. Mr. MANSFIELD. Mr. President, it is my understanding that the distinguished Senator from South Carolina [Mr. JOHNSTON] has an hour's speech on the foreign aid proposal. Unfortunately, the distinguished senior Senator from Oregon [Mr. MORSE] had to leave the floor briefly, to attend a very important conference on the higher education bill. He will return later and will have a speech to make. I do not know of any votes which will be taken during the remainder of today. It is anticipated by the leadership that next week the Senate will meet on Monday, Tuesday, Wednesday, Thursday, and Friday; and it may be that votes will be taken on any or all of those days. I mention Tuesday specifically, because although some elections will be held on that day, there is no commitment that votes will not be taken in the Senate on that day. In view of the fact that we may be in for a long siege, I think it well to inform Senators that the Senate will meet on Tuesday of next week, as well as Monday, Wednesday, Thursday, and Friday, and that on Tuesday, votes may be taken in the Senate. Mr. JOHNSTON obtained the floor. Mr. MANSFIELD. Mr. President, will the Senator from South Carolina yield briefly to me? Mr. JOHNSTON. I yield. Mr. MANSFIELD. Mr. President, I understand that the distinguished Senator from South Carolina has an amendment to the amendments which are pending and are at the desk. I call his attention to the fact that, in response to a question raised by the distinguished minority leader, I stated that no other votes would be taken this afternoon. So I hope that with that in mind, the Senator from South Carolina will agree with the leadership and will join in the assurance that no other votes will be taken this afternoon. Mr. JOHNSTON. I assure the majority leader that I shall not call for any vote on any amendment. Mr. MANSFIELD. I thank the Senator from South Carolina. ORDER FOR RECESS TO MONDAY Mr. MANSFIELD. Mr. President, I ask unanimous consent that when the Senate concludes its session today, it take a recess until noon, on Monday next. The PRESIDING OFFICER (Mr. BREWSTER in the chair). Without objection, it is so ordered. KAINO HELY AUZIS Mr. HUMPHREY. Mr. President, I ask that the Chair lay before the Senate the amendments of the House of Representatives to Senate bill 310, for the relief of Kaino Hely Auzis. The PRESIDING OFFICER laid before the Senate the amendments of the House of Representatives to the bill (S. 310) for the relief of Kaino Hely Auzis, which were, in line 3, strike out "sections 101(a) (27) (A)” and insert "sections 203 (a) (2)", and in line 6, strike out "minor child" and insert "daughter". Mr. HUMPHREY. Mr. President, on April 4, 1963, the Senate passed S. 310, to provide for the granting of nonquota status to the adopted daughter of citizens of the United States. On July 9, 1963, the House of Representatives passed S. 310, with amendments to grant second preference status to the beneficiary. Inasmuch as a quota number will be currently available for the beneficiary, I move that the Senate concur in the House amendments to S. 310. The PRESIDING OFFICER. The question is on agreeing to the motion of the Senator from Minnesota. The motion was agreed to. AMENDMENT OF FOREIGN ASSIST ANCE ACT OF 1961 The Senate resumed the consideration of the bill (H.R. 7885) to amend further the Foreign Assistance Act of 1961, as amended, and for other purposes. Mr. HOLLAND. Mr. President, I have at the desk an amendment to the pend ing amendments which have been offered by the distinguished majority leader [Mr. MANSFIELD], on behalf of himself and other Senators. I ask that my solution to approaching disaster consists of more and more billions to be wasted in foreign aid-more billions to be thrown on top of the billions already spent into the cesspool of hopeless conspent into the cesspool of hopeless confusion. There is nothing new about foreign aid. In one form or another, it has been given for thousands of years. The nations of the world throughout the pages of history have engaged in aiding each other. The ancient Greeks tried to meet the challenge of the Persians, the Macedonians, and finally the Romans with programs of mutual assistance. The Romans paid handsome subsidies, from time to time, to both their allies and their satellites. Great Britain, almost of the last and eventually successful singlehanded, bore the financial burden coalition against Napoleon. aid as a concept and as a practice. The No, there is nothing new about foreign only thing new about foreign aid is the reckless abandon with which the United States of America has pursued its pro grams. amendment to those amendments be called up and be made the pending questions have pursued foreign aid programs Over the years of history other na tion. The PRESIDING OFFICER. The amendment of the Senator from Florida to the so-called Mansfield-Dirksen amendments will be stated. The LEGISLATIVE CLERK. On page 1, in line 8, of the amendments (No. 280) submitted by Mr. MANSFIELD, on behalf of himself and other Senators, the following amendment (No. 290) is proposed: namely, strike out the figure "$1,500,000,000" and insert the figure $975,000,000". The PRESIDING OFFICER. The question is on agreeing to the Holland amendment to the so-called MansfieldDirksen amendments. Mr. JOHNSTON. Mr. President, I believe that we have reached a crucial point-perhaps the most crucial point in the history of U.S. foreign policy. When any