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What We Got For What We Gave

July 2024
28min read

The American Experience With Foreign Aid

Imagine a person of great wealth with a habit of giving away vast sums and lending more. In order to understand his character, we should examine how the money is dispensed and why. Who are the recipients? What does the donor expect of them in return? How does he react if his expectations are not fulfilled? By asking the same questions of a wealthy and seemingly generous government, we can acquire a similar insight into its character.

Among nations in this century, the United States is the number-one giver and lender, having dispensed approximately $300 billion in foreign aid since the start of World War I. (There will never be agreement on the precise amount because of inconsistencies in government accounting and the problem of secret, unreported aid distributed by the CIA.) This money helped defeat Germany in two world wars, contain the Soviet Union in the Cold War, cure the ill, feed the starving, build highways, train technicians, sustain democracies and dictatorships, win permission to maintain military bases abroad, kill guerrillas and teach them to kill, support the United Nations and its agencies, precipitate or prevent changes in foreign governments, station men and women of the Peace Corps in remote villages, stimulate a population explosion and then try to control it—all this and a thousand other things inconceivable but a few decades ago. This outpouring was in response to constantly shifting purposes and was accompanied by bitter controversy at every stage, both at home and abroad. The results of foreign aid were sometimes triumphant, more often disillusioning, and occasionally tragic. No chapter in the history of American behavior on the world stage is so complex or revealing.

The only experience the United States government had with large-scale foreign aid before World War I was on the receiving end. Without gifts and loans from France, the Netherlands, and Spain during the American Revolution, the United States could not have acquired the weapons and supplies essential for carrying on the war. France, implacable foe of Great Britain, provided the most cash and also direct military and naval assistance under the alliance of 1778. France’s reward was the reduction of the British Empire achieved when the American colonies won independence. The French neither expected nor received lasting gratitude from the United States. Indeed, twenty years after the alliance, the United States and France were engaged in undeclared naval war, with Great Britain as a quasi ally of the United States. Self-interest ruled on both sides of this first transaction.

During the nineteenth century, private American philanthropy overseas expanded steadily, principally through missionaries. But the federal government saw neither the need nor the constitutional justification for giving away the people’s money abroad.

Then came the First World War. American sympathies lay overwhelmingly with Great Britain and France and against Germany. Britain and France needed American food, fuel, and munitions but lacked the cash to buy. While the United States remained neutral, they borrowed heavily from American banks under a program organized by the Morgan firm and condoned by President Woodrow Wilson. But by the time the United States declared war on Germany in April, 1917, Britain and France were near bankruptcy. Only the credit of the United States government could sustain them. They asked for loans. Wilson and Congress said yes. The United States was in the business of foreign aid.

The First World War loans to belligerents and to newly independent countries established upon the dissolution of the old German, Austrian, and Russian empires totaled about $10 billion. They bore interest at near bank rates and were expected to be repaid. President Wilson, Congress, and Wilson’s Republican successors in the 1920’s all agreed on that point. The recipients hoped the United States would forgive the loans as an American contribution to common victory. They had contributed the blood of millions in battle. Could not the United States contribute treasure? But Wilson denied there had been a common victory. Allied purposes, embodied in secret treaties, and the overarching American purpose of making the world safe for democracy were different. The loans must be repaid.


After the war, the borrowers, in spite of American insistence, could not or would not repay. The United States begrudgingly scaled down the interest rates and did forgive much of the principal-up to 80 per cent in the case of Italy. In the world economic collapse of the 1930’s, payments by the major borrowers were suspended entirely. To Americans the European nations now looked like deadbeats, while in the eyes of Europe, Uncle Sam had turned out to be Uncle Shylock. The mood of Congress and the American people in the 1930’s was “Never again.”

In the era of the First World War the United States also provided food for starving populations in war-devastated regions. The first effort, financed by private donations and headed by Herbert Hoover, provided relief for Belgium under German occupation. Hoover’s extraordinary competence led to his appointment as head of all American food production and distribution in 1917 and director of all European relief in 1919.

