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Congress. We shall have to adopt new commitments on M-Day. It is all right House, which are constantly feeding inpolicies moneywise, and say, “This is for the Secretary of State to hold a news to this Chamber their memorandums and what you are getting it for, and that is conference and engage in a series of non
conference and engage in a series of non other information that they think they all you are going to get.”
sequiturs with respect to foreign aid and can use to counter our opposition. The Secretary said:
war or no war. But I say to him, most But when the kind of attack takes Now we spend gladly—we spend gladly, respectfully: “You will greatly strength- place to which the senior Senator from about $50 billion a year in our defense en the military posture of the United Oregon was subjected in the New York budget. I don't see why we can't spend 10 States and the defense of the United Times this morning, all we can do is to percent of that, if necessary, to get the job States if you will cooperate with us in
States if you will cooperate with us in state, patiently, goodnaturedly, and toldone without war, if possible.
trying to bring about some economy in erantly, what we believe to be the facts If ever there was a false conclusion, connection with the terrific military in answer. that is it-namely, that the foreign aid cost.”
There is an interesting editorial in program is intended to prevent war. The two most dangerous forces in the the New York Times this morning. I There is no cause-to-effect relationship world, so far as peace is concerned, are ask unanimous consent that it be printed between those two premises. The State the Russian and the American military at this point in the RECORD. Department officials like to create the I vote to maintain our forces, so far as There being no objection, the editorial impression that if we give them all the our national defense budget is concerned. was ordered to be printed in the RECORD, money they request for foreign aid, it will If the mad, insane armaments race is as follows: not be necessary to go to war. continued, history will repeat itself, and
SENATOR MORSE'S PERFORMANCE It is my opinion that if Congress pro
the result will be war. At the same
Senator WAYNE MORSE, of Oregon, is disvided all the foreign aid that is asked for in the bill, so many tensions would ourselves so strong that Russia will un
attacking the foreign aid bill. His knowlbe created in so many parts of the world, derstand, day and night, that she, too,
derstand, day and night, that she, too, edge of parliamentary procedure, his skill at and so many problems would develop in has everything to lose and nothing to
has everything to lose and nothing to expressing indignation, and his seemingly inso many parts of the world, that peace gain by nuclear war. That is why I defatigable ability to engage in exhaustive would not be encouraged, but more ten voted more money for defense than was
soliloquies—characteristics that have been sion and more trouble would result, in recommended by any one of the four employed by him so often in the past-are Presidents under whom I have served the extent of foreign military and economic
now being used in an all-out effort to reduce stead. I do not say that reducing foreign aid as a Senator. There were times when I
aid to the developing nations. will reduce the chances of war. There voted more money for defense than any
Some of Mr. MORSE's criticisms are justiis no proof whatsoever that granting the of those Presidents recommended, be fied. The rich industrialized nations of Secretary of State all the money he
cause I was literally gambling, so far Western Europe are not contributing a fair wants for foreign aid will avoid war. as our domestic defense was concerned, share of the costs of NATO's defense forces; Quite to the contrary. In my judgment, on providing too much rather than too funds have been wasted in Turkey, Pakistan,
and other countries; and it may well be true we would help to lessen the chances of little.
that “the United States pays the salaries of war if we drastically cut military aid out But I will not waste the taxpayers'
more generals in Chiang Kai-shek's army of the foreign aid bill. I am sorry I am money on foreign governments which
than the total number of generals in the ennot getting from the Secretary of State will not assume their defense obligations. tire U.S. Military Establishment.” the support that he ought to be offering So I say to the Secretary of State: But Mr. MORSE does not confine his wrath with respect to foreign aid. "I do not take offense at your news
to obvious shortcomings. His claims that The military aid provisions of the bill conference this morning. I believe you the American public is being "rooked,” that are shocking in their amount. In my expressed your sincere, honest judgment.
aid to Latin America has "caused more harm
than good” and that foreign aid is hurting judgment, the committee did not begin I have respect for it. I disagree with
the domestic economy, only help the eneto cut it enough. We ought to cut it in some of it.
mies of the whole program. Mr. MORSE may connection with NATO.