nation, most particularly a great nation which carries the heavy responsibility of leadership for much of the world, is determined to preserve its identity and independence before the onslaught of Communist degradation and imperialism, it cannot afford the luxury of fantastic waste. Mr. President, it is my considered opinion that it is mind-changing time in the Senate of the United States. For 17 years since World War II we have constantly and consistently accepted the magic formulas of the apostles of giveaway foreign aid. This we must stop. I am not one of those people who recklessly charge those with opposing points of view with dishonesty, deceit, or a lack of integrity. Let us give the apostles of giveaway the benefit of the doubt. Let us say in all sincerity that they believe in their magic formulas. Like most human beings, the persons whom they have deceived most are themselves. There can be no doubt that these supposedly sane, intelligent, and loyal Americans have gotten us into a quicksand of mess and predicament in foreign entanglements from which we may never disengage ourselves. The great tragedy of The great tragedy of it all is that their only recommended with a specific purpose in mind and with a specific goal in view. But we Americans seem to have another idea— or perhaps the lack of an idea. We seem to believe that if we pursue relentlessly a program of abstract togetherness and humanitarianism, we will find at the end of some distant rainbow that brave new world which we have sought and failed to achieve, through two World Wars and the Korean war. Historically, other nations have extended foreign aid for two reasons: first, to strengthen their military position in concrete terms; and second, to develop their colonies or territories or other areas for the ultimate benefit not only of the colony or protected state but also for the benefit of the motherland itself. We Americans, however, have gone radically beyond these practical and emphatically limited objectives. We Americans aid everybody who asks for it, and even some who do not. We aid our allies. We aid so-called neutral states which consistently vote against us in the United Nations and oppose us elsewhere. We even aid the satellites and vassals of the Communist enemy. I call attention to the "Report to the President of the United States From the Committee To Strengthen the Security of the Free World on the Scope and Distribution of U.S. Military and Economic Assistance Programs." This is the so-called Clay Committee report on foreign aid, dated March 20, 1963. Every American interested in the foreign relations of his country and in world peace should read the Clay report. The majority view of the report contains more clear thinking than any of the reports on the same general subject which have come out of the executive branch of Government under the three administrations since World War II. I can only conclude, however, that it is a terrible pity that General Clay and his committee did not carry their thoughts to a logical conclusion and thus recommend that foreign aid give away programs be stopped now. I only regret that the President did not, on the basis of the Clay report, do more than make a modest cut of $420 million in his request for foreign aid funds for the coming fiscal year. But he still asks for another $42 billion in foreign aid. May the good Lord have mercy on us and our economy. In But perhaps I expect too much too soon of a committee appointed by the executive branch of Government. any case, these 10 points made by the Clay Committee were of special interest to me: 1. External aid is of little value unless it is accompanied by an internal expression of will and discipline. 2. We are attempting too much for too many. 3. We should not extend aid which is inconsistent with our beliefs, democratic tration and consequences. dition, and knowledge of economic organiza 4. We believe the United States should not aid a foreign government in projects establishing Government-owned industries and commercial enterprises which compete with existing private endeavors. 5. Foreign aid was not designed for combat zones. Consideration should be given for making provision for countries in the border areas other than in our foreign aid program. 6. We do not see how external assistance can be granted to Indonesia by free world countries unless it puts its internal house in order, provides fair treatment to foreign international adventures. creditors and enterprises, and refrains from 7. We cannot accept the view that the United States must provide aid lest the fragile, new, developing countries of Africa accept it from Communist nations with resulting political penetration and eventual subversion. 8. We believe that the United States has contributed proportionately more than its share to the task assumed by the United Nations in the Congo. 9. The United States and Latin America cannot allow another Castroite-Communist Cuba to come into existence. 