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# U.S. INTERNATIONAL ECONOMIC OBJECTIVES AND STRATEGY

## Table of Contents

Page

I. The Challenge 1

II. The World We Live In 8

A. The Revolution of Rising Expectations 9

B. The Political Problem of Economic Growth 12

C. The Problem of Population Growth 14

D. The Precarious Position of our Industrial Allies 18

E. The Burden of World Armaments 20

F. Economic Interdependence 21

III. The Communist Challenge 25

A. Comparative Rates of Growth 25

B. The Communist Economic Offensive 28

IV. The Approach To Action 34

A. Foreign Economic Policy in Relation to
United States Foreign Policy 34

B. Trade Policy 37

C. Economic Development of the
Underdeveloped Areas 47

1. Objectives and Guidelines 47

2. The Problem of Particular Applications 54

3. Forms of Public Capital or Economic Aid 56

4. The Role of Private Investment 60

5. Quality Manpower and Technical
Assistance 61

D. Raw Materials and Private Investment 63

V. Conclusion 67

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GENERAL COMMENTS
---

ANNA ROSENBERG:

It is an excellent report. It deals with the picture in a very broad
and enlightened way but when it comes to the recommendations it
lacks the breadth and vision that the first part has.

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## I. THE CHALLENGE

One single revolutionary idea underlies much of the ferment of our times. This is the idea of the inherent right of every human being to enjoy

the prerequisites of a decent and dignified life.¹ It is not an exaggeration to place this simple thought at the core of much of the contemporary turbulence in world affairs.

To Americans, to whom such an idea is an accepted and even unquestionable belief, it may be difficult to appreciate its revolutionary impact. Yet, if we search beneath the violence, the social unrest, the disorder of our times, we are apt to find the dynamic factor to be [nothing other than] a newly awakened sense of the importance of human life.

This idea manifests itself as the emergence of a totally new world concern -- a concern for economic advance on an unprecedentedly vast scale. And while this movement takes place within national boundaries, while it is intensely identified with national objectives and while it is often conceived only in national terms, it has nonetheless marked the beginning of a new international orientation of world economic affairs. This emergent concern with global economic advancement is the most critically important international question -- with which our or any other nation is concerned.

NAR: Not just economic but social as well.

Decent - economic

Dignity - social

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- la -

It might reasonably have been expected that such a challenge would display United States resources and faculties most brilliantly. Our nation obviously possesses an instrument of huge power to attain economic objectives, namely its riches -- not merely its capital, but its skills, its machines, its technicians. Paradoxically, this has not brought strength or assurance or clarity to U.S. policy. Instead, public debate seethes with questions -- skeptically asked, hesitantly answered -- about the whole of U.S. economic policy. Has military aid not been too sternly stressed? Has not economic assistance been fettered with too many political conditions -- arousing resentment and hostility? Or has it not been given too benevolently without firm conditions -- to be dissipated in waste and corruption? Is the U.S. not being subjected to political blackmail? And (inevitably) why are not more nations more grateful?

While some of this public discussion reflects healthy public concern, there is one question that is rarely if ever asked. Unfortunately, it is more

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NAR critical than all the others. It is: what is an economic policy -- any
economic policy -- for?

The question is neither banal nor simple to answer. For it ultimately
asks: to what world purpose is the United States dedicated? It is not
aggrandizement. It is not philanthropy. It is not merely globe-girdling
military bases. It is surely not world-wide economic hegemony. What is it?

An economic policy must serve and reflect a foreign policy. A foreign
policy must serve and reflect a nation, its people, its beliefs and its
purposes. A people is what a people does. This is more than a moral
injunction. It is a practical fact, a law of political life. It has been
recognized -- and exploited -- even by the tyrant. One of the plainest
marks of twentieth century totalitarianism has been the dictator's recognition
of this overriding political imperative -- whatever the national act or the
purpose, the people must be induced to believe in its rightness. The
United States for nearly a decade possessed an atomic monopoly and the power
to impose its hegemony on the world and to end the Communist menace once
and for all. The policy was rejected as repugnant to our deepest principles.
There are moral capabilities quite as stern and explicit as political
capabilities; and the limits of neither can be transgressed without pain or loss.