The great unsettled world political problem in 1919 was the future course of Russia, where the Bolsheviks were engaged in a civil war to consolidate their control. Because of the disruption of war and revolution, millions in Russia were on the brink of starvation. Hoover was a humanitarian but also a political realist. He offered food for Russia on condition that it be distributed by agents of his organization. The Bolsheviks refused the food-unless they be given sole control over its distribution. Lenin and Trotsky realized, as did Hoover, that political power came from flour barrels as well as from the barrels of guns. No food was sent by the United States to Bolshevik-controlled Russia in 1919 or 1920. But in 1921 famine became so severe that Moscow appealed for help. Hoover was now Secretary of Commerce and the moving spirit behind the American Relief Administration, a consortium of private groups operating with government support. From 1921 to 1923 the ARA distributed enough food in Russia to save millions of lives.

In the years preceding World War II, there were lively debates over whether to aid certain countries attacked by aggressors-Ethiopia by Italy, and China by Japan, for example-but American isolationist sentiment was so strong that those who favored strict neutrality held the upper hand in Congress. Then Hitler’s Germany invaded Poland, and the Second World War was on. In June, 1940, France surrendered to Germany, and Great Britain was alone in the fight, facing the prospect of imminent German invasion. President Franklin D. Roosevelt believed that the national security of the United States depended on British survival. However, he applied foreign aid by indirection, claiming that his overriding purpose was to keep the nation out of war. With that stated aim he arranged a deal: the United States gave Great Britain fifty First World War destroyers and received in return leases to a string of naval and air bases from Newfoundland, through Bermuda, to the Caribbean.

The next step excited deep controversy. Early in 1941 Roosevelt asked Congress for authority to declare the defense of any country vital to the defense of the United States, and then to provide that country with military and other supplies. The program was misleadingly called Lend-Lease. In theory the recipients were to return any usable equipment when the war was over, and to the best of their ability also were to supply the United States with reciprocal goods and services.

Opponents of Lend-Lease said that Roosevelt would become the supreme war lord of the world and that Congress, if it gave the requested authority to the President, would be renouncing its constitutional participation in the conduct of foreign policy. One isolationist Senator said that Lend-Lease was a plan to plow under every third American boy. (The reference was to the early New Deal agricultural policy of plowing under surplus crops in order to raise farm prices.)

Roosevelt won the battle. Lend-Lease became law in March, 1941. By 1945 the United States had spent more than $50 billion in Lend-Lease aid, with the largest amounts going to Great Britain and Russia. In practice, Lend-Lease was nearly all gift. The British contributed some reciprocal aid, especially in housing American troops in the British Isles. Most recipients had nothing to offer in return except victory over the Axis; but that, after all, was the primary purpose of Lend-Lease in the first place.

Sometimes the United States used Lend-Lease for purposes transcending simple military victory. For example, in the Middle East the British initially distributed all aid. But by 1943 the American government no longer would accept the idea of that region as an exclusive British responsibility or sphere of influence, and the United States began to extend Lend-Lease directly to Middle Eastern countries. In Latin America, Lend-Lease was used as much as an instrument for strengthening good political relations as it was for its direct effect on the war. Lend-Lease was also used to pressure the British into modifying the system of imperial preference whereby the components of the Empire-Commonwealth extended preferential tariffs to each other, a form of discrimination against the United States.

Between 1939 and June, 1941, Hitler’s Germany and Stalin’s Russia were linked in a nonaggression pact, and most Americans considered the Soviet Union to be as evil as Germany. But then Hitler invaded Russia. The United States and Great Britain acted on the axiom that the enemy of my enemy is my friend. Prime Minister Winston Churchill said that he would make a favorable reference to the devil in the House of Commons if Hitler invaded hell. Lend-Lease was extended to Russia. Roosevelt and Harry Hopkins, his closest adviser and assistant in foreign affairs, demanded that aid for Russia be assigned first priority, and that it be delivered in spite of appalling losses from German U-boat attacks against convoys. They believed that Russia might make a separate peace if aid was not given on the most generous no-strings-attached basis.

With victory in sight the Russians suggested a large low-interest loan from the United States. Secretary of the Treasury Henry Morgenthau, Jr., thought that a $6-billion loan would be a good thing politically; others, especially Ambassador Averell Harriman in Moscow, argued that there should be no loan except on a hardheaded quid pro quo basis. Roosevelt died and the Harriman position prevailed, but the Russians would not conform their behavior in Eastern Europe to American expectations. Early in the Truman administration the Russian request for a loan was conveniently “lost.”