10. We are convinced that the burden of sustaining foreign assistance to the lessdeveloped countries is falling unfairly on the United States, and that the industrialized countries can and should do more than they are now doing. One would think, also, that sooner or later, at least a part of the truth would catch up with even those who practice political and economic self-hypnosis. The Clay Committee shows some indication of achieving at least a slight glimmer of an understanding of the political and economic facts of life. But apparently the truth has no meaning for these other people who are prisoners in the decadent, crumbling castle of ideas of their own making. They suffer from one grotesque hallucination piled on top of one act of stupidity after another. No! Fiscal sanity and the economic facts of international life continue to escape and elude the apostles of giveaway. Instead, they try to readjust the facts or at least to confuse themselves about the facts-by indulging in namechanging and alphabet soup for aid programs and agencies. We can only hope that the Clay Committee report will result in more insight and real thinking about foreign aid. We have had economic aid which we called lend-lease. That was during World War II, and I think a review of the settlement agreements would show that there was not too much lend, very little lease, and an awful lot of giveaway. Since World War II we have had mutual security programs. But these mutual security programs by name defy all logic. Not only is mutual security aid extended to allies but it is extended also to neutrals and to the vassals of the Communist enemy. How can these programs be either mutual or add to our security? Then there has been technical assistance designed to provide the know-how to those who do not possess our industrial and technical skills. A close examination of the technical assistance program will, however, show that money is spent not only on personnel possessing skills but also on goods and miscellane ous services. Then, there are loans. These loans, so many of them, are really gifts in that there is no hope of ever recovering them. The Development Loan Fund, which was put into operation several years ago, tacitly acknowledges this state of affairs by employing the category of "soft loans." What are soft loans? Soft loans are loans that no practical banker or businessman would touch with a 10-foot pole. Soft loans are gifts that it is more politic to call loans. Finally, there is the interesting category of defense support, which one would think includes the instruments and weapons for possible war. But defense support includes not only weapons and materiel but substantial amounts of economic aid. Indeed, at one time all economic aid was called defense support aid. We started out, after World War II, with the Greek-Turkish Aid Act. At that time there was great pressure by the Russians on Greece and Turkey. In the case of both countries we went from military assistance to permanent programs of economic dole. Then, there was the Marshall plan. We were told, in 1947, by Mr. Paul Hoffman and by Representative Christian Herter-later Secretary of State under the second Eisenhower administrationthat in 4 years the total expenditure on aid to Europe in its recovery would not exceed $17 billion. Actually, I believe, that aid under the Marshall plan only amounted to about $12 billion. But foreign aid becomes a habit, and we have gone on and on, looking for new areas to aid, on the theory that since 1947 there are harsh new forces at work in the world which endanger this Republic and its people. According to the latest reliable figures I have on hand, by the end of fiscal year 1962 our total aid amounts to $97,675 million since World War II, on top of $494 billion spent on lend lease. That makes approximately $147 billion. Bear in mind that is not all. Remember, we had to borrow the money to pay 3 percent interest. Ever since 1950 we have been paying more than $3 billion annually on the additional amount of indebtedness caused by our aid to foreign countries. At the present time it amounts to almost $6 billion annually in interest alone-additional interest created on account of foreign aid. In the final analysis, it is impossible to determine how much of this aid is military and how much is economic. There is just too much change and too much fuzzy thinking in the labels and categories assigned to different types of programs for anyone to be very sure of himself on this subject. The agencies which have administered foreign aid have changed names even faster than the names of aid programs have been changed-in fact, as fast as a lizard can change skins. As I recall, we started out with the Marshall plan being administered by a task force within the State Department. For a time, even after the bulk of economic assistance was transferred to a separate agency, the Technical Cooperation Administration was part of the State Department. Later, however, TCA became part and parcel of the Mutual Security Administration which then administered foreign aid. As for the alphabet soup, the foreign aid agency has been known as ECA, MSA, FOA, ICA, and now AID. Which stand for, respectively, Economic Cooperation Administration, Mutual Security Administration, Foreign Operations Administration, International Cooperation Administration, and now Agency for International Development. One might say that, regardless of the name, this particular rose smells all the The smell is that of giveaway leading to national bankruptcy and economic chaos. Perhaps the most interesting name of all was Foreign Operations Administration which was the Eisenhower administration's first choice of giveaway agency names. At least, FOA gave the wags around Washington a chance for a little expression of humor. For it was said that FOA, pronounced "Fo-ah," was entirely fitting for a Capital City which at that time showed a