BRIEF OF A SPEECH DELIVERED BY MR.WILLIAM BENTON BEFORE THE ECONOMIC CLUB OF CHICAGO

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80R01731R000400620012-1
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 23
• Document Creation Date: December 12, 2016
• Document Release Date: May 16, 2002
• Sequence Number: 12
• Publication Date: April 15, 1959
• Content Type: MF

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Ma4ORANDTM FOR: Mr. Dulles
SUBJECT : Brief of a Speech Delivered by Mr. William Benton
before the Economic Club of Chicago
Mr. Benton's talk on "The Soviet Economic Challenge" stresses the
necessity for America to gear up for this camitng ccmapetition. He points
out four elements of Soviet economic strength, as follows:
(1) The economic growth of the Soviet Union in industrial
production. Here Mr. Benton makes reference to your
U. S. Chamber of Commerce speech (see page 5).
(2) The Soviet trade offensive.
(3) The coming challenge to the dollar by the ruble in which
he states that Mikoyan may be plannlrtg a revolution in
international finance. The ruble will, have gold and a
growing flood of commodities as its backing.
(4+) The Soviet challenge in the field of foreign aid. During
the next decade, according to Mr. Benton, this may turn
out to be the gravest threat to the Western World due to
the accelerating aid program of the Soviets and the scale
with which it is handled.
Mr. Benton makes mention of the Soviet economic system and, on page
12, he states that "Allen Dulles has expressed the cautious hope that
education may prove the Achilles heel of the Soviet system".
Mr. Benton makes the following suggestions:
(4)
Continue to maintain and build up our defense establishments.
Produce at full capacity.
Develop new ways to stimulate private investment abroad,
Particularly in undeveloped countries.
Reduce tarfffs and trade barriers and
(5) Strengthen
cultural America's programs of international information
exchange.
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AAB
15 April
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ENCYCLOPAEDIA BRITANNICA
342 MADISON AVENUE
SUITE 702
NEW YORK 17, N.Y.
WILLIAM BENTON
PUBLISHER b CHAIRMAN
April 10, 1959
Dear Allen:
I congratulate you on your candid and important speech
on Wednesday night - even though my associates think
it is one reason why my own speech on the same night
in Chicago received so little publicity. I got six or
eight inches in the Times and you got a full page. But
believe me I wasn't trying to compete. I think you may
be interested in my speech nonetheless, and it was un-
doubtedly a shocker to the Economic Club of Chicago.
I quote you in it as I find i so often do in my speeches.
I am attaching it.
Si cerely,
/,W:~ii;
The Honorable Allen Dulles
Central Intelligence Agency
Washington, D. C.
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Address by Honorable William Benton
Annual Meeting, Economic Club of Chicago
Chicago, April 8, 1959
THE SOVIET ECONOMIC CHALLENGE
I congratulate the Economic Club of Chicago and its president,
Jim Downs, on this series of talks. Your club has been focussing on
the gravest economic problem of our time -- indeed of any modern
time. You can hope that out of this series you may have a better
chance to understand the problem and to do something about it.
I have not read the papers of my three predecessors on your
speaking program. I didn't want to find out that they'd stolen my
stuff and I didn't want to be accused of stealing theirs. But I know
something of their views -- for example, of my friend Philip Reed's
comforting prediction that it will take the USSR a century to catch
up with the U.S. in production of electric power.
Thus I suspect that I shall be more of a Cassandra than they.
Tonight I cannot be the optimist I've often been in my activities in
Chicago, which began when I first came here to work in 1928 as
Assistant General Manager of Lord & Thomas. Chicago generates op-
timism. It seems safe and it has been sure. It is the world's
greatest business city. It is world capital and symbol of economic
productivity. For 100 years it has specialized in putting its broad
shoulders behind what can't be done -- and then doing it.
In this city where my business interests againcenter and
where my oldest son has settled for his business life -- I am not
happy tonight as prophet of danger and potential disaster.