American wartime aid to China was deeply entangled in politics. The American people sympathized with China’s plight-attacked by Japan in 1931 and continuously at war since 1937. But American assistance to China before the Japanese attack on Pearl Harbor in December, 1941, was insubstantial. By then it was almost too late. Japan controlled the China coast, and only driblets of supplies could be flown into China over the Himalayas from India. But in 1942 the Chinese Nationalist government headed by Chiang Kai-shek asked the United States for a $500-million loan. Some American diplomats and military advisers in China recommended that the loan be granted only after the Chinese guaranteed to reform their inefficient and even corrupt economic policies, and that the uses of the money be carefully supervised. The Chinese said that the attachment of such strings to the loan would be demeaning to China’s status as a great power. So Roosevelt and Congress extended the loan-no strings.

American leaders were well pleased, on balance, with the results of foreign aid during the Second World War. Germany surrendered in May, 1945, Japan in August. In the meantime, Congress and the public had invested great hopes for the future in the new United Nations and ancillary multilateral organizations founded between 1943 and 1945. These organizations would give Americans and the world a chance to prevent recurrence of the conditions which produced the Second World War. Thus, the American intention at war’s end was to channel most foreign aid through international institutions.


Immediate relief for war-devastated regions would be provided by the United Nations Relief and Rehabilitation Administration—UNRRA—financed primarily with American money. American subscriptions would sustain the new World Bank and the International Monetary Fund, designed respectively to facilitate economic growth and world trade.

And it worked-at first. But by 1946, with the Cold War in its incipient stage, President Truman and Congress grew wary of spending American dollars through an international organization in which the Russians had a vote. The cry went up that the United States should give aid to its friends. Accordingly, UNRRA was disbanded, and the United States turned to bilateral and rather uncoordinated grants and loans, the largest of which was a $3.75-billion loan in 1946 to Great Britain.

During this period Utopian hopes for the United Nations were breaking up under the impact of spreading disagreements between the Soviet Union and the United States and its friends and allies. Americans perceived the Soviet Union embarking on a campaign of world conquest first by consolidating totalitarian control over Eastern Europe; then by dominating Iran, Turkey, Greece, perhaps China; aiming next for control of all Germany and Western Europe-stirring up discontent and rebellion at every chance. It was a cliché of the time that the principal export of the Soviet Union was chaos. Unless chaos was stopped, it would soon engulf the world and destroy American security and the liberal political values by which Americans lived.

The year 1947 was a great watershed in the history of foreign aid. In February the British told the United States that they could no longer afford to support the government of Greece in its efforts to prevail over a left-wing insurgency in which Communists played a leading part; nor could the British any longer aid Turkey in its efforts to resist Soviet pressure for bases on Turkish soil. American leaders had long been pondering the strategic significance of the eastern Mediterranean. Quickly, President Truman accepted the recommendation that the United States take up the burden the British had dropped. In March, Truman announced the doctrine which bears his name:”… it must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.” He asked and Congress granted $400 million for predominantly military aid for Greece and Turkey. Turkey modernized her armed forces and no longer felt seriously menaced by the Soviet Union. The Greek government, with American military advisers and ample air power, prevailed over the guerrillas. President Truman had noted that the total cost of the Second World War to the United States was $341 billion. By spending little more than one-tenth of one per cent of this amount in Greece and Turkey, the United States would”… safeguard this investment and make sure that it was not in vain.”

By Truman’s standards the money was well spent; but not all Americans were satisfied. Some, like diplomat George F. Kennan, thought the emphasis of the Truman Doctrine was too military. Walter Lippmann, one of the nation’s most farsighted commentators on foreign affairs, predicted that the Truman Doctrine of assisting any nation that claimed it was threatened by Communism would lead the United States to squander its resources all over the world. Liberals were disturbed because the Greek government which survived with American support was a repressive, undemocratic regime.

The criticism of people like Kennan, Lippmann, and political liberals contributed to the next stage in foreign aid: the Marshall Plan. It was obvious in 1947 that Europe had not recovered from the devastation of the war. Some Americans argued that misery and want were the breeding ground of totalitarianism and ultimately of war. Furthermore, a destitute Europe could not buy American products. Accordingly, the State Department developed a plan, announced by Secretary of State George C. Marshall in June, 1947, for European recovery—not simply a set of self-centered national plans, but a coordinated program worked out by the Europeans themselves.