strong affinity for the game of golf. But let us go to great lengths to be fair about this matter. Without being guilty of creating straw men to be knocked down, and with full intent to do justice to those who believe in economic aid, let us ask ourselves: On what premises do they base their beliefs? Let us, indeed, ask ourselves what kind of rationale has been used to stampede the departure of all our billions of foreign economic aid-billions which amount to almost three-fourths of our national debt. The national debt is more than $300 billion, and almost three-fourths of it has been caused by the foreign aid giveaway program. It costs us approximately $6 billion a year in interest alone. Now then, what are the arguments for foreign economic aid? Insofar as I can determine, the arguments are based on these basic concepts: First. Foreign aid, they say, enhances our national defense and strengthens our military might. Second. Foreign aid, they say, will stop communism in its tracks by creating conditions of social and economic well-being from which the opposition to communism will arise. Third. Foreign aid, they say, will provide for programs of economic growth on a planned businesslike basis. Fourth. Foreign aid, they say, will create stable societies friendly to the West. Fifth. Foreign aid, they say, will provide for hungry nations to buy surplus U.S. commodities. Sixth. Foreign aid, they say, will encourage the flow of capital, both public and private, essential to the longrun success of economic development. act as a stabilizer against recession in Seventh. Foreign aid, they say, will the United States, a crutch for our foreign trade and thus, by implication, as a subsidy and a pump-priming device for American economic expansion and full employment. offer in the persons of Americans living Eighth. Foreign aid, they say, will abroad and through subsidized visits of foreign officials to the United States, a living example of democracy—that is, "democracy by example," to use the fashionable cliche. First. Let us take the idea that foreign aid enhances enhances our defense and strengthens our military might. Historically, and on the basis of practical horsesense, a case could be made for real defense support, as contrasted with vast quantities of giveaway economic assistance, to our NATO allies in Europe as well as to our allies in the Southeast Asia Treaty Organization— SEATO-the Central Treaty Organization-CENTO-the Republic of China, Vietnam, the Philippines, and perhaps a few other nations. the But there are other countries in which economic aid cannot possibly be justified under the pretext of defense support because in those nations United States is not helping to support the military forces to any significant degree. In those nations economic aid is called special assistance and under this category we are asked to provide additional millions to Afghanistan, Bolivia, Burma, Ethiopia, Ghana, Haiti, Indonesia, Jordan, Liberia, Libya, Morocco, Nepal, Somalia, Sudan, Tunisia, Yugoslavia, and others. Let us take a few examples of the recipients of special assistance. the recipients Through fiscal year 1962 we gave approximately $3,953 million to India. India, supposedly, was a nation dedicated to nonviolence and peaceful pursuits. Yet India's record is a mixed one. She has attacked our NATO ally, Portugal, and defied the U.N. Charter in doing so, but she also resisted Red Chinese aggression. Ghana, an African State, was promised vast new amounts of aid for its sweeping Volta River project. Yet Ghana's brand of neutralism is that of repeatedly voting against our position in the U.N.not abstaining but voting against us repeatedly. Ghana, moreover, has embarked upon a program of left-leaning dictatorship and authoritarianism. Even among those nations to which we are allied there has been incalculable waste which could have only weakened not only our defense position but theirs. In Iran, for example, we spent $3 million to build a road to a proposed dam site before there was even a firm contract for financing the dam. In Laos, to whom we have given about $445 million in aid, there has been, according to one Government operations committee report, case after case of con flicts of interest, apparent mismanagement, misuse of funds, and even instances of what I would call graft. The list of error and miscalculation and outright stupidity is indeed almost endless. And for further details I refer, Senators, to the address I made in 1961 before the Senate on this same unhappy subject. So let us proceed in our clinical examination of the ideas which foster giveaway by the billions and over decades. Second. Foreign aid is supposed to stop communism in its tracks by creating the social and economic conditions from which the opposition to communism will arise. We gave, through fiscal year 1962, approximately $2,400 million to Communist Yugoslavia, and approximately $5222 million to Communist Poland. We even gave approximately $50 million to Cuba before the rise of that bearded beatnik Napoleon, Fidel Castro, and then another $2 million after Castro came to power. How much opposition to communism has arisen in Poland? Did our aid restrain Castro from declaring himself a Communist and leading his people to totalitarianism and bringing us to the very brink of war last fall? Just how independent, in the final showdown, will Tito's Yugoslavia be of Khrushchev's Soviet Russia Third. Foreign aid, they