What I feel bad about is that the protest that he is a supporter of foreign As I have said previously, we ought to State Department has not seen fit to aid while exercising his critical faculties bring home at least four of our six divi- face the reality of the situation that against this particular bill; but his unresions in Germany. If Senators will talk exists in this country with respect to
strained performance leaves the impression with the chairman of the Committee on foreign aid and to try to arrive at an
that he is more interested in reducing the Armed Services, they will find no dispute adjustment of the differences that exist
overall amount of aid than in making sure with him about the fact that six divi in this body over foreign aid, while there
that the program is operated more efficiently. sions are not needed in Germany to pro- is still time. It could be done in the Mr. MORSE. Mr. President, I shall tect Germany-and Germany knows it. long weekend ahead. I assure the ad
long weekend ahead. I assure the ad- ignore the first part of the editorial, Furthermore, we ought to bring those ministration that Senators who are op
ministration that Senators who are op- which deals with personal reference to divisions home until our NATO Allies posed to the bill are ready and willing the Senator from Oregon. Whenever I start to fulfill their commitments in re at any time to try to adjust our dif- find someone starting out even with faint spect to their NATO obligations. Not a ferences. But that does not mean that praise, I am on my guard. I am never single one of them has done so yet, in we will ever agree to a continuation in taken off my guard by gloved complicluding West Germany. It may be that the foreign aid bill of many of the weak- ments. I was pleased that the New York because there is full employment in West nesses and evils in the present foreign Times did say: Germany and a great deal of unemploy aid bill, which we will seek to rectify Some of Mr. MORSE's criticisms are justified. ment in the United States, there are by a series of 40 or 50 amendments. those who do not want to bring our di While I am on my feet, commenting ing from the New York Times. The
That was a refreshing admission, comvisions home. But I believe that Ger on the differences I have with the Secre
editorial continues: many has an obligation to fill her NATO tary of State, I wish to make a comment ranks. or two on some differences I have with Europe are not contributing a fair share of
The rich industrialized nations of Western Nevertheless, she is a wonderful ally the New York Times. Senators who are
the cost of NATO defense forces. on this score, compared with France. opposed to the bill do not have the media
France, obviously, has no intention of of information to support them that the I appreciated that statement, too. I fulfilling her NATO obligations. On the proponents of the bill have. We do not hope the Senate will keep that in mind floor of the Senate the other day, I called have the great propaganda force of the
have the great propaganda force of the when, later today or tonight, it acts on attention to a classified document, in American press, which, by and large, is the Morse amendment dealing with vited Senators to examine it, and then functioning as a huge lobby for the ad
functioning as a huge lobby for the ad- NATO, whereby I propose to end all U.S. returned it to the Committee on For- ministration in connection with this aid to NATO countries that are selfeign Relations, where I invited Senators wasteful foreign aid bill. We must work sufficient. to go to look at it. The sad fact is that very hard to keep up with the activities I am glad the New York Times agrees most of our allies do not even want to of the research staff of the Department that the rich industrial nations of Eucommit themselves to fulfilling their of State, the Pentagon, and the White rope are not contributing a fair share of
the cost of maintaining NATO's defense tion of what is happening to the Ameri
tion of what is happening to the Ameri- program of the U.S. Army Engineers, forces. I am glad the New York Times can taxpayers.
whereby military aid funds could be used recognizes, from the evidence we have The New York Times editorial also for the building of roads, dams, and adduced and put into this RECORD for states:
other great public works developments. several weeks, now, that funds have been
And that aid to Latin America has "caused If such a program is called military aid, wasted in Turkey, Pakistan, and other more harm than good.”
there will be no complaint from me. But countries.
military aid for the acquisition of Sher
Mr. President, if Senators will examI thought it was interesting that the ine the context of the speech from which military
equipment has no place in Latin
man tanks, submarines, and other heavy New York Times commented that:
that statement is taken, they will find It may well be true that "the United States
America. On the other hand, if the that I pointed out that our military aid military aid is confined to items necespays the salaries of more generals in Chiang that I pointed out that our military aid Kai-shek's army than the total number of to Latin America has caused more harm
sary for internal security—to expendigenerals in the entire U.S. Military Estab- than good. There has been some waste lishment.”
tures for small arms, such as pistols, in our economic aid; but my criticism machineguns, rifles, tear gas, and equipThe Times can strike from the edi- about “doing more harm than good” re
ment necessary for the handling of riots torial the words “it may well be true," lated particularly to our military aid. and the type of coups the Communists
Before this debate is concluded, the Sen- could stage, I will not complain about because it is true; it is true that Chiang Before this debate is concluded, the SenKai-shek's army has in it more generals ate will have to deal with amendments
aid of that kind. than does the entire U.S. Military Estab- on that score. But the New York Times
But that does not require any such figlishment, and I do not understand how should take note of the fact that I joined
ure as the Foreign Relations Committee anyone can dispute the fact that Chiang the Senator from Minnesota (Mr. HUM
is recommending to the Senate. I wish Kai-shek's army is dependent upon the PHREY] in trying to restore a substantial
to make that comment in regard to that amount of the authorization that the soU.S. Treasury.