Marshall and his advisers decided that this proposal should not be presented as something directed against Communism and the Soviet Union. In a “calculated risk” they left the door open for Soviet participation. The Russians did send a delegation to a preliminary meeting in Paris, but soon withdrew in a cloud of denunciation of the United States for seeking the economic domination of Europe. Marshall and his colleagues heaved a sigh of relief. Had the Russians not withdrawn, it is unlikely that the American Congress would have appropriated the money necessary for the plan.

Virtually all commentators and historians agree that the Marshall Plan was the great triumph of American foreign aid. The administration and Congress worked smoothly together, even though the one was Democratic and the other under Republican control. Indeed, the leader for the plan in the Senate was Republican Senator Arthur H. Vandenberg, Jr., of Michigan, who had been an isolationist before Pearl Harbor. “This legislation,” said Vandenberg,”… aims to preserve the victory against aggression and dictatorship which we thought we won in World War II. It strives to help stop World War III before it starts. It fights economic chaos which would precipitate far-flung disintegration. It sustains Western civilization. It means to take Western Europe completely off the American dole at the end of the adventure.” In other words, this was foreign aid to end foreign aid.

Throughout 1947 a cluster of special committees built public support among business, labor, education, and women-voter groups. Congress acted in the spring of 1948, and on April 3 the President signed the Economic Cooperation Act. In the next four years the United States contributed $13 billion, less than half the amount which Europeans had originally requested, but enough to fulfill the basic objective of recovery. In 1947 European industrial and agricultural production was hovering around 70 per cent of prewar levels. By the end of the plan in 1952 industrial production was 35 per cent above prewar levels and agriculture 10 per cent above. Great Britain received the most, $3.2 billion; France, $2.7 billion; fifteen others received lesser amounts, with tiny Iceland the least, $29 million.

American aid constituted less than 5 per cent of the gross national products of the participating countries during the period of the plan. But this 5 per cent was crucial. It provided for essential needs, linked disconnected parts of a productive system, and provided incentives for the Europeans to adopt efficient methods on a regional basis.

The high point of American self-satisfaction over foreign aid came in 1949. The Truman Doctrine aid was succeeding in Greece and Turkey. Europe was reviving under the Marshall Plan. The plan’s political companion, the North Atlantic Treaty, was signed in April. A Soviet attempt to disrupt Western policy in Germany through the Berlin blockade had been foiled. The great events of the previous two years seemed to confirm that by linking power and imagination, Americans could do anything.

President Truman, having surprised everyone but himself by winning the 1948 election, was riding high. In his inaugural address he outlined four major aspects of foreign policy: first, support for the United Nations; second, world economic recovery; third, military strength “against the dangers of aggression”; and “Fourth, we must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas.

“More than half the people of the world are living in conditions approaching misery. Their food is inadequate. They are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas.

“For the first time in history, humanity possesses the knowledge and skill to relieve the suffering of these people.”

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.

There was, however, one important exception to a generally unbending ideological approach. In 1948 Stalin expelled Yugoslavia from the Soviet camp, cutting off aid and trying to bring down President Tito. Yugoslavia remained staunchly Communist, anti-Russian but by no means pro-American. Congress, with some dissent, accepted the Truman administration’s arguments that it was in the American national interest to supply economic and later military aid in order to sustain Yugoslavia’s independence. Some Congressmen said the aid should be conditional on Yugoslavia’s renunciation of Communism and willingness to be aligned with the United States. The majority, however, saw that such conditions would, from Tito’s point of view, mean taking on one kind of dependence as the price of escaping from another. The United States did not insist on such conditions, although some Americans never could accept the idea that United States dollars were supporting a Communist state.

The transition from the Truman to the Eisenhower administration, from Secretary of State Dean Acheson to John Foster Dulles, was an illusory watershed. Dulles’ rhetoric made it appear that the Republicans were bolder, more determined to “roll back” Communism and “liberate” its captive nations. In fact there were no fundamental shifts in foreign policy or foreign aid, which throughout the 1950’s continued to be heavily military. In this decade the amount of covert aid dispensed by the CIA became significant, but the sums spent remain unknowable outside the agency to this day. Some money went to foreign politicians directly, some to political parties, some for paramilitary units, while some was filtered through ostensibly private philanthropic groups or commercial enterprises.