Even more important is the affirmative side of a nation's purpose.
A society must not only shun certain policies and practices in which it does
not believe; it must dedicate itself to what it does believe. Thus for U. S.

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foreign policy -- and economic policy -- the decisive fact is this: the beliefs we most deeply hold do not cease to be relevant or binding at the shores of the Atlantic or the Pacific. The ultimate values to which we are dedicated are not circumscribed by the continental limits of the United States. We face a challenge to our survival. But beyond this we face the deeper challenge of constructive tasks impelled by the things we stand for not merely those we are against.

We are increasingly aware on practical, political and economic levels, of the constant interaction of domestic and foreign policies. We know that the domestic farm problem is related to the matter of exporting surpluses overseas. We know that the domestic demands of specific industries can directly affect our tariff and trade policies. We know that the whole conduct of our society -- from the integrity of government to the freedom of opportunity for all races -- directly affects our repute in all lands.

What these facts suggest is even more true of the moral values and national purposes to which we are committed. These values and purposes are directly relevant to foreign policy -- and economic policy -- because they answer the question: what are these policies for?

We hold man himself to be the living thing of unique and transcendent moment -- not the state, not society. We know man to be something more than a creature of natural forces. Accordingly we wish the political and economic environment in which he lives to serve him instead of dominating him. We cherish peace, as the climate of freedom. From the time when the Preamble

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to the Constitution dedicated the national spirit to "domestic tranquility,"
this has been true of our national life. And manifestly it is no less true --
it could not be less true -- of our world purpose.

We seek justice for all men -- in certain cases, occasionally with sad lack of success even in our own country. We do not believe in the concept of second-class citizenship. And this translates into our rejection internationally of the notion of second-class nations or second class peoples.

If true to the nation it serves, our foreign policy cannot seek to
make all nations in one image, or insist that responsible national conduct
demands imitation of American conduct.

At the same time, we long ago learned that no favored part of our
nation could long enjoy prosperity and strength if great fractions or whole
groups were left in want. And we have been -- more lately -- led to realize
that this applies to the world as well.

Every one of these principles has a bearing upon foreign economic policy. Only by these purposes can the efficacy of the means we employ be weighed and judged. There are few areas of public concern where ends and means must be more clearly distinguished. And there are few areas where ends and means have been more chronically confused.

It is not sufficient to construe the end of foreign economic policy as
the procurement of military security against clear and present Communist
threat: there are many instances where we have a responsibility and a concern

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regardless of the Soviet danger. It is not sufficient to imagine the end of
to be the meeting of "emergencies" demanding instant
economic policy
Congressional action; in fact, the constant recourse to the cry of "emergency"
has not only made the repeated appeal sound increasingly hollow, but also
has obscured the full nature and purpose of sustained policy. Nor can the
appeal for foreign economic aid be rested simply on the matter of U. S.
dependence upon overseas markets or resources -- for a coherent economic
policy, faithfully reflecting U. S. foreign policy, clearly must be concerned
with all areas of the word - not just those
with innumerable areas not supplying strategic materials to this country.

Nor -- most critical, because most plausible, of all misconceptions --
can foreign economic policy be conceived to have as its end the simple
fostering of economic progress. For economic progress unrelated to more
fundamental goals can turn into a device to crush liberty. The twentieth
century's two most conspicuous displays of dramatic economic progress
have been provided by Communist Russia and pre-World War II militarist Japan
-- but the
/ achievement made neither country a notably good, or peaceful, neighbor in
the community of nations. Economic progress must be translated into ?
institutions compatible with freedom, justice and the common welfare of all
nations.

This concern with economic policy marks a new orientation for foreign
policy. In the nineteenth century, as in all of previous history, foreign
policy was essentially conceived of as a political task. Its goals were the

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[enlargement] of national power, the establishment of political balance, the facilitation of international discourse. The role of economics within such foreign policies was narrowly and nationalistically conceived, while

NAR: UNRELATED outside the orbit of foreign policy, international economics was primarily to concept of exp. world economic and human dignity no existence other than as an idealistic hope.