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As I try to peer into the future, I shall begin with an
aphorism: the risk of underestimating the opposition is much graver
than the risk of overestimating it. This is more than merely a good
general rule for business executives when they appraise their competi-
tion. It is far more important when we Americans now seek to appraise
the USSR. It is far more applicable when the opposition is armed
with hydrogen bombs. Here we face no mere matter of the P and L
statement, but a matter of life and death.
We should have learned this rule in 1949, when the Soviets
exploded their first atomic bomb years before we thought they could.
We should have re-learned it in 1953, when they exploded a hydrogen
bomb -- and again years ahead. We did begin to learn it in 1957 when
the first sputnik went into orbit.
This rule of power politics -- the rule that a country should
not underestimate its opposition -- will be superficially examined
by me tonight in the field of trade and economic rivalry -- in other
words, in terms of the Soviet economic challenge.
'Way back in 1955 Nikita Khrushchev told a group of U. S.
Congressmen: "We value trade least for economic reasons and most for
political reasons." This statement mirrors orthodox Communist theory.
In 1957 Khrushchev put this even more sharply. In an oft-
quoted statement, he said, "We declare war on you in the peaceful
field of trade. We declare war. We will win over the United States.
The threat to the United States is not the ICBM but in the field of
peaceful production. We are relentless in this and it will prove
the superiority of our system."
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Khrushchev finds many who believe him. A few months back,
our government discovered to its chagrin that President Kubitschek
of Brazil was circulating a memorandum estimating that the Soviet
Union, in the not too distant future, will be our superior in indus-
trial production. By 1980, when many Chicagoans in this room may
hope still to be alive, Dr. Kubitschek's document estimated Soviet
gross national production at the rate of $1,561 billions annually,
and that of the U. S. at only $858 billions or about half.
Yes, the USSR means to cross swords with us in the battle of
production and trade. She throws down her gauntlet to us as the
leading economic power in the world. She feels sure she has the
weapons for a successful challenge and many foreign observers agree.
To help us decide whether we must now roll up our sleeves
and tighten our belts, let us examine some of the elements of Soviet
economic strength. I shall give you four.
The Soviet rulers claim that by 1965 the economic defeat of
capitalism will have been accomplished, though the United States is
expected to continue to struggle against the inevitable and will not
yield production leadership to the USSR until 1970. By then, the
world-wide moral and political defeat of the United States and of
its private enterprise economy will be obvious even to the United
States.
Now we used to scoff at Soviet claims -- but again and again
the so-called visions of Stalin have turned into realities; and
today we scoff only at our own peril.
Last November Khrushchev said to Walter Lippmann: "We will
cause you, the Americans, more trouble each year. At present the
United States is the richest and most productive country in the
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world. But it is living in the last years of its greatness. Shortly
the USSR will surpass the U. S. in productivity per capita. When
that is achieved, the people (of the poor countries) will be 'con-
vinced in their stomachs'. That is your danger, not our H-bombs."
Late last year the official magazine of the Soviet Foreign
Trade Ministry gloated that Soviet foreign trade had helped curb the
profits of what it called the "super monopolies". And a Soviet
economist has recently declared that by 1965 the USSR will be calling
the tune on world prices.
Here is what Khrushchev told the Soviet Communist Party's
twenty-first Congress this past January:
"Think of this, comrades! Although the socialist countries
occupy only a fourth of the earth's territory, although the majority
of these countries were backward in the recent past, the time is not
distant when they will produce more than half of the world's indus-
trial output! . . The countries of the socialist camp have all the
prerequisites for winning the championship in world production.
... We want the competition to take place not in an arms race, not
in the manufacture of atom and hydrogen bombs and rockets, but in
the realm of industrial production -- meat, butter, milk, clothing,
footwear and other consumer goods. Let the peoples see which regime
better meets their requirements and let them pay their due to each
regime according to its deserts."