very misleading editorial. called "powerhouse amendment," offered I read further from the New York
It states further: by the two leaders in the Senate and Times editorial: their associates, sought to take from the
And that foreign aid is hurting the domesBut Mr. MORSE does not confine his wrath Alliance for Progress program. The
tic economy, only help the enemies of the to obvious shortcomings.
whole program. Senator from Oregon, in cooperation Mr. President, perhaps it is wrath; but with the Senator from Minnesota, said, Mr. President, it is hurting the domesif it is, I wish to state that my adrenal “We think you have gone too far in tic economy. It is hurting the domestic glands show no evidence of being empty. cutting the authorization for the economy in many ways, for it is resultHowever, throughout this debate, Alliance for Progress program, insofar as ing, in effect, in the exportation of a although I have spoken with deep con- our economic aid is concerned"; and, as
great deal of our economic potential. viction, I have spoken with more sorrow chairman of the Subcommittee on Latin
What we ought to be doing is saving than wrath. I am rather sorrowful that American Affairs, I was pleased to join
American Affairs, I was pleased to join whatever we can and using the money we are in this plight in connection with the Senator from Minnesota in urging
to develop our own underdeveloped areas foreign aid. I am sorrowful that this the Senate to restore $75 million to the
the Senate to restore $75 million to the in the United States and to meet our administration sent to Congress the for- authorization for the Alliance for own unemployment problem. We should eign aid bill in the form in which it Progress program—thus increasing it to
do something about our schools, our came to us. I am sorrowful that the ad- $600 million.
$600 million. The Senate did so because water level, money for medical care, for ministration did not take note of the the Senator from Minnesota was in a
the aged, for arthritis research, heart recriticisms of foreign aid that are set position to inform the Senate that al- search, and cancer research. forth in the committee's report, and did though those in charge of the program We must start paying closer attention not do something about them before it did not like that cut and would prefer not
did not like that cut and would prefer not to our domestic economy. The New York sent the bill to us. The administration to have it made, yet, when talking to him
to have it made, yet, when talking to him Times is absolutely right in that comment knew that such criticisms are based on about the program, they said that in its editorial. I say that foreign aid is conditions which have existed for the although they would like a larger hurting the domestic economy. But the last few years; nevertheless, the bill was authorization, they could live with this editorial states that by making those handed to us again. That is why I am Particularly in view of the lapse arguments, all I am doing is helping the not moved by the suggestion that all we of time, that was a fairly good rehabili
of time, that was a fairly good rehabili- enemies of the whole program. should do is to slap the administration tation, for we are rapidly approaching That is more nonsense. Now that we on the wrist, and then say, by way of the next fiscal year, and it will not be have been forced into the position of warning, "If you do not do something long before the new program will be writing the bill on the floor of the Senate about reforming your foreign aid bill by before Congress.
as though the Senate were a committee next year, you will be in trouble."
I hope that by that time more than of the whole, we have a duty to bring out So I think we should let the adminis- eight Latin American countries will have the evidence that we have been bringing tration realize that it is in trouble now, submitted their plans for cooperation in
out. and that if these criticisms are sound, connection with the Alliance for Prog I will tell Senators what I believe disthe reforms should be forthcoming now. ress program. The other day I pointed turbs some editors, including editors of I say most respectfully to the Secretary out, and so stated for the RECORD, that the New York Times, the Washington of State that he should use the next few only eight Latin American countries have Post, and others. They do not have any days to consult with the Senate Foreign submitted such plans, and Argentina and answer to the evidence that we have Relations Committee, to determine what Brazil are not among them, although been putting into the RECORD for several can be done to give assurance now about Argentina and Brazil have been heavy weeks. I started putting that evidence needed reforms, before the Senate pro- recipients of millions of dollars out of into the RECORD several months ago. I ceeds next week with further considera- the President's contingency fund. I am spoke almost daily for weeks on that subtion of the bill.
convinced that not one dollar should ject until the time of the test ban treaty The New York Times editorial also have gone to them out of the contingency
debate. Then I laid aside my speeches states:
fund. This is noted because it is easy on foreign aid. I knew that the foreign He claims that the American public is for the New York Times to leave the aid authorization bill would be before the being "rooked."