The name of the foreign aid agency was changed twice under Eisenhower: in 1953 from Mutual Security Administration to Foreign Operations Administration (FOA), and in 1955 to International Cooperation Administration (ICA). This was mostly just shuffling of the alphabet.

One important development of the Eisenhower era was the passage in 1954 of Public Law 480 whereby American food, then in surplus supply of unmanageable proportions, could be sold abroad for local currency. The United States would then spend the local currency for a range of aid projectseverything from the construction of military bases to upkeep of the American Embassy, to agricultural assistance, to grants for American scholars visiting the recipient country. Public Law 480 was often called the “Food for Peace” program. It has been an integral part of foreign aid ever since.

The Eisenhower years lacked the sense of excitement, of innovation, of triumph so evident in the late 1940’s. Numerous critics-many in the universities and a group which collectively could be called foreign policy intellectuals-charged that American foreign policy was stagnant. The time had come, they argued, for the United States to be true to its frontier heritage, to analyze the world’s problems, and to solve them. Military strength was not enough. The United States had lost the initiative and was too often simply reacting to the Soviet Union. America had to appeal to the ideals of mankind, all mankind, not just those who were ready to join us in one or more of John Foster Dulles’ proliferating alliance systems against the Soviet Union. Furthermore, the critics said, the United States should respect the natural desire of new nations to remain unaligned in the struggle between the Great Powers. Dulles, on the other hand, had condemned neutralism and often withheld aid to countries unwilling to be unequivocally on the American side. For example, he withdrew a promised loan to Egypt in 1956 for construction of the Aswan Dam because Egypt showed an interest in receiving aid from Russia. Egypt then precipitated the disastrous Suez crisis, and Russian aid built the dam.


One of the most influential books in the new genre of criticism was Max F. Millikan’s and Walt W. Rostow’s A Proposal: Key to a n Effective Foreign Policy , published in 1957. The authors argued that the United States ought to launch “a much-expanded long-term program” for “the economic development of the underdeveloped areas.” Such a program would make the peoples of the world see that their goals and those of the United States were identical and would lead to “viable, energetic, and confident democratic societies through the Free World.” Millikan and Rostow admitted that the program would be expensive, but cheap “compared with what we shall have to spend in emergency efforts either to salvage situations which have been permitted to degenerate, such as Korea and Indo-China, or to put out additional brush fires if they get started.” Best of all, this endeavor would reinvigorate the American spirit, would “give fresh meaning and vitality to the historic American sense of mission-a mission to see the principles of national independence and human liberty extended on the world scene.”

This idea had a strong appeal for the young senator from Massachusetts who was elected President in 1960. Under the leadership of John F. Kennedy, foreign aid was given more imaginative emphasis than at any time since the Truman years, and for the first time since Franklin Roosevelt it was directed to Latin America as well as to Asia and Europe. Kennedy’s words echoed Truman’s Point IV program of a decade before and the vision of Millikan and Rostow. “There exists, in the 1960’s, an historic opportunity for a major economic assistance effort by the free industrialized nations to move more than half the people of the less-developed nations into self-sustained economic growth.” To reflect the new emphasis, Kennedy arranged for one more name change in the foreign aid program-the Agency for International Development, yielding the appropriate Madison Avenue acronym AID. The name remains the same today.

Kennedy’s two most glamorous programs were the Peace Corps and the Alliance for Progress. The first, headed by his brother-in-law, R. Sargent Shriver, recruited idealistic men and women volunteers (mostly recent college graduates, in the inital years) and sent them to work in rural areas of Latin America, Africa, and Asia. No program was more popular in the United States or had as lasting an effect on the American volunteers—whose view of the world, America, and themselves was profoundly altered. The Peace Corps annual budget, seldom much over $100 million, was small in the context of all foreign aid, yet was subject to criticism from the right (“naive do-goodism”) and the left (“disguised imperialism”). Nevertheless, it has had more impact dollar for dollar than any other foreign aid endeavor, and it does closely approach the ideal of nonpolitical altruism.

Despite its Democratic origins the Peace Corps was continued by the Nixon and Ford administrations, although the emphasis in recruitment was shifted away from liberal arts graduates to people with specific technical skills: plumbers, electricians, carpenters, trained farmers. In 1977, under the Carter administration and with a new director-Sam Brown, once a leader of the movement against the Vietnam War-the doors were open again to young people without technical skills. This shift seemed to recognize that the Peace Corps was a national asset because of its influence on the volunteers as well as for the help they gave to people abroad.