Such trumpetings, as propaganda in today's world, are proving
increasingly effective among the peoples of the so-called uncommitted
countries whose populations total one billion human beings -- well
over a third of the human race. This is because of the comparisons
that Soviet propaganda can now make between the rates of growth of
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our economy and theirs. Since 1957 our own economy can almost be
said to have been in retreat -- while the economy of the Communist
world - Russia and China in particular - is surging forward with
giant steps.
4,951 /NSFeP i /
The USSR claims an economic growth th;W year of 10%.1 Here is
the first of the four potent weapons in the Soviet economic and
propaganda arsenal.
Let's take steel production. The Soviet goal for 1965, for
the USSR alone., is 100 million tons and the Chinese goal seems to
be expanding monthly. Last year, for the first time, the Communist
bloc, including the USSR, its East European satellites and China,
produced more steel than did the United States. Half our capacity -
an amount equal to the USSR production - was idle. Let me put this
another way. The American steel furnaces that were cold last year
could have produced as much steel as all the furnaces in the Soviet
Union.
Allen Dulles, director of the Central Intelligence Agency, re-
minded the U. S. Chamber last April that "a recession is an. expensive
luxury." "Its effects are not confined to our own shores," Mr.
Dulles continued. Then he warned, "Soviet propagandists have had a
field day in recent months, pounding away at American free enter-
prise." This warning is minimized by many American economists who
stress our historic rate of a 3% average annual economic growth.
They do not throw into the balance the harmful impact of the Soviet
propaganda dramatizing our setbacks and our millions of unemployed.
Radio Moscow tells the peoples of Asia and Africa and Latin
America;. "It took the West a hundred years to build its production
system; follow ours and you can do it in twenty!"
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Perhaps I should interpolate here that the world unhappily is
not filled with people who share your views and mine that, even if
the Soviet Union were to learn to outproduce us 100 to 1, we would
still most fervently prefer a system designed to serve the freedom,
the dignity and the development of the individual. We would still
prefer our system to any system aimed at the glorification of the
Party or the State.
Let me now turn to another example of the Soviet challenge --
their trade offensive. This is their economic weapon Number Two.
The USSR needs surpluses and raw materials which we often
reject -- let us say the cotton of Egypt or the rice of Thailand and
Burma. When it doesn't need the rice, it can still acquire it and
re-sell it at cut prices. The non-Communist rice-exporting countries
call this dumping.
(In a dispatch from Chicago dated March 28, the
New York Times quoted Mr. Charles B. Shuman,
President of the American Farm Bureau Federation,
as having "evidence that the Soviet Union was using
cut price wheat -- including some that had originated
on United States farms -- as an economic warfare
weapon." The Times said that Mr. Shuman "expressed
the fear that the Soviet Union would replace the ,--.
United States in the Western European market.")
The Russians can flood the market with their surplus tin. In
Bolivia, where tin is the vital life stream, there are riots.
Against the Russians? No. Against us. It is true that the most
recent riot was touched off by a statement in Time Magazine. But
the underlying cause was the depressed market for tin.
Soviet petroleum finds its way to Argentina and Uruguay.
This tends to dry up the markets for Venezuelan oil. So does
President Eisenhower's executive order establishing a quota on oil
imports into the U. S. This order pleased our oil producers in
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Oklahoma and Texas but it cut our purchases of Venezuelan oil by
$250,000 a day. Vice President Nixon heard about oil when he visited
Caracas -- and with insults and brick-bats. Will there be unemploy-
ment in other oil producing countries? The Russians won't hear
much about it. But we will.
Soviet automobiles are appearing on the German market. They
are selling at low prices and they aren't being advertised. The
Soviets haven't yet learned the power of commercial advertising to
help sell their goods in export markets. They are beginning to use
advertising domestically to dispose of surpluses or to stimulate
savings, as I reported in Sales Management on my return from USSR
three years ago. And I now predict that the USSR will shortly begin
to learn how to use export advertising. This will add measureably to
the formidability of Soviet competition in export markets.
There are persistent Soviet bids for more trade with Britain.