impression, by means of its statement Senate. I could see what was going to
in the editorial that "aid to Latin Amer- happen in the Foreign Relations ComMr. President, I think that is a very in the editorial that “aid to Latin Amerapt description of what is happening.
ica has 'caused more harm than good,'” mittee. Several months ago I started to The American people are being rooked; that the Senator from Oregon is op make the RECORD, and it is a factual The American public and the American posed to the Alliance for Progress
Alliance for Progress RECORD. I have put in factual data in taxpayers are being taken for an eco program.
speech after speech as to how foreign aid nomic ride by way of the vehicles of I am opposed to much of the military has operated in country after country. waste in the foreign aid program; and aid program, and shall have some sug It is in the RECORD for future reference. we should stop such waste. The word gestions to make as to how it could be No Senator can say that he did not have “rooked” is an accurate and apt descrip- modified into a program similar to the the facts available to him. If he did not
read them, that is not the fault of the ments. That is what ought to confront Like a salami in a slicing machine, thick Senator from Oregon.
the editor of the Washington Post. He wedges of the program have been arbitrarily The editor, using a typical journalistic ought to give his readers an analysis of shaved off. device of downgrading, then stated: the reasons why it became necessary to That is more nonsense. We have not
Mr. MORSE may protest that he is a sup offer the amendments on the floor of the reduced the bill at a single point, except porter of foreign aid while exercising his Senate.
upon the basis of the factual case we critical faculties against this particular bill; Then the editor said:
have made to justify a cut. In keeping but his unrestrained performance
Certain men of good will can differ with with our Senate processes, a majority If a Senator undertakes to make the some of these specific aspects of the program, of the Senate agreed with us on each one record in detail, it is alleged that he is but it seems to us that the process by which of those cuts. Why does the editor not engaging in an "unrestrained per
legislative decision is reached is capricious say, "I do not like it, because I do not
and irresponsible. formance."
believe the cuts should have been made.” We must not take the time of the Sen I ask “Why?” What is capricious and Why should he use such descriptive ate to make the record. That somehow
That somehow irresponsible about it? Is it capricious terminology? is not supposed to be in accordance with and irresponsible if sincere and dedi First of all, the program was cut from the rules of the game. But the Senate cated men who disagree with the admin- $4.9 to $4.5 billion following General Clay's should not be operated on the basis of istration and the administration spokes- report. its being a game. I happen to think men in the Senate say, “We are going to That is correct. Is there any objecthat when the Senate has before it a make our record in opposition and let the tion to that? matter vital to the welfare of the people Senate be the judge."
This figure was drastically reduced in the of our country, Senators ought to exer What the editor impliedly confesses, House, and less severely by the Senate Forcise their rights and have the courage to although he would deny it if we put the eign Relations Committee. exercise their rights and to make the rec- question to him, is that he does not think
That is true. ord, no matter whether some editor who we ought to make the record. He does wishes to downgrade a Senator may call not think we ought to take the time to mittee recommendations in votes based less
Now the Senate has chopped its own comit "unrestrained." make the record. He does not think that
on information than emotion. So the editorial states: this should be a great debating forum.
That is another bit of psychological But his unrestrained performance leaves He does not believe that we ought to the impression that he is more interested in protect the Senate so that we can truly escapism on the part of this editor. He reducing the overall amount of aid than in say that it is the greatest parliamentary did not proceed to answer the arguments making sure that the program is operating body in the world. But it will not be a
we presented. He did not deal with the more efficiently. parliamentary body if it is merely a
objective data we put into the RECORD. How could one get a more false con meeting place for Senators to assemble Congress has called on the Executive to
reform the administration of foreign aid. clusion from the record that the Senator in order to cast votes.
But who will reform the administration of from Oregon has made over many weeks The Washington Post editor, like the
Congress? in the Senate? I have said before that New York Times editor, has, as we say, although I wish to cut the bill in money “let his slip show.” He has unknow
That is a nice way to meet an issue, amounts, I want a good foreign aid pro- ingly confessed what rankles him. What
ingly confessed what rankles him. What is it not? What makes this editor begram, a program that will accomplish he is really rankled about is that a thor
lieve that the administration would reits legitimate objectives. I want an effi ough debate on a foreign aid bill that form foreign aid any more this time than cient foreign aid program, a foreign aid he knows cannot stand a thorough de- it has in past years, though we have program that will help us, in this great bate without a great many of its deficien- patiently, from the Committee on Forcontest between totalitarianism and free cies being shown up is taking place in eign Relations, pointed out the deficiendom, in winning the minds of millions of the Senate.
cies in the program which should have people over to the side of freedom.