Today, world economic advancement has come to be a dominant reality which directly concerns every nation on earth. It is impossible to enumerate the institutions which have come into being to cope with this reality, but even a partial listing is sufficient to indicate the importance which it holds. Among some of the more well-known are these: the Marshall Plan, the European Common Market, the Colombo Plan, Point Four, the General Agreement on Tariffs and Trade, many agencies of the U.N., and an uncountable number of national and private programs of international economic construction?

NAR: This is how it appears but not necessary. What it really is in terms of basic purpose. To the American people, this new development of world affairs presents itself as a many-sided challenge. In part, it is a political challenge in which our capacity for economic leadership and cooperation is put to test against that of Russia. In part, it comes to us as an appeal to our self-interest, for not alone our trade but our access to badly needed resources hinges directly on the development of world protective capacity. In part, again, the challenge comes to us in the form of a moral question -- asking us

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NAR: Don't forget Foreign Policy is
expression of national purpose.

how we can translate our moral concern for the individual into a material
contribution to his well-being and reminding us that we are, by comparison
with the world of restive poverty, an island of secure abundance.

The challenge thus involves at the same time our capacity for
courageous self-direction and for realism. It is true that participation in
the movement toward world betterment involves a degree of sacrifice for some
Americans and increased opportunity for others. Inevitably there will be
individual industries and localities which will feel the pressure of world
competition, just as other industries and localities will experience an uplift.
Although such problems of transition must be recognized and dealt with, to
allow short-term costs to outweigh long-term benefits would be a disastrous
national policy.

It is a reality that this economic movement of the twentieth century
is more freighted with inevitable disappointments, more destined for recurrent
-- if never final -- disillusion, more latent with disorder than the Industrial

NAR: What rele
vance has this
statement.

Revolution itself. America's abundance, great as it is, is insignificant
measured against the extent of global needs. At best, we can hope to make
no more than a modest contribution to a process which will take generations
to accomplish.

To expect otherwise

is to court an illusion equally as dangerous as that of our ability to ignore
or to disengage ourselves from the economic revolution which surrounds us.

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NAR: Where do we have that

- 8 - What we need is
the expression of purpose.

II. THE WORLD WE LIVE IN

The profession of purpose in the abstract is not enough. The policy we seek must not only be true to its moral source and meaning. It must also be rational in method, applicable and constructive in the world as it is. For the nation that proclaims moral purpose beyond its capacity to serve practically merely arrogates to itself a dignity it does not deserve. It offends and alienates; it confuses duty with sentimentality.

NAR:

The most essential requisite, then, of a sound U.S. foreign economic clear statement of national purpose -- a foreign policy designed to ... its international policy is its accurate assessment of the world in which it must operate: the aspect problems and opportunities that exist, the elements of weakness and of for expediency strength in the world economic scene.

Much of American thinking about the world, and not a little of its behavior, is based on the premise that if the Soviet Union were somehow miraculously to be transformed -- if, for example, it became overnight a democratic community -- that our international problems would be at an end.

It is this assumption which we first discard when we survey the realities of the world in which we live. That the Soviet threat gives an urgency to world problems is as unmistakable as that its power constitutes a major world concern. But the Soviet challenge -- to whose economic implications we shall turn in a subsequent section -- may obscure an even more basic fact which we must come to see and accept. This is that many, if not most, of the problems of the international order would be with us even if the

**NAR:** Still a negative concept rather than positive one that envisions world-wide op. of today.

**RUSK:** We might insert several paragraphs re what American experience has shown that is applicable to rising expectations, i.e., hard work vs. habit of idleness; role of entrepreneurial decision-making vs. government doing this; meeting rising expectations not a process of distributing from "haves" to "have nots", but producing more.

**CLEVELAND:** This section (A) refers to achieving stability, not growth.

**GORDON:** Second paragraph under A, lines 3 through 5: we are taking too much credit for this.

Paragraph beginning at bottom of page: Questions intellectual history here.

First four lines:

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-9- NAR:

in which for the first time our vision for
mankind is possible of achievement

Soviet Union did not exist. We are living through a revolution which in its
scope, its opportunities, and its perils is without parallel in history. It is
the nature of this revolutionary transformation which we must understand if
we are to meet the aspirations of our time with a positive contribution.