Three years ago Khrushchev, visiting England, spoke contemptuously
of current Soviet-British trade as the exchange of Russian crabs
for British herrings. He offered to buy almost $3 billions of
British goods if the embargo on strategic exports were removed. And
now Mikoyan roams the world markets, beating the drums for Soviet
products, ready to buy or sell from either pocket, ready to undercut
other countries' prices, and holding out the hope of Soviet loans at
2% for 40 years.
This last point dramatizes still another element of the
Soviet economic offensive. This is their economic weapon Number
Three. It is no less than the coming challenge to the dollar by
the ruble.
LaSalle Street, please take note.
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The London Economist recently reported that the head of a
large Zurich bank had wagered the chairman of our Federal Reserve
Board a case of champagne that the United States will devalue the
dollar within three years. And the house of Montagu, the big London
bullion house, in the Bullion Review for 1958, tells us a few facts
about Soviet gold production. It was about 17 million ounces both in
1957 and in 1958. That's about $600,000,000 a year - on the same
order as South African output. Soviet gold reserves are estimated up
to $10 billion. Montagu makes some comments, too, on the possible
devaluation of the dollar: "One cannot exclude the possibility that
a further decline in dollar holdings (and they mean dollar holdings
by foreign countries) caused by the American Government's difficulties
in handling its financial problems might well force the hands of the
American authorities."
There is no Marxist nonsense in Soviet banking operations.
Russian bankers operate today much as they did under the czars. They
don't believe in capitalism, but they believe in capital and they
handle it along capitalistic lines. Our bankers will tell you that
Soviet gold is a pleasure -- and a profit -- to handle. It is always
perfectly assayed. And it is beautifully packaged, so that the banks
always make just a little bit more when they handle Moscow gold than
with any other country's gold.
Soviet gold now trickles into the West at the rate of about
seven million ounces a year. This is roughly a quarter billion dollars.
It isn't enough to disturb the delicate balance of the gold market.
But what did Mr. Mikoyan urge last summer in an article in the
Soviet magazine International Affairs? He proposed nothing less than
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that the United States raise the price of gold. This of course de-
valuates the dollar. He contended that the price of gold is "arti-
ficially established" by the United States at a low rate which we
impose on countries from which we buy gold - as a form of tribute
collected by us.
In the Soviet foreign trade journal, Vseshnyaya Torgovlya,
Mr. Mikoyan stated that in the not too distant future the ruble,
export of which has been forbidden for thirty years, will be made
fully convertible on international exchanges.
Both of these magazine articles by Mikoyan sustain reports that
the Russians plan a revolution in international finance. In the
Soviet view, the ruble is to displace the dollar as the dominant
medium of international exchange even in the non-communist world.
Such a belief would have seemed foolish - or merely a night-
mare - a few years ago. And today? I'm not a financial expert -
but I wonder. Soviet industrial diamonds and gem diamonds soon will
be competing with those of South Africa. The international ruble
will have gold and a growing flood of commodities as its backing.
And in a death grapple between the ruble and the dollar, what will be
the fate of the relatively free system of finance that has so long
dominated the international world of money?
Fourth and finally, we of the United States are now dangerously
facing a Soviet challenge in the field of foreign aid. During the
next decade, this may turn out to be the most important of all the
Soviet economic weapons. Recently Under-secretary of State Dillon
reported that Soviet commitments to underdeveloped and uncommitted
nations for the year 1958 amounted to $1 billion. Mr. Dillon said
this represented "a dramatic acceleration of the tempo of the drive."
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By comparison with our own, the Soviet program of aid to under-
developed countries has been small -- with a total commitment of only
two and a half billions since the war, mostly in long-term low-interest
credits. Some experts believe the program will continue to be
relatively modest. But others estimate that within ten years the
Soviet economy will be able to provide a surplus of ten billions
annually for export -- if its leaders elect to do so. If the tempo
continues to accelerate, they may readily so elect.
The Russians are playing for big stakes and they know what the
stakes are. They expect and they get political value for their money
even when the money's small. Their anti-Western line is quite clear.