I say to my colleagues on my side of been reformed and were not?
What this editor does not want to The burden of my argument has been the issue, “Prepare for more of this. It that this program is not doing it. That will become more and more pointed and face is the fact that some of us are “fed kind of attempted personal downgrad- bitter as the days go by." By next week up” and we are seeking to put reforms ing on the part of the New York Times they will be writing editorials on asbestos into operation now. is no answer to the facts put into the paper.
I have one more comment to make in RECORD. The New York Times editor We have not heard anything yet, so
respect to the Secretary of State. He ought to be devoting himself to answer- far as concerns the unkind things which deals with the amendment the Senator
made a comment about Egypt, which ing the criticisms that we have made of will be said to us if we hold our ground. from Alaska (Mr. GRUENING] and the foreign relations by answering the fac I say to the editor of the Washington Senator from New York [Mr. JAVITS), tual information that we have put into Post, “Go ahead. Fill up your bottle of the RECORD.
so ably piloted through the Senate last I have one other comment on another ing to talk about this bill until we think in the Senate with respect to the amend
invective. We can take it. We are go night. There has been some comment facet of this general problem. The Sen
The Sen- we have made the full record.” ator from Alaska [Mr. GRUENING] has
ment dealing with the matter of fishing
The editorial further states: talked about an editorial that appeared
rights. The implication was that apin this morning's Washington Post. I
Senators frequently complain that the aid proval of that amendment is supposed share every comment that he made about they characterize their own legislative be
program is haphazardly run. How would to be a terrible intervention on our part it. The Washington Post editor also havior?
in American foreign policy. belabors the idea that apparently we
The point the Secretary of State and should not be discussing this subject on
Is that not a nice bit of psychological others are overlooking is that we are the floor of the Senate. We ought to let escapism? They cannot meet the argu- merely saying to these countries, in cona steamroller roll over us.
Senators ment, so they make an ad hominem nection with these amendments, “It is should not exercise their rights and their argument. There is no reply to the our money. You do not have to take duties to make the record. There is charges that in many instances the for- it. But if you are to take it you will much concern because there are 50 pend- eign aid program is wasteful and ineffi- have to take it on certain terms and coning amendments, but the concern is that cient—so the question is asked, “What ditions." it will take time to consider the 50 pend- about the Senate of the United States?” What is incorrect about that? Cering amendments. I wish the editor of We can have some support from this tainly there is nothing wrong about it, the Post would express some concern editor, after we dispose of this problem so far as the innate power of Congress about the fact that a bill came to us in and come to grips with some procedural is concerned. such condition that sincere and dedi- changes needed in the Senate. I hope It happens to be the right of Congress, cated Senators—as sincere and dedicated it will not give him a heart attack if he which has charge of the purse strings of as those on the other side of the issue happens to find himself on the same the Government, as a check upon the from us feel that it is necessary in the side of that issue with the senior Sena- Executive, to say, "We are not going to public interest to offer some 50 amend- tor from Oregon.
allow the money, unless the recipient
countries are willing to agree to certain or not to authorize that policy by recom The International Development Assoconditions."
mending the expenditure of taxpayers' ciation provides what it calls unconvenThat is what is sorely needed in con money in sufficient amounts to carry out tional terms at a standard rate of threenection with the entire foreign aid pro- the policy.
fourths of 1 percent, with 50-year matugram. That is why I shall press next So I say, "Mr. Secretary, you and I rities and a 10-year grace period. week for my amendment in regard to have a difference as to the degree of con I continue to read from the letter: the contingency fund.
gressional authority in
Similarly, when AID was established in I want the President to have unlimited funds in relation to policy.” Funds are 1961, the executive branch sought and Conpower to meet a national emergency directly related to policy. The Secretary gress wisely authorized the extension of AID overnight, but I believe we must put must ask for authorization of funds for development loans on terms as low as threestrings on the contingency fund with a given set of policies, and some of us
fourths of 1 percent over 40 years, with a 10respect to permitting a President to ex find ourselves in disagreement and in
year grace period on repayment of principal.
