- Historic Sites
What We Got For What We Gave
The American Experience With Foreign Aid
April/May 1978 | Volume 29, Issue 3
Truman’s vision was soon dubbed Point IV. The philosophy behind it would eventually become the basis of American technical assistance for economic development. Here was an optimistic blending of humanitarian concern for the poor of this world, an uncritical confidence in the wonders of science and technology—especially American technology-and a self-interested calculation that poverty equaled instability, equaled opportunity for Communism, equaled a threat to the United States. Point IV had the virtue of appearing cheap. The United States would provide knowledge, to be applied by the recipients to the solution of their own problems-not limitless piles of money. Congress in 1949, however, was hardly captivated by the idea. Conservatives saw it as “globaloney,” the kind of vague sentiment they had associated with Henry Wallace. Military realists doubted its efficacy to meet immediate threats. As a result, little Point IV money was appropriated and that only after a delay of nearly two years. In the meantime, the euphoric optimism of early 1949 gave way to fear about America’s security.
Between the summer of 1949 and the summer of 1950, American foreign policy suffered three jolting blows which were to have a profound impact on foreign aid and on America’s definition of what the nation needed to do to secure its safety. The three blows were the victory of the Chinese Communists and the retreat of the remnant of Chiang Kai-shek’s regime to the island of Taiwan, the Soviet detonation of an atomic explosion in August, 1949, and the North Korean attack on South Korea in June, 1950.
The consequence was an almost complete militarization of foreign aid. Every new program, every dollar, was justified in terms of its contribution to the military strength of the “Free World.” The spirit of Point IV was neglected. The economic aspects of the Marshall Plan were replaced by assistance for the purchase and production of weapons. Significantly, the name of the agency in charge of foreign aid was changed in 1952 from Economic Cooperation Administration (EGA) to Mutual Security Administration (MSA). Military aid for NATO allies, begun on a moderate scale in 1949, doubled and redoubled after the outbreak of the Korean War, an event interpreted in Washington as indicating the readiness of the Soviet Union and her giant Communist satellite, China, to use war as an instrument of world conquest. The military aid mission became the characteristic instrument of foreign aid, established in scores of capitals around the world, supplying American weapons and training in their use. At the same time, thousands of foreign military officers came to the United States for special training. The cost of such training was part of foreign aid. The United States also expanded its network of bases around the world and paid generous rent to the host governments. Military aid supposedly was to be used exclusively to increase the defense capabilities of the “Free World.” Inevitably, however, it also strengthened authoritarian regimes against internal dissent, as in Spain, or exacerbated tension between regional enemies whose differences had nothing to do with the Cold War, as with India and Pakistan.
The three shocks altered the domestic political atmosphere in which aid was debated. Gone was the benign bipartisanship of Arthur Vandenberg’s support for the Marshall Plan. Now there were vitriolic partisan accusations by Republicans that the Democrats had “lost” China either from stupidity and reluctance to give Chiang Kai-shek sufficient aid, or because of the influence of Communists and Communist sympathizers within the American government. The era of Joe McCarthy had arrived.
The Truman administration blamed the fall of China on Chiang’s incompetence and corruption and denied that any amount of American aid, within the bounds of reason, could have altered the outcome. Most critics were not persuaded. The same critics who denounced failure in Asia also charged that the United States was spending too much in Europe. As a result of the political criticism and even more because of the Korean War, there occurred a regional shift in American foreign policy and foreign aid away from Europe and toward Asia. A trickle of aid to South Korea became a flood. The Chinese Nationalists on Taiwan soon became, on a per capita basis, the most heavily supported regime. Indochina received its first American aid-initially under the French, and after the French were ousted in the mid-1950’s, direct to the government of South Vietnam.
The new political atmosphere was rigidly ideological. Congress sought to use aid to punish delinquent friends as well as to injure enemies. A series of enactments reduced the administration’s flexibility in awarding aid to nations which traded, against the will of Congress, with the Communist bloc. Nations whose governments dared criticize the United States, as India’s did, were denounced in Congress. Special funds for famine relief in India were extended only after long delay and vigorous urging by the administration.