They tell the underdeveloped countries to expropriate Western property
and to reject Western aid. They promise help without the "enslaving"
conditions we impose. That we do not "enslave" is of no importance,
so long as the Soviets are able to sell the idea that we intend to.
In India recently, there was a dramatic demonstration of the
effectiveness of the Soviet aid and propaganda program. Two steel
mills of one million ton capacity were opened on two successive days.
The first had been built by a group of West German and Indian
industralists. Its opening passed relatively unnoticed. The second
was built and financed by the Soviet Union. It opened amidst a fan-
fare of publicity, a flood of propaganda that made it appear to India
and surely much of the underdeveloped world that the Soviet Union was
India's principal benefactor in her struggle toward self-sufficiency.
Yes, perhaps the gravest threat to the Western world in the
emerging Soviet economic challenge is the accelerating program of
Soviet economic aid, and the skill with which it's handled.
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Now I've mentioned four forms of Soviet economic challenge.
As a Cassandra, I could go on. But I am not here to argue that the
Russians are ten feet tall. I'm merely arguing that when we Americans
are in a life and death struggle we shall be well advised if we do
not underestimate our competition. I'm trying to dissolve any illusion
that the United States is necessarily the Big Man and that the USSR
is the Little Man and that a Good Big Man always beats a Good Little
Man.
Manifestly there are deep-seated flaws inherent in the Soviet
system. Further, there are cancerous economic flaws wholly apart
from the purges, the tyranny and the political double-dealing.
One is the unsolved problem of succession in a dictatorship --
how, without terror and bloodshed, to transfer power from one regime
to the next. Stalin was in his forties when he became absolute ruler,
but Khrushchev is already sixty-five. This is Sears-Roebuck's newly
advanced retiring age (it was 60 in 1942 when General Wood turned over
the Britannica to the University of Chicago, and advised me to keep
it at 60).
Now I don't know the condition of Khrushchev's liver; he looks
healthy enough in his pictures. And it takes a man in good health to
stand up against Hubert Humphrey for eight and one-half hours. But
I would wager that the jockeying is on among those who want to sit
where he sits. He may be temporarily succeeded, as was Stalin and
before him Lenin, by an oligarchy of unquiet men scheming among them-
selves for the ultimate power. Such a struggle might lead to another
round of liberalization within the USSR. This would be all to the
good. Or it might deflect Communist energies away from an interna-
tional offensive. Such a respite might of course be only temporary.
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There are factors and trends that could work in our favor.
For forty years the people of the USSR have been hearing about the
better life that is in store for them. It is true that most Soviet
citizens are today better off materially than their fathers were
before the Revolution. But all things are relative, and twice one
egg per week is still only two eggs. Their lot has been alleviated -
but only to a degree that may whet their appetites for more. We can
wait with some hope for that "mellowing process" predicted by George
Kennan.
The astute politician Khrushchev today seldom makes a major
speech without pointing to Soviet accomplishments in increasing the
output of food and to a future with good housing, and enough meat,
milk, and clothing for all. Perhaps he feels that the Soviet people
may never again be as supine as they were in the years when Stalin
was operating on Lenin's dictum that it was necessary to sacrifice
two entire generations in order to achieve the revolution.
Illiteracy in the USSR has been largely wiped out for those
under 45. In my book of last year, This is the Challenge, I again
reported how the booming Soviet educational system - or rather its
training system - is turning out tremendous crops of competent pro-
fessional men and women, administrators and technicians - and thus
creating a new version of a middle class. Allen Dulles has expressed
the "cautious hope" that education may prove the Achilles heel of the
Soviet system. The Kremlin may Indeed find it an increasingly harder
problem to manipulate the people of the USSR.
Alexis de Toquevil].e in his book, "The Old Regime," said:
"The evils which are endured with patience so long as they are inev-
itable seem intolerable as soon as a hope can be entertained of
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escaping them." The Russian people found the evils of the Czars in-
tolerable and ultimately escaped them; and no man can say for sure
that this may not happen again even though there seems small hope at
present for any significant or imminent change in the regime or its
policies.