A. <u>The Revolution of Rising Expectations</u>

Until the nineteenth century, most of mankind accepted the view that
poverty and want were no more to be questioned than illness and death. In
the pyramid of each society there were some who would be born to wealth or
station or power; a very few might rise there. But for the mass of mankind,
a man's station was fixed by tradition; the vast majority could hope at best
for subsistence.

NAR:
Excellent

Until the late eighteenth century the inevitability of this social order
was unchallenged and with it the validity of the political systems which
maintained it. Then the philosophers of the American Revolution proclaimed
the doctrine of political equality and of the inalienable right of <u>all</u> men to
life, liberty and happiness, and a decade later the French Revolution followed
with its clarion call of Liberte', Egalite', Fraternite'. During the next century
most nations of the Western world (with the notable exception of Russia)
embraced these principles and revised their systems of government accordingly.

The concept of equality and progress was soon extended to the eco-
nomic field. It was not a far step from the assertion of political equality to
the doctrine that political equality was meaningless without economic

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well-being. The conviction grew that when men lacked the material basis of a good life they could not make any real use of the right of political participation.

This assertion by all peoples of their right to a greater share of the world's goods is a central fact of our times. Two words evoke its essential spirit: industrialization and growth. Everywhere, as never before in history, there flourishes the quite American notion that growth is the law of life, that today must be better than yesterday, but not nearly so good as tomorrow. And almost everywhere -- especially in the great middle-area of the earth from the islands of the South Pacific to the deserts of North Africa -- there exists the conviction that the key to growth is industrialization. The steel mill or the hydroelectric plant have become much more than functionally useful economic assets. They have become signs of national pride, and symbols of the hopes of peoples.

NAR: ?

The sweeping impact of this revolution cannot be easily summarized. But three particular facts need be noted.

NAR: First: this popular temper of steeply rising human expectations is not confined only to underdeveloped areas. It is a world-wide appetite, evident even in the most advanced economies. The surpassing of pre-World War II levels of productivity has not meant a slackening in the popular demand for better standards of living for whole classes in all nations.

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Second: such a world-wide phenomenon manifestly means that such an economic "program" as might have been conceived a few decades ago has little relevance today. The satisfaction of limited, short-term needs -- by aid, by loan, by gift -- is not the issue. What is at stake is the decision to be made by hundreds of millions of people as to the very way of life -- the economic system and the political institutions -- that they will choose in order to share more fully in the productivity of their societies.

And third: in the crucial underdeveloped areas of the world, this revolu-
tion in mass demand sets up a sharp conflict of purpose. For the political
compulsion is to achieve (and, when achieved, to assert) full and vigorous
NAR: former Colonial powers.
independence from the Western world. Yet the economic need is to acquire

the capital and resources and skills -- essential to economic progress --
NAR:
that can only come in large measure, from the Western world. And this
basic conflict accents plainly the difficulty of fulfilling any Western hope
to receive political cooperation in return for economic assistance.

For the underdeveloped nations the revolution of rising expectations
NAR: human aspirations
is a triple upheaval compounded of economic hopes, of resentment
at racial discrimination and social inequality, and of demands for
political independence. In these lands something akin to a long-
delayed explosion has taken place -- an explosion whose present
violence is itself an indication of the passion and the anguish

NAR:
Not quite
true any
more.

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Second: such a world-wide phenomenon manifestly means that such an economic "program" as might have been conceived a few decades ago has little relevance today. The satisfaction of limited, short-term needs -- by aid, by loan, by gift -- is not the issue. (What is at stake is the decision to be made by hundreds of millions of people as to the very way of life -- the economic system and the political institutions -- that they will choose in order to share more fully in the productivity of their societies.)

And third: in the crucial underdeveloped areas of the world, this revolution in mass demand sets up a sharp conflict of purpose. For the _political_ compulsion is to achieve (and, when achieved, to assert) full and vigorous independence from the Western world. Yet the _economic_ need is to acquire the capital and resources and skills -- essential to economic progress -- that can only come in large measure, from the Western world. And this basic conflict accents plainly the difficulty of fulfilling any Western hope to receive _political_ cooperation in return for _economic_ assistance.

