The potters herald. [volume] (East Liverpool, Ohio) 1899-1982, 1947-10-02
Comment On
World Events

A new report soon to be issued
by the Twentieth Century Fund
warns that loans to other countries
are powerful instruments of AM
erican foreign policy, but carry
dangers to both lender and borrow
er and should be approached with
realistic sense of what they can
accomplish.
With America being called upon
to lend billions of dollars to Eu-
rope this warning is very timely.
The survey of problems of for
eign trade and investment was pre-
pared by Norman IS. Buchanan,
Professor of Economics at the Uni
versity of California, Berkeley, and
Friedrich A. Lutz, Professor of
Economics at Princeton. They say:
american investors = both pri-
vate and governmental-must have
a thorough understanding of the
problems of forced-draft Industrial
ization and sophisticated view of
the difficulties to be surmounted.
This involves a good deal more than
a well-intentioned desire to make
people in low-income areas better
off, If the United States is to per-
form it's creditor role effectively
there must be full recognition that
this is much larger role than
any country has ever before es-
sayed in long-term international
lending"
Among the difficulties with loans
to aid less-developed countries
pointed out in the Twentieth Cen
tury Fund report are the need to
induce even low-income populations
to save and to put part of their saw
ings into useful capital; the need
to develop services such as trans
portation and communication along
with industry; the need for an ade-
quate supply of trained workers;
and the possibility that, as stand
ards of living and sanitation rise
and death rates go down, the in
crease in population may eat up all
the gain in output in the country.
The authors give figures to show
that countries that have reached
advanced stages of industrialization
usually have the highest incomes
per person They cite figures assem-
bled by Colin Clark for the period
1925-1934 and say: Gas contrasted
with an average income per en-
ployed person in the United States
and Canada of $1,381 and 81 1897
he reports 1852 for
Poland, $3.50 for Bulgaria, $243 for
Romania, $207 for Lithuania and
an estimated low for China of $1O0
$780,"
However, lest anyone Jump to the
that industrialization is
always or solely the means to high
er living standards, Buchanan and
Lutz point out: "Industrialization
alone is not necessarily an open-se-
same to higher real income the
world over For although high-per-
.apita-income countries are usual
y industrialized the higher produc-
,ivity per capita that affords them
nigh incomes cannot logically be
raced altogether to industrializa-
ion. In most instances, the indus
is itself to be explain
ID by combination of rich natural
an energetic and skilled
people, a topography and climate
avorable to production, and not
east in Importance, usually low
density. In other words
were relatively favorable
or high-per-capita productivity
With or without industrialization
md thus for high-per-capita STAN
lard of living"
The authors of the funds re-
'ort point to Americas present po-
ition as the greatest creditor ma
ion in the world and repeatedly (
leclare that the only way we can
Ultimately get our loans repaid is
0 accept imports.