say, will provide for programs of economic growth on a planned businesslike basis, a totally ridiculous theory proven baseless by sad experience. May I call attention, also, to the fact that in Pakistan one of the auditing teams observed that 10 dump trucks, procured at a cost of $265,000, were standing idle while the earthmoving work has performed by women with head baskets and burros. The dump trucks, it was discovered, were not suited to the nature of the soil. Moreover, it was difficult to train operators of complex equipment, and labor was abundant, so women were used instead of the expensive dump trucks which our tax dollars had pur chased. Still another example of the planned, businesslike basis of foreign economic aid programs can be found in the case of Korea. In the report of the staff survery team of the Subcommittee for Review of the Mutual Security Program on Economic Assistance to Korea, Thailand, and Iran, dated July 5, 1960, attention is called to five projects which are described as being "bogged down." This interesting quotation, found on pages 6 and 7 of this report should provide further refutation of this third concept: a factory site, the determination of the type of equipment to be used, and the scale of operations and the prices to be paid for machinery and materials are left to the management of the enterprise. If the judgment of the management proves to be wrong on these matters, the management loses its investment. In Korea, where many industries are government owned and where many others are financed almost entirely by government loans, the normal profit and loss incentives and penalties cannot be accepted as adequate and time-consuming machinery of bureaucontrols of management, and the elaborate cratic review has to be relied on. There are undoubtedly a considerable number of entrepreneurs with the management ability and with capital, and the survey team visited a number of factories equipped by the United States which are in successful operation. These successes appear to reflect the adequacy of the entrepreneurs cedures for granting U.S. assistance. rather than the effectivenss of the pro Recognizing that its observations were limited, the survey team, nevertheless, invites consideration of the possibility that U.S. assistance to the industrial-commercial segments of the economy (as distinguished from public utility segments such as railways and powerplants) should be limited to en terprises where there is a qualified manager then most of the surveying, screening, and reviewing procedures now in effect eliminated. A corollary of this would be that to the extent that local entrepreneurs are not available to carry forward industrial-commercial development on an adequate scale, encouragement should be given to foreign firms to come in and fill the deficiency. If the Korean Government is unwilling to use the services of foreign entrepreneurs, it should accept the fact that certain areas of economic development must await the indigenous production of management ability and risk capital. How well-planned and businesslike is a program which gives birth to projects for which the existing managerial abilities and other skills are most inadequate in fact, so inadequate that the projects grind to a halt? Another case in point is that of Turkey to whom we had extended approximately $4 billion in total aid through fiscal year 1962. It is reported that our aid to Turkey has met with tremendous suc cess. Indeed, one document states that there was a 50-percent increase in Turkey's gross national product between 1948 and 1962, 144-percent increase in the number of industrial establishments, 61percent increase in industrial production, 52-percent increase in mineral production, 95-percent increase in generating capital for electric power, and more than 100-percent increase in agricultural pro100-percent increase in agricultural production. Yet, despite all of these impressive figures and despite the constantly repeated statement that Turkey's great leader, Attaturk, had carried his country so far that it was ripe for an economic aid program, and despite the fact that Turkey has been able to maintain an impressive armed force against Communist aggression, our hopes have not been fulfilled in that valiant country. For years, inflation has been rampant, there has been a flight of capital from the country, and there has been an unfavorable balance of trade. To put it simply, Turkey could not meet the burden of rapid economic development, and the whole problem culminated several years ago in the overthrow by a military junta of the constitutionally established Government of Turkey. As that great educator of Yale University, William Graham Sumner, put it many years ago: State ways do not make folkways. Too often, our apostles of giveaway have failed to take into consideration the mores and customs of a developing society. Too often, they have overestimated the absorption power of an economy for foreign aid. Too often, foreign aid has brought not stability and economic plenty but instability and economic chaos. Too often, modern technology has been superimposed on regimes and administrative systems which were unable to cope with Western instruments of progress. Fourth. Foreign aid, they say will create stable societies friendly to the West. This idea is so closely related to the previous one that it has been for the most part answered. Let me just suggest, however, that