There is a major factor which should not be minimized. If I
were purely a Cassandra, I would overlook it. This factor is China.
In a few years your banquet speakers will perhaps be focussing on a
new problem which they will tell you is the gravest in all our history.
They may tell you that in 1959 we Americans were fighting the wrong
cold war -- and they may be right. Peking claims that China's pro-
duction of steel and grain doubled in 1958. Twice one egg is still
only two eggs, but it's a much bigger omelet when stirred by
600,000,000 people. To the Soviet Union or to the rest of us it is
clear that Mao Tse-tung, Chou En-tai and Company are reorganizing
China to achieve the last ounce of productivity.
There is a wisecrack current in Moscow. Khrushchev's Seven
Year Plan, they say, is not aimed at catching up with the United
States, but at keeping ahead of China. The United Nations forecasts
a Chinese population of 1,600,000,000 by the year Twenty-hundred.
The Soviet population is now 207,000,000, less than a third of
China's, and growing much more slowly. The prospect of an explosive
over-populated China immediately south of Russia's rich and under-
populated Siberia must be cause for concern in Moscow. Former
Premier Paul Reynaud at a conference I attended in Bern last summer
asserted that China's abandonment of birth control is one of the most
significant political developments since the war. The Soviets under-
stand such developments.
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But I fear any effort to find a silver lining in China's grow-
ing strength makes tonight's cloud the more ominous.
Is a powerful China, seemingly more Communist than the Kremlin,
likely to weaken the worldwide economic challenge of Communism? We
may indeed some day find ourselves allied with the USSR against
Communist China, but is this a comforting thought for the members of
the Economic Club of Chicago to take home to their wives and
daughters tonight?
I hope that I may by now have persuaded many of you that the
arguments are powerful that America's present necessity is to gear up
for the coming economic competition.
Now do I have any suggestions as to how best to gear ourselves
up?
Yes, I have a few, though I have advanced some of them so
often that they may seem tarnished if not shopworn to some of you.
However, this does not prove they are not good. A secondhand set of
Encyclopaedia Britannica is still better than the Book of Knowledge.
(I say this as a bow to the many executives of Britannica and Brit-
annica Films in the audience tonight.)
Of course, the first and most essential task of the United
States is to continue to maintain and further to build up our defense
establishments; this is a subject for another speech, though not by
me. Perhaps I should remind you, however, that many who have
studied the subject feel that our defense budgets should be stepped
up at a rate of at least three billion a year. A great political
scientist, who spends his life studying world trends, told me last
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month that he thought the odds on a nuclear war had shifted in the
last five years from 1 in 100 to 1 in 10. He advises me to purchase
three hide-aways (he prefers to call them lodges), at 10 or 12,000
feet altitude, one in South America, the second in Southeast Asia
and the third in Africa. "Keep one member of your family out of the
United States at all times," he warns.
If he's right, three billion a year is far too little. We
must weigh his arguments. Our understanding of reality is essential
to our suvival in freedom.
Our second objective for our economy, as I see it, is to
produce at full capacity, or close to full capacity. We must pursue
policies which insure an expanding economy. What we should produce,
and how our total production should be divided among goods and ser-
vices, is another question. We have largely solved the technical
problem of production; what we have not solved is the problem of
maintaining an economy at full momentum and of channeling its produc-
f9MdNG 09R/Owc
tion goods and services most vitally in the national
interest.
For the last several years, our growth rate has been con-
siderably less than our traditional 3%. Almost two years ago, in
the third quarter of 1957, our gross national product reached its
peak -- we were then producing at the annual rate of $451.1 billion
dollars. The recession came along and G.N.P. sagged. A low annual
rate of $429.2 came in the first quarter of 1958. The average for
the year ended up at $437.7. (These figures are all in '58 prices.)
Today it is creeping back up -- but with five or six million
unemployed. It is at least $20 billion behind what we might reason-
ably expect with high employment.