It is for those reasons also that the World ercise an unchecked discretion in mak some instances the majority find them
Bank, the U.S. Government, and other bodies ing millions of dollars available to Argen- selves in disagreement, as the votes in
have been encouraging foreign governments tina and Brazil for balance-of-payments connection with the bill show-with to lend on softer terms to the less-developed problems, for budget support, for making some of these policies. Therefore we are countries. more money available to them so that trying to persuade the Senate not to au While I believe that AID's lending policy they, in turn, may use some of it to pay thorize money to carry out those policies, should be flexible enough to adjust the loan off American creditors. American tax- which means that if the Secretary does
terms to the particular circumstances of the
various countries and that terms should be payers' money should not be used for not get the money those policies must
hardened for a number of countries as AID that purpose. If used for that purpose, necessarily go down the drain—and that
Administrator Bell has done in recent it ought to be done with the specific ap- is where they belong.
months, I believe it would be a matter of proval of Congress, rather than by an I yield the floor.
grave consequence if AID's minimum lendunchecked exercise of discretion on the Mr. GRUENING. Mr. President, the ing terms were forced upward beyond their part of a President of the United States. pending business is my amendment No. present level. That is why I believe we must adopt an 232.
I ask unanimous consent that the enamendment to place the contingency I suggest the absence of a quorum. tire text of Mr. Black's letter be printed fund within some definitive limits.
Mr. HUMPHREY. Mr. President, will
in the RECORD, along with a copy of a letThe President should not be hand- the Senator withhold that suggestion?
ter from the Secretary of the Treasury, cuffed in the slightest in his ability to act Mr. GRUENING. I do, provided I do
Mr. Douglas Dillon, addressed to Chairquickly in regard to an American emer not lose the floor.
man FULBRIGHT, and dated Septemgency, but I shall not remain silent any Mr. HUMPHREY. The chairman of
ber 25. longer in connection with such uses of the committee
the committee (Mr. FULBRIGHT] mo There being no objection, the letters the contingency fund. I put data in the mentarily stepped out of the Chamber. were ordered to be printed in the RECORD, RECORD on that subject the other day. While he is away, I want to make avail as follows: The data show that the contingency fund able for the RECORD the views of the ex
NEW YORK, N.Y., has been used, not only by this Presi- ecutive branch on this amendment.
August 1, 1963 dent, but also other Presidents to shore
I am sure my colleagues know the
Hon. J. W. FULBRIGHT, up the budgets of other countries, such former President of the World Bank, Mr.
Chairman, Committee on Foreign Relations, as Brazil.
U.S. Senate, Washington, D.C.
DEAR MR. CHAIRMAN: I understand that In my judgment, Brazil has yet to act tee earlier this year in reference to this
proposals have been made in the Foreign Rein good faith in relation to the United particular amendment. He wrote to the lations Committee to harden the loan terms States in trying to do something about chairman of the committee and offered for AID development lending to less develinflation. Brazil goes through a series us some very good advice. He is a repu- oped countries, setting a minimum figure as of so-called token gestures, but the fact table banker, one who has gained for
table banker, one who has gained for high as 2 percent for 30 years with a 2-year is that apparently Brazil is of the opinion himself an outstanding reputation be
grace period. My deep concern over the effect that she can come back to get more cause of the fine services he has rendered
of such proposals if adopted moves me, at the
risk of intruding upon your deliberations, to money to shore up her monetary policy to the World Bank. He wrote: after each inflationary runaway. She
submit this letter for your consideration and
DEAR MR. CHAIRMAN: I understand that that of your distinguished colleagues. has obtained large sums from the con
proposals have been made in the Foreign The problem is that many developing tingency fund, and should not be allowed Relations Committee to harden the loan countries have a need for and ability to make to have more.
terms for AID development lending to less use of outside capital which is in excess of Mr. President, I have made these comdeveloped countries.
their ability to service conventional loans. ments on the position of the Secretary
A number of countries already are at or close
Later, he stated: of State, and on the two editorials. I
to the point beyond which they cannot pru
The problem is that many developing counsay to the Secretary of State, “Although tries have a need for and ability to make
dently assume increased foreign debt in view
of their already heavy debt service obligayou and I disagree, Mr. Secretary, to the
use of outside capital which is in excess of tions. To refuse the low-interest loans extent I have brought out in this speech, their ability to service conventional loans. with long maturities and generous grace pemy admiration for you remains un A number of countries already are at or riods for their development programs would abated. You are still one of the greatest close to the point beyond which they can be to frustrate their development efforts and Secretaries of State in my time, and
not prudently assume increased foreign debt to deny them opportunity for increased foryou will go down in American history as
in view of their already heavy debt service eign exchange earnings from which to servà truly great Secretary of State. But loans with long maturities and generous obligations. To refuse them low interest ice their external debt at a later stage, when
they should be much more able to bear it. you, too, Mr. Secretary, must be brought grace periods for their development programs To encourage countries, in effect, to borrow under the checking power of the Con would be to frustrate their development ef on hard terms is to lead them into a foreign gress of the United States in respect to forts and to deny them opportunity for in debt service obligation they cannot bear and your policies. Mr. Secretary, you must creased foreign exchange earnings from possible eventual default on their loans. not be allowed to do whatever you care
which to service their external debt at a later It is for these reasons that the Internato do and take the position that the stage.