Kennedy’s Alliance for Progress was an effort to redress years of neglect in relations with Latin America and to respond to alarming indications there of virulent hatred for the United States and a parallel receptivity to Communism. Indeed, by 1961 there was a Communist regime in Cuba under Fidel Castro. (The totally misguided and bungled American effort to overthrow the Cuban government at the Bay of Pigs in April, 1961, strengthened Castro instead and damaged the American reputation throughout the region.) The Alliance for Progress promised a major American contribution to a cooperative, carefully planned effort at economic development and social reform, so that the benefits of new wealth would be more equitably shared by all.

The Alliance has often been called a failure. Programs in health and education have made good progress toward their goals-but there has been little improvement, relative to population, in agriculture, housing, or general economic growth. Income has not been significantly redistributed, and there is less rather than more political democracy in Latin America than when the Alliance was proclaimed. Congress has consistently reduced the amount asked by Presidents for the Alliance, causing the contribution by the United States in grants and loans to remain below 10 per cent of total funds spent on Alliance activities. Latin American nations themselves contribute between 85 and 90 per cent. The remainder comes from the foreign aid programs of other industrial countries-Canada, for example-and from international agencies.

The Kennedy years were like a brief second honeymoon. Congress reduced the administration’s annual foreign aid requests by smaller amounts than at any time since the Truman years. The President and leading senators were in close agreement. The emphasis on development had long been a favorite theme of Senator J. William Fulbright of Arkansas, chairman of the Foreign Relations Committee. Senator Hubert H. Humphrey of Minnesota was one of the fathers of the Peace Corps idea. Foreign policy intellectuals from the universities were not only in accord with the President; a good many of them were in the government.

Morale in AID was high as ambitious projects were launched throughout the tropical world: dams built, irrigation pipes laid down, sewer systems installed, hospitals and clinics established, tractors and other machinery purchased, and everywhere roads, roads, and more roads. In the 1950’s the United States had considered it inappropriate to provide aid for population control. But now no American leader could ignore the fact that every increase in food production was worse than useless if accompanied by a greater increase in population. Accordingly, assistance in birth control was extended (ironically, under the first Roman Catholic President).

And it all seemed to be working. The world’s weather was good, with rainfall abundant or adequate in tropical areas. Agricultural scientists were introducing new, highly productive strains of wheat and other grains. The use of fertilizer was expanding. Food production was going up. Publicists began to write ecstatically of the “Green Revolution” in Asia. Victory over world hunger, sustained economic growth, and political triumph over the instability caused by misery all seemed possible.

But the bright dawn of the early 1960’s was followed by a decade of disaster. In the United States, President Kennedy was assassinated, and then Martin Luther King and then Robert Kennedy. American poverty, crime, and racial injustice were rediscovered. Terrible riots devastated American cities. Americans began to ask why their government should spend billions abroad when there were so many unsolved problems at home.

There was no easy answer to this question. By the mid-1960’s American foreign policy and the Vietnam War had become synonymous. If Vietnam was the result of two decades of American effort to create a peaceful, stable world, then perhaps all this effort had been mistaken. Gradually, the same people who had been most devoted to the concept of foreign aid, such as Senator Fulbright, had second thoughts.

The Vietnam War also produced a generation of radical critics of foreign policy in general and of foreign aid in particular. They saw the humanitarian arguments for aid as a flimsy cover for a sinister imperialistic intent to dominate the Third World and suppress the revolutionary spirit which sought to bring real freedom. The critics pointed out that Food for Peace often meant financing for military purposes. They dug hard to uncover the clandestine operations and secret wars waged by the CIA. They publicized the extensive training provided by AID for foreign police officers, training for the ultimate purpose of suppressing political protest.


At the same time, evidence began to accumulate that science and technology could not solve all problems. Development assistance designed to raise a country’s standard of living had too often created a new class of the wealthy or made the rich richer, while in some cases even weakening the position of the poor. Irrigation dams, broad highways, heavy agricultural machinery, and tons of fertilizer were good for big farmers, for those with land and capital. But they often harmed rather than helped the peasant with a tiny farm. At worst the peasant’s farm was absorbed by the large landowners, the big operators. And then there were changes in the weather, years of devastating drought that wiped out the gains of the Green Revolution.