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Now it takes no financial or mathematical genius to discover
that if the current or recent rates of our own economy and the
Soviets are maintained -- that they will shortly surpass us in gross
national product -- and with a minimum of fin-tailed Cadillacs or
plastic covers for the hats that cover the heads that cover our
brains.
Can we Americans afford to settle for a growth-rate of less
than the 5% set as a goal in the 1958 report of the Rockefeller
Brothers Fund? This is no quota set by an optimistic sales manager.
It is a rate of growth calculated by a panel of carefully chosen
experts to accommodate sharply increased defense expenditures deemed
essential; to cover increased and essential domestic expenditures
in such fields as education; and to provide for a 2.8% per annum
growth of private per capita consumption. Thus it seems to promise
that we can have our cake and eat it too. If we.get the breaks,
perhaps we can and perhaps such an example on our part will help
lead the world to peace. At any rate, we should seek to develop
national policies directed toward such a goal. This requires skilled
and courageous
/political leadership applied to national tax policies, budget and
monetary policies.
One distinguished economist estimates ke must double our cur-
rent or historical rates of savings and investment to achieve the
Rockefeller goal. We must work more, but if we doryit will be easier
to save more.
The recently inaugurated study by the Joint Economic Committee
of Congress was projected on the motion of the Committee chairman,
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.a44 d 54,,rsna4,1t,
Chicagots own distinguished economist,ftSenator Paul Douglas. This
is planned as a ten-month $200,000 study of economic growth, employ-
ment and inflation. Few congressional probes could be more timely
and important. The first four preliminary witnesses who were heard
late last month - Dean Neil Jacoby, who was active here at the
University of Chicago for many years, Professor Sumner Slichter of
Harvard, Leon Keyserling and Marriner Eccles - indicate the high
level of economic competence being enlisted.
A third front on which we must fight is that of economic aid.
Here again I turn to a recent but neglected report of the Rockefeller
Brothers Fund. This one is titled "Foreign Economic Policy in the
20th Century." It says, "The selective economic program of the
Soviet Union is politically effective primarily to the extent that
weak countries must face the strong Soviet economy alone. If these
countries are part of larger groupings they will be able to resist
pressure more easily and negotiate on a more nearly equal basis.
"The Soviet effort is impressive primarily because the free
world has failed to develop a workable structure within which the
industrialized and newly developing regions can cooperate in fulfill-
ing the aspirations of their peoples."
The report continues, "The free world can withstand the impact
of the Soviet geo-political trade offensive, if it organizes itself
to do so. The more highly industrialized nations of the world are
linked to the less developed nations by a two-way trade of goods that
totals more than $35 billion annually or almost 30 times the amount
of trade between the less-developed countries and the Communist bloc;
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"By building appropriate international institutions on the
solid basis of existing mutual interest, the free world can perpetuate
an advantage that lies overwhelmingly on its side."
I endorse the conclusions of this report. I believe the
American people are again prepared to take what Clarence Randall of
Chicago has called "the bold and costly measures to avert disaster
in this contest."
Annual increases in productivity can of course make it far
easier for us to increase our foreign aid programs, and to put them
on a long-term basis, not an uncertain annual basis, bolstered along
the lines of Senator Monroney's "Development Loan Fund."
Further, we should develop new ways to stimulate private~in-
vestment abroad, particularly in under-developed countries. I am
tempted by Clarence Randall's proposal that the tax exemptions we
now give to profits from investments in Latin America should be ex-
tended to the entire world. In his provocative article in the current
Atlantic Monthly, he urges, "genuine partnerships and immediate and
generous sharing with local capital of both the risks and the
opportunities."
I am not now prepared to join those who are suggesting that
America must create a government monopoly of foreign trade in order
to meet the Soviet challenge. This can come; I am told it is being
discussed in the State Department and "papers" are being prepared on
it -- as indeed they should be. But I am hopeful that we can avoid
violating our anti-trust laws in ways that are repugnant to many of
us in the business community and to a great majority of our voters.