tional Development Association was created Congress must give you the necessary Mr. Black continued:
in September of 1960 as an affiliate of the
World Bank lending on unconventional terms money to do what you want to do. The
It is for these reasons that the Interna at a standard rate of three-fourths of 1 perpurpose of the bill is to get an authoriza
tional Development Association was created cent service charge with 50-year maturities tion for what you want to do."
in September of 1960 as an affiliate of the and a 10-year grace period. Similarly, when This is an authorization bill. An au World Bank lending on unconventional AID was established in 1961, the executive thorization bill involves a review of the
terms at a standard rate of three-fourths of branch sought and Congress wisely authorpolicy that is proposed by the adminis
1 percent service charge with 50-year matu ized the extension of AID development loans tration for the expenditure of taxpayers' rities and a 10-year grace period.
on terms as low as three-fourths of 1 per
cent over 40 years, with a 10-year grace pemoney. After we have taken a look at I want my colleagues to note that that riod on repayment of principal. It is for the proposals, from the standpoint of affiliate of the World Bank has as good these reasons also that the World Bank, the policy, we render the decision on whether a record of financing as any I know. U.S. Government, and other bodies have been
encouraging foreign governments to lend on as the World Bank and the OECD show that Eugene Black might well be given softer terms to the less developed countries. the need is growing for the kind of terms thoughtful consideration. Mr. Black has
While I believe that AID's lending policy that the United States has been providing. been heralded in this body for his unshould be flexible enough to adjust the loan A recent staff study of the International Determs to the particular circumstances of the velopment Association concluded that the
usual qualities and qualifications as an various countries and that terms should be foreign debt service burden for the less de
international finance expert. Mr. Black hardened for a number of countries as AID veloped countries has been becoming rapidly has advised the committee to mainAdministrator Bell has done in recent heavier in relation to export earnings, out- tain a reasonable, soft loan policy. He months, I believe it would be a matter of put, savings, and many other key indicators has hesitated even to advocate the firmgrave consequence if AID's minimum lend- of the seriousness of their debt servicing er terms or more stringent terms that ing terms were forced upward beyond their problem. Very liberal repayment terms were we are suggesting or asking for as an present level. Therefore, I strongly hope found needed where determined development amendment in the bill before the Senthat your committee will not revise the wise efforts were being progressively jeopardized
ate. decision it made with respect to AID loan by decreasing creditworthiness for loans on terms 2 years ago. conventional terms.
I think we ought to recognize, also, Once again I ask your understanding for It is to me significant that the terms used that the loans, under the foreign aid bill, the spirit and concern in which these views by AID are similar to those pioneered by the are not designed to make money are offered, and I extend to you and the mem World Bank for lending by the International for the U.S. Treasury. They are inbers of the committee my continued esteem Development Association. These were adopt- tended to serve our foreign policy interand best wishes.
ed by the IDA after long and thorough inter- ests. The difference between the interest Sincerely,
national discussion under the leadership of EUGENE R. BLACK.
Eugene Black. Recent actions by representa- rate charged under the bill as reported
tives of both the developed and less developed by the committee and the cost of the SEPTEMBER 25, 1963. countries on the future of the IDA confirm money should be looked upon as a secuHon. WILLIAM J. FULBRIGHT,
their confidence in this organization and in rity or foreign policy expenditure or cost. Chairman, Committee on Foreign Relations, its sound lending policies.
If we are to engage in a moneymaking U.S. Senate, Washington, D.C.
I should also point out that the loans made business, we have a bank called the ExDEAR BILL: I am writing you because of my by AID are tied to U.S. procurement and port-Import Bank, which has earned deep concern over any final action by the represent the supplying of U.S. goods and rather substantial profits. This Congress which would move in the direction
proservices rather than dollars. In this way, any of requiring a general hardening of loan
gram is directly related to commerce. adverse impact of our foreign assistance proterms under the Foreign Assistance Act at
grams on the U.S. balance of payments is It finances U.S. exports. It has rates of the present time. In addition to the recent kept to the minimum, and, in fact, loans so
interest and terms of maturity that reaction of the House of Representatives to given add to output and jobs at home.