Although advanced industrial countries like Japan were making excellent progress in controlling population, the record in the poorest countries was discouraging. Population projections indicated that famine was almost inevitable. With each increase in available food, the population increased more. The problem was in large measure the result of great achievements in health-the near eradication of smallpox and other diseases, the reduction of infant mortality through improved sanitation, and a general increase in life spans. The doctor and agricultural scientist seemed too often to be working against each other.

Vietnam remained the most damaging event. Three successive PresidentsKennedy, Johnson, Nixon-proclaimed that Vietnam was the great test of America’s determination and ability to prevail. Billions in economic and more billions in military aid were poured into that Southeast Asian country with tragic results. The Presidents made the mistake of ignoring the special circumstances in Vietnam which made success on American terms impossible. The critics made a similar mistake-generalizing that failure in Vietnam forecast failure everywhere.

In 1968 Congress cut the administration’s foreign aid request by 40 per cent and appropriated the smallest amount since 1941. Three years later Congress actually voted down the foreign aid bill and did not finally approve it until the fiscal year was almost over. No longer could a foreign aid program be taken for granted, like Social Security.

Congressional disillusionment was forcibly expressed by Senator Frank Church, Democrat of Idaho, in a well-publicized 1971 speech entitled “Farewell to Foreign Aid: A Liberal Takes Leave”: “The experience of twenty years of aid shows that we can neither bring about fundamental reform in tradition-encrusted societies nor prevent revolution in those countries where the tide of change runs deep and strong; all we can really do is to service the status quo in countries where it is not strongly challenged anyhow.” And Senator John L. McClellan, Democrat of Arkansas, lamented that for too long the United States “has attempted to export democracy abroad to unwilling and unready recipients, while neglecting the obvious needs of our people and democratic institutions at home. … Foreign aid … is a flop and we should stop it.”

Even professionals who had devoted their lives to eradicating disease, increasing food production, and attempting to improve the general lot of mankind were on occasion overcome with pessimism. One couple with long experience in Central America conducted an extensive “audit” of American aid. On the basis of intimate familiarity and on-the-spot inspection, they concluded in 1973 that “development professionals do not know how to carry out an effective economic development program, either a big one or a small one. No one knows how —not the U.S. government, not the Rockefeller Foundation, not the international banks and agencies, not the missionaries.” They quoted with sad approval the sermon of a Washington, D.C., minister. “We have now squarely to face this paradox. … We have increased human hunger by feeding the hungry. We have increased human suffering by healing the sick. We have increased human want by giving to the needy. It is almost impossible for us to face the fact that this is so. The truth comes as a shocking discovery for we have all been brought up in the Christian tradition in which caring for the least of our brethren has been counted the highest virtue.”


The mood in Congress improved with the winding down of American involvement in Vietnam, but it did not improve very much. Presidents Nixon and Ford did institute two shifts in emphasis which met with general approval. New development projects were to emphasize direct assistance to the small farmer, rather than large, expensive undertakings which benefited the wealthy and piled up a burden of debt in the recipient country. Also, more American assistance was to be channeled through the World Bank and United Nations agencies. The Carter administration has moved in both these new directions. In 1978, for the first time, more American economic assistance will be distributed through international organizations than on a direct bilateral basis.

The end of the Vietnam War also saw a sharp reduction in American military assistance in general, and a geographical shift to the Middle East, where the United States supported both Israel and the Arab states in an effort to provide both sides with a feeling of security and a willingness to reach a settlement. Israel had been a recipient of some aid from the American government since 1948 as well as aid from private American citizens. For 1978, $1.7 billion of the $3.2 billion sought by the administration for military aid is earmarked for Israel.

Many countries, once recipients of grants for military equipment, have since the 1950’s become sufficiently prosperous to buy American weapons. In the decade of the 1950’s, the United States supplied $22.0 billion of weapons to other countries. Of this amount $17.4 billion was in grants and $4.6 billion in sales. By the 1960’s, sales exceeded grants, and today grants almost have disappeared while the volume of sales remains high. The American government has made great efforts to promote such sales. Critics argue that the practice stimulates local arms races (in Latin America, for example), uses resources more wisely devoted to human betterment, and gives some totalitarian governments the weaponry to suppress their own people. Proponents say that if the purchasers cannot buy from the United States, they will turn elsewhere; that the United States has more influence over countries using our arms than over those using arms from elsewhere; that arms sales sustain essential American defense industries; and that sales improve the balance-of-payments problem.