stability is generated from within a society. And friendship can no more be purchased among nations than it can be among individuals. Perhaps William Shakespeare put it best when he said: Neither a borrower nor a lender be, for loan oft loses both itself and friend. In our own country Ralph Waldo Emerson wrote along the same lines: We do not quite forgive a giver. The hand that feeds us in some danger of being bitten. Fifth. Foreign aid, they say, will enable hungry nations to buy surplus U.S. commodities. Under existing law, we may dispose of farm surpluses abroad by selling them for foreign currencies, mak ing grants for disaster and famine relief, and donation to private welfare organizations for oversea distribution. I do not find fault with giving farm surpluses to hungry people, but I do find fault with some of the techniques used. Why should we collect foreign currency for agricultural surpluses and then spend these funds on the country's development program? Why do we not make a greater effort to swap more of our agricultural surpluses for the products in which we are in such short supply-for example, manganese, chromite, cobalt, and tungsten, and so forth? Even given the facts that some of the hungry nations do not produce these scarce commodities, could me not join with other surplus food producing areas and arrange three-way barters of products? And even if we do now have huge stockpiles of many scarce commodities, surely these commodities could be imported for day to day use in the United States. Sixth. Foreign aid, they say, will increase the flow of capital, both public and private, essential to the long-run success of economic development. This concept is based, of course, on the fairly widely held view among modern economists that an underdeveloped and agricultural economy will reach a so-called takeoff point. That is, the economy must produce a surplus over and beyond its needs in order that savings may be available for investment. The percentage of savings necessary for the economy's takeoff toward industrialization is variously estimated at 5 to 15 percent of the gross national product. In the Western World during the industrial revolution, particularly in the 19th century, savings for investment were accumulated by capitalists through the mechanism of maintaining low wages and thus controlling the consumption of the working working people-who people-who otherwise would have eaten up and used up all of the savings. In the Soviet world, modernization and industrialization advanced at a much faster rate than in the West-the Soviets not only kept wages low but also controlled prices, and deliberately maintained scarcities of consumer goods as well as millions of slave laborers. Taking the underdeveloped nations as a group, it would seem that those Americans who expect miracles from foreign aid ignore many facts of life. First of all, we have seen what happens when foreign aid is poured into nations without modern administrative institutionsnations whose people are tied to beliefs that fitted simple societies but not modern industrial societies. It frequently results in a runaway inflation, reckless consumption, an excess of imports-including luxury imports-over exports and wholesale corruption. Somehow, those who have the savings are afraid to remove them from the sock or the cookie jar. And to keep the ball rolling-to meet the so-called revolution of rising expectations-the apostles of giveaway must continually find new sources of funds-either American, British, or from international organizations. More and more, also, we find the recipients of foreign aid inclined toward authoritarian methods to solve the increasingly complex problems of their own making. Castro has embarked on wholesale nationalization and heavyhanded controls. Nasser of Egypt and Nkrumah of Ghana have apparently behaved in a similar, although perhaps more moderate vein. The list of foreign aid sired or nourished tyrants is almost endless. It is said, however, that Tito of Yugoslavia has relaxed in his frenzy of dictatorship and nationalization since becoming a major recipient of the American dole. But this is somewhat like the man who cut his throat so he would not have to shoot himself. For Tito had gone so far down the path of dictatorship and nationalization that any relaxation, whether it is spelled out in a new constitution or not, is purely relativeand probably will be temporary as well. Seventh. Foreign aid, they say, will act as a stabilizer against recession in the United States, a crutch for our trade, and thus, by implication-a pump-priming device for American economic expansion and full employment. It is perfectly true that no nation can live indefinitely in economic plenty while the rest of the world starves. But I doubt that it is wise for us, in this era of international tension and fantastic expenditures for defense, to lean upon the weak reed of foreign aid. True, our exports do exceed our imports, and this imbalance could not continue indefinitely. If a nation sells, it must also buy. But with foreign aid, we are running a deficit in our balance of payments, and we had been losing gold at a rapid rate until the Kennedy administration was able to institute measures of control. In 1947 we had almost $23 billion in gold stocks and in 1963 we were left with less than $16 billion. Most of the gold outflow has occurred since 1957. And why has there been a gold flow out of the country in