Foreign Relations of the United States, 1955–1957, Foreign Economic Policy; Foreign Information Program, Volume IX

148. Letter From the Representative at the United Nations (Lodge) to the President¹

New York, May 11, 1956.

SUBJECT

• “UN Multilateral” Aid

Dear Mr. President: George Humphrey very kindly sent me a copy of his letter of May 7, correctly stating that I advocate US support of multilateral economic aid under the United Nations, but which is inaccurate in attributing to me support of the present SUNFED idea. My proposal in detail, dated April 13,² is in the hands of your Special Assistant, Bill Jackson, and is markedly dissimilar from SUNFED. It will be referred to in this letter as “UN Multilateral”.

Herewith is my reaction to George’s letter:

1. The subject of economic aid to underdeveloped countries cannot be dealt with adequately solely from the standpoint of so-called “orthodox” financing; but must be viewed from the standpoint of the Soviet threat.

2. In accordance with your speech of April 16, 1953, the United States already favors economic aid under the aegis of the United Nations when disarmament is achieved. Therefore, we do not so much face the question of “whether?” as “when?”

3. “UN Multilateral” in no way competes with the World Bank, the International Finance Corporation, the International Monetary Fund, etc. It is designed entirely to fill the gaps which they do not fill for such projects as highways, harbors and “infrastructure” in general. It does not supersede these agencies; it supplements them.

4. Under “UN Multilateral” no allocations of funds would go into effect except with the approval of the World Bank. Thus, it is in harmony with George’s viewpoint, a fact which I apparently did not make clear to him.

5. “UN Multilateral” is financially advantageous because it would not involve any increase in appropriation, merely an earmarking on the order of $75,000,000 from the billions which we now appropriate for economic aid abroad. The fact that more countries would contribute to each project means that the US percentage would be less than is the case under a bilateral program.

6. Speaking of “UN Multilateral”, George’s letter says that “experience has shown that such a scheme once started never ends and continually grows—with the great bulk of the money always coming from us”.

It seems to me that the plan which I advocate has got two built-in limitations:

A. Our contribution is contingent upon all other countries making their contribution; and

B. The bulk of the contributions must be in convertible currency.

These limitations are a guarantee against “never ending” and “continually growing”. Also, the Marshall Plan, through which 17 billion was authorized by Congress but only 14 billion was expended, did come to an end, having magnificently achieved its objective.

The important question as far as economic aid abroad is concerned is not “how much?” but “how?”. We might spend a good deal less in total dollars than we are now spending: the Russians seem to get big results with less money. The aim of “UN Multilateral” is to spend what we do spend differently, exercising actual control, but gaining all the credit which comes from helping an apparently unselfish international program which supplies no cover for penetration.

7. It seems fallacious to say that under multilateral aid schemes “we supply the money. They supply the majority of the Board of Directors to dispense it”.

“UN Multilateral” specifically provides that no project would go into effect without the approval of the World Bank, which guarantees that we would retain a large measure of control… . The fact that we have been able to devise international financing organizations such as the World Bank and the IFC which so well suit our interests indicates that we could do it again.

8. “UN Multilateral” is justifiable on psychological grounds alone. It would not surprise me to learn that the US spends more now for psychological programs which are not as promising as this.

9. George Humphrey’s fears that we are under attack to pay for regional schemes for economic aid is an argument for trying a global program, advocated by countries from all areas, since it provides an answer to those who advocate schemes for regional—or purely national—help.

10. It seems to offer the most promising way to prevent the so-called “auction” which some are trying to promote between the US and the USSR. Applicants for US funds could, if “UN Multilateral” were in effect, simply be told to get Soviet agreement for pro rata, convertible contributions. This would have a marvelously shrinking effect.

11. This plan would seem to be a better and cheaper way to move some countries away from the Soviet Union than anything now in operation. For instance, Mr. Nehru has said that he would prefer aid through the UN to aid from the Soviet Union. This is true of other countries which are not Soviet satellites, but are tender and whom we do not want to lose.

If it were possible to view the world in narrow technical terms and restrict oneself to “sound” commercial loans, there would be no need for what I advocate. But in that case there would have been no need for the entire foreign aid program—or for your speech of April 16, 1953.³

With warm and respectful regard,

Faithfully yours,

Cabot L.

1. Source: Eisenhower Library, Whitman File, Administration Series. Secret.
2. Not printed. (Department of State, USUN Files, New York) Lodge’s letter refers to an attached letter on multilateral economic aid. This attachment, which may also have been dated April 13, has not been found in Department of State files or the Eisenhower Library.
3. In a letter of May 14, President Eisenhower thanked Ambassador Lodge for his letter and continued: “I trust you have sent a copy to George Humphrey. If you have not, won’t you do so at once. I think he should have your thinking on this matter, and I would prefer it come directly from you.” (Eisenhower Library, Whitman File, Administration Series)