Disagreement and conflict between the President and Congress over the amount, recipients, conditions, and purposes of foreign aid have always existed. Sometimes Congress has pressed aid for a particular purpose or country on a reluctant President. Far more often, Congress has placed restrictions on how aid could be used. A recent example is the action of the House of Representatives in passing a foreign aid appropriation in June, 1977, with the proviso that none of the amount could be used directly or indirectly to grant or lend money to Vietnam, Laos, Cambodia, Uganda, Cuba, Angola, or Mozambique.

President Carter said these conditions would “severely restrict his ability to promote the interests of this country around the world.” He complained particularly about the prohibition on indirect aid, which conceivably could force the United States to withdraw all support from the World Bank, the United Nations Development Fund, and the African Development Bank should those institutions assist any of the proscribed countries. In specific terms the House action was an obstacle to improved relations between the United States and Vietnam and Cuba, a serious blow to twTo of the President’s foreign policy objectives. At the same session the House considered, but voted against, prohibitions on aid to Nicaragua and South Korea proposed because those countries violated the human rights of their citizens.

The foregoing sketch of the American experience with foreign aid has indicated only part of the complexity of the subject. Far more could he said of the increasing role of foreign aid extended by other countries: the Soviet Union, Communist and Nationalist China, Japan, Canada, the nations of Western Europe, even Israel. Until the early 1950’s more than 90 per cent of foreign aid worldwide came from the United States. In 1965 the figure was 60 per cent. In 1977 it was 25 per cent, and in most countries receiving American aid the contribution from the United States is now less than 15 per cent. Much could also be written about the importance of private agencies—large foundations like Rockefeller and Ford, special organizations like CARE, the Save the Children Federation, International Voluntary Services, Project Concern—more than two thousand agencies all told. These groups work primarily with their own endowments of philanthropic contributions, but they also cooperate with United States government projects and often receive government assistance, A complete discussion would also require attention to special emergency programs to assist countries afflicted by earthquake, floods, droughts, and other natural disasters.

The American government, beginning with the loans of World War I, has had sixty years’ experience with foreign aid. The experience reflects the shifting assumptions of foreign policy—from the denial in World War I that our loans should be considered a contribution to a common military effort; to the generosity of Lend-Lease and the Marshall Plan during and after World War II; to the subordination of all other considerations beneath the primary goal of military strength in the 1950’s, with a concomitant shift of emphasis from Europe toward Asia; to the optimistic hopes of the early 1960’s that the United States could eradicate hunger and lift the Third World to a condition of sustained economic growth; to the disillusionment of the Vietnam era, when many Americans seemed on the verge of abandoning the whole enterprise; to a quieter, more mature willingness in the late 1970’s to continue foreign aid, but on a relatively modest scale and without Utopian expectations.

Indeed, the lowering of expectations has been the most striking trend in the foreign aid experience. At the end of World War II, Americans had a near monopoly on usable world power, the result of special historical circumstances which could not last. But Americans unconsciously attributed that power to their own exceptional moral virtue. Foreign aid, as one instrument of that power, seemed capable of anything. By the time of the Vietnam War the myth of American omnipotence and exceptionalism was in ruins. The painful but necessary lesson that all things are not possible, even to Americans, had been learned.

Every debate over foreign aid raises the question “Why?” Sometimes idealists argue that foreign aid should be completely altruistic, directed at helping other people without thought of American interests. Realists say that the United States always should act in accord with its perceived interests and therefore selfishly. The two views are not necessarily irreconcilable, for nations, like individuals, act in order to receive satisfaction. The real question is how does a nation define satisfaction-narrowly, in terms of its material prosperity and military security, or broadly, in terms of its contribution to the relief of misery, the reduction of economic and political tensions, the protection of human rights, the furtherance of human equality even at the sacrifice of some of its own wealth. The United States through sixty years has been both narrow and broad in its use of foreign aid—and sometimes it has been both at the same time.

Has the United States received its money’s worth? The answer depends on one’s fundamental values and sense of what is possible in this world.


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