flect the money market. But the Deraise significantly minimum AID loan repay
While I hesitate to intrude upon the pro- velopment Loan Fund was not put in the ment terms, I understand that there are
ceedings of your committee, I thought it foreign aid bill to take away business proposals before your committee which
might be of some help to give you my views from the commercial banks or from the would have a similar effect. I wish to sug on the importance of retaining the present World Bank. It is an addition to those gest some reasons why these moves are un
flexibility in AID repayment terms. timely and to express my strong support for With best wishes.
normal, conventional types of financing, retaining the flexibility of the present law.
and it is, in a very real sense, a foreign The repayment terms which have generally
policy program and a national security been adopted under the present Foreign As
program, and not a banking or moneysistance Act-a long period of repayment up Mr. HUMPHREY. Mr. President, as
making enterprise. We should keep that to 40 years, grace periods up to 10 years, and Senators know, the committee responded in mind. with a three-fourths of 1 percent credit or to the demand for improved, or harder,
The low interest rates we are recominterest charge-are no less essential now
terms on loan policy. As I recall, we mending are higher than before, and than they were only 2 years ago when your committee approved the new program. A
shortened the term of the loan from 40 repayment is provided in dollars. It is move now to harden generally this aspect of to 35 years. The amendment the com
a much sounder program than we had for our lending program would be contrary to mittee adopted reads as follows:
many, many years, before we began the the realities of the financial situation of most In the case of loans under part I (the loan program with repayment in dollars. of the less-developed countries and would administrator) shall establish terms which
I conclude by saying that rates of innot be in the interests of international finan shall include (A) interest at a rate not lower terest of the type proposed in the cial stability. We rightfully are relying un than three-fourths of 1 per centum per ander the new AID program more heavily on num during the 5-year period following the amendment offered by the Senator from loans than grants and now require dollar date on which the funds are initially made Alaska are actually higher than those in rather than local currency repayment. There available under the loan, and not lower than many European countries. They are are some cases where loans by AID with 2 per centum per annum thereafter and (B) higher than many of the British loans, harder repayment terms make financial repayment on an amortized basis, beginning higher than many of the recent German sense, and I can assure you that where they not later than 5 years after the date any loans, and higher than French assistdo, these harder terms are required. But to funds are initially made available under the
ance, which is largely grants. require higher interest rates generally or loan, and ending not later than 30 years shorter grace periods and maturities would, following the end of such 5-year period.
What we are attempting to do is to in my view, seriously reduce the overall con
persuade countries to bring down their tribution of the program to development. It
In layman's language, it means that rates of interest. Many of the underwould also impede our efforts—which have during the grace period of 5 years the developed countries that are obtaining recently shown signs of real success—to per- rate of interest shall be three-quarters these loans are able to use this soft type suade other AID donors to soften their terms. of 1 percent, and for the next 30 years of loan as a means of buttressing their
In the meantime, it would not really help the interest rate shall be at not less than the United States and it would be self-de
economy so as to be able to maintain a 2 percent.
credit structure at the World Bank and feating to the purpose of our AID program to add to the burdens of the developing coun
This contrasts with what was the with private commercial banks, and at try's budget or its balance of payments by policy, and what is the policy today, of the same time have a rising standard of setting an increased artificial floor to the in- three-quarters of 1 percent for 40 years. living. terest rate than can be charged, decreasing So we have toughened the loan policy, We should understand clearly that the the grace periods or reducing the maturities
and terms and interest rates. The Sena- development loans are a part of our forin which loans are to be repaid. Such a step tor from Ohio, the Senator from South eign policy. It is designed to strengthen would, in most cases, retard progress that Dakota, the Senator from Iowa, and the our security. We have continued this make toward self-support and thereby pro- Senator from Tennessee, as well as other program on the basis of low rates of inlong the time when they might be expected Senators, made a very strong recom terest, but this year we are recommendto rely on conventional sources of financing mendation for tighter and stronger loan ing a sizable increase in the interest rate, and the World Bank. While we seek to im- terms. The committee adopted the from three-quarters of 1 percent to a prove the ability of the borrowing country recommendations, and has incorporated minimum of 2 percent. Senators should to service its debts through progress in de the new terms into the bill, and we have note that this is a minimum, and that velopment, we should take care that the
what we think is a sound proposal. burden of debt service should not be such as
the administrator can and does make to impede that progress.
With due regard and respect for my higher interest terms applicable. SenIt is significant that studies within the colleagues, when it comes to banking ators should also note that the maximum past year by international institutions such and financing, the position of Mr. period is 35 years. The term can be