We are quick to accuse the Soviets of politically motivated
foreign trade. Yet many of their policies, like ours, may seem
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rational from the standpoint of their domestic economy. Our trade
too is governed by political considerations -- domestic ones affecting
farm policies, for example -- or our oil quotas to which I've just
referred - or our tariffs, as the Illinois and Connecticut Manufac-
turers Associations can tell you.
The United States should do all it reasonably can to reduce
tariffs and trade barriers and thus stimulate world trade generally.
In his testimony before Senator Douglas' Committee, Professor
Slichter suggested that tariff reduction would hold down United
States prices and thus counteract inflation.
And should we exclude the Soviets from our trade? Might not
trade with them help encourage the trends we desire? In his new
book, Adlai Stevenson asks these questions: "So why not trade with
them? Why not help them improve their living standards? Why not
encourage the growth of material abundance and thereby make it
harder to preserve the secrecy, ignorance and tight controls of the
Soviet system? Why not help the Soviet leaders subvert their own
system of fear with the confidence bred of plenty?"
Finally, in my list of quick suggestions, I remind you that
I have been identified, over the years, first in the Department of
State and later in the Senate, with proposals for strengthening
America's programs of international information and cultural exchange.
These can have profound impact on the economic struggle. They should
be greatly enlarged.
We must not neglect-the export of people and ideas as well as
goods. Clarence Randall complains that our representatives can't
speak "the language of the people with whom we must deal each day."
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I have previously proposed the creation of centers for the training
of technical assistance experts - "West Points of Point /+," I called
them, and I repeat the suggestion here. The graduates of such
centers would serve overseas for a few years as the graduates of our
service academies serve in the armed services. They would receive a
most marvelous training for the business world we like to envisage
for the future.
A few fissures have opened in the Iron Curtain. More can be
developed with a little leadership and money, as I pointed out last
year in testimony to the Foreign Relations Committee of the Senate.
One of our most hopeful lines of action is to make the Soviet people
aware of how wide the discrepancy is between their own standard of
living and that of the West. The Soviet press so fears this issue
that it failed to print Prime Minister'Macmillan's broadcast in
Moscow about how well the British people live and how much higher
British per capita production is than the USSR's. I suggest that
we set up this issue as a pre-condition of the Summit meeting
sought so eagerly by Khrushchev. Let him agree to carry its pro-
ceedings in the Soviet press and on its radio and TV. Challenge him
to expose his people to the great international debates of the times
at the Summit meeting. If he wants the Summit, let his people listen
to what goes on there.
I shall pass over tonight, as a subject for another speech,
and this one I would like to make, the ignorance of our own people
and the importance of informing them. On March 18, James Reston
reported dismay in Washington because in a spot check the
New York Times discovered that 39% of those questioned did not know
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that Berlin is an enclave in Communist East Germany. Such ignorance
is a commentary on the American press, radio and TV - as much as on
the American people. Our press and radio may be free, but they are
:far from adequate.
Now you may say, as Iconclude, that measures I have ticked off
quickly will cost a lot of money. I reply that the money is tiny
compared to our national Income, and our Defense Department costs.
In view of our great danger and our urgent need, I for one am prepared
to face up to higher taxes. We are confronted with a new emergency
no less real than war, and potentially equally menacing because if
we do not meet it, war may not be far behind.
FL"EN
Governor Stevenson is perhaps well enough established *n this
,#O Aini iN (10v C- c /- L1,P j
economic citadel, for me to quote him4tonight. In grave and
solemn words he reported on his last year's trip to the USSR. He wIM Vti vs
. "My conclusion is that our Russian competitors are much
tougher than most of us have yet realized -- and that this time we
might get licked, unless we are willing to change our habits, our
political behavior and our complacent outlook on the world.
Can we rediscover in time the values which made our Western
revolutions infinitely greater than Lenin's? Can we check and
reverse our national slide toward complacency? By dedication and
hard work, can we demonstrate anew what we mean by the good life and
the good society? These are the questions before the American
people today.
How we respond to them, my friends of the Economic Club, is
the key to the future. It is the challenge of our time.
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