recent years? The answer is both complex and simple. It is that our exports are less than the combined totals of imports, essential military aid to our allies, expenditures by American tourists abroad, and giveaway foreign aid. No. Even ignoring other factors, foreign aid is an undependable crutch. For foreign aid contributes in more ways than one to our balance-of-payments problems. There is no doubt in my mind that foreign aid channels American production into temporary and unstable pursuits. More important, perhaps, it does the same thing abroad to foreign industries. It builds up with American money competition from foreign industries who have the production costs' advantage of low wages-advantages which can be magnified through the introduction of modern assembly line techniques. The disaster brought to the textile industry in my own State of South Carolina and in many other States is only one example of this fact of life. American industries, not wanting to preside over their own destruction, are investing more and more money abroad. In 1939 there were $11,400 million in American long-term capital invested invested abroad. By 1947, this figure had grown to $16,900 million in private capital and $12,200 million in U.S. Government investments. And by 1961, this figure had increased to $48,927 million in private investments and $21,814 million in U.S. Government investments-a total of almost $70 billion invested abroad. The free flow of capital is just fine in theory until one examines the stark realities of tariffs, customs regulations, currency controls, and differences in wages for labor that does not move freely across national boundaries. An excessive flow of capital can, in other words, spell disaster in this world of controlled domestic economies. Perhaps we should learn a lesson from Great Britain of the 19th century. For Great Britain emerged from the Napoleonic Wars as the most powerful and industrially-advanced nation on earthdustrially-advanced nation on earththe workshop of the world. Contrary to popular belief, it was not World War I that put Great Britain on the economic skids. World War I only expedited a process that had long been in progress. I am told that in 1860 Great Britain produced two-thirds of all the coal and steel-the very lifeblood of economic strength in the 19th centurywhich flowed in international trade. By 1880, Great Britain was producing only one-third of the coal and steel that flowed in international trade. True, British production had expanded during those 20 years. during those 20 years. But absolutes are never important in international economics or politics. The awful truth is that Great Britain's competitors had expanded with modern technology at a far greater rate than had the British. Ironically, it was British capital which had built up the competition offered to her in the 1880's and thereafter by the United States, Germany, and Japan-all newcomers among the great nations on the international scene. Yes, the British capitalists allowed their own industries to become obsolete and antiquated while they enjoyed large profits from oversea investments. The net result was that Britain was no longer able to play her traditional role as the balancer in the European balance-of-power system. And once the scramble for colonies was over, Germany decided to challenge British power. The peril point and escape clauses and all the trade agreements in the world will not help us if we preside over our own economic disaster. Nikita Khrushchev has invited us to compete with the Communist world and has promised the United States that he would "bury us." Nikolai Lenin is said to have made this statement: The time will come when they (the capitalist nations) are so bankrupt that they will lose all power of resistance. It may be, as some eminent authorities have maintained, that Lenin was referring only to moral rather than to financial bankruptcy. But I doubt it. Communism, in theory and in practice, is tied to materialism. Thus, I should think that Lenin meant both financial and moral bankruptcy. In any case, financial bankruptcy frequently precedes moral bankruptcy—or at least the two go hand in hand. Let us not contribute to our own downfall by reckless giveaway programs. Let us not aid Khrushchev in burying us. Let us not prove that a ruthless Communist, Nikolai Lenin, was right. Eighth. Foreign aid, it is said, will, in the persons of Americans living abroad and through subsidizing visits of foreign officials to the United States, provide a living example of democracy, that is, democracy by example, to use the fashionable cliche. According to the last account I had, we, the United States, had about 15,000 people engaged in the foreign aid program. All of these people, of course, do not live abroad. But I wonder how many of them, even with the best will in the world, can really offer democracy by example in societies ruled by absolute monarchs, medieval despots, and authoritarian socialists-regimes which are so frequently riddled with corruption. And we note that Americans living abroad are subjected to wholesale criticism for high living in the minds of those less fortunate than ourselves— particularly the intellectuals who cannot hope to attain the American standard of living. To them, the oversea American more and more comes to resemble the European colonizers who have departed so recently. Surely the tempers of these Americans must be frayed and |