For the underdeveloped nations the revolution of rising expectations is a triple upheaval compounded of economic hopes, of resentment at racial discrimination and social inequality, and of demands for political independence. In these lands something akin to a long-delayed explosion has taken place -- an explosion whose present violence is itself an indication of the passion and the anguish

- 12 -

NAR: Political framework for achieving individual needs -- eco. and social
as well as national security. No nation can accomplish these alone
any more -- depend on their relations and cooperation with others.
Therefore political framework of regional groupings with inter-regional
agreement. Plus national regional and international institutions designed
to facilitate. We can't provide all this on a bilateral basis for 60 or 70
nations. (tremendous lack of imagination or realism on our part.)

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which enter into it. The challenge now is to demonstrate that these expecta-
tions have not been raised in vain; that the aspirations of men may be satis-
fied in economics without denying them in politics; and that a great common
task can evoke great common concerns.

B. <u>The Political Problem of Economic Growth</u>

This is a staggering challenge. Eventually what the aspiring nations need is an increase of national product of the order of ten, twenty, or a hundred fold over present levels. But this enormous rise in output must take place in a setting where the bare prerequisites of an industrial system are often lacking: not only in terms of steel mills and rail lines and ports, but as an absence of a trained labor force, and adequate market system, or a class of production-minded entrepreneurs. Further, the underdeveloped countries, despite their appetite for growth, usually do not have a digestive capacity for large immediate doses of capital. An indulgence in too quick a pace of economic expansion will burst the frail bonds of their institutions and cause growth to be vitiated by wild inflation.

Yet these economic obstacles are perhaps less dangerous than the
social and political problems. Because the gap between reality and newly-
roused anticipations of the future is greatest in the poorest nations, the
government of an unindustrialized country typically finds itself confronting an
almost impossible dilemma. It cannot grow without a measure of domestic
savings; but having risen to power on the unleashed aspirations of the people,

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its leaders dare not slow down the pace of advance to the point where aspira-
tion will turn to despondency or fanaticism.

As a result of their enforced need to make haste -- many of the new
nations have turned to state capitalism or socialism as their basic form of
economic organization. But essentially their dilemma lodges in the fact
that *whatever* economic institutions are used -- those of free or public enter-
prise -- one cannot make much haste. And so the temptation is great to stake
all on one desperate effort. This may take the form of the Communist panacea
which promises the milennium at the price of a liberty which means little to
people who have never enjoyed it. Or it may tempt irresponsible or merely
shortsighted leaders to seek escape from their dilemmas at home in adventures
in the foreign field. Or yet again, the very precariousness of their situation
may encourage struggling countries to ask for economic aid as their right,
while spurning all conditions and safeguards to aid as an invasion of their
national dignity. By asking for aid without assuming any reciprocal responsi-
bility in international relations can be demoralized.

Hence it is dangerous for us to assume that industrialization will
automatically solve the problem of political stability, and that economic well-
being of necessity will produce a democratic form of government where
economic advance necessitates the structural reordering of a nation, advance
is likely to create instability in government. In fact, the challenge of the
revolution of rising expectations is political and spiritual even more than

[LC]

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economic. Unless we can assist in the creation of institutions which embody
respect for human dignity, economic advance may produce a Frankenstein
which crushes freedom. Unless we succeed in demonstrating that our beliefs
reflect universal aspirations we will have merely succeeded in refining the
tools of slavery. It would be paradoxical if communism which claims that the
economic structure of society determines all other aspects of social life were
to emerge as the apostle of the primacy of political and psychological factors
while the West, despite its religious and moral tradition, were to stake
everything on economics.

C. <u>The Problem of Population Growth</u>

The world-wide social revolution would be formidable by itself. It
receives particular urgency because of the explosive increase of the world's
population. Ever since 1650 the world's population has been increasing at
an ever accelerating rate. From 1940 to 1954, for example, the annual per-
centage increase was twice the rate of the period between 1850 and 1900,
and one and a half times the rate of between 1900 and 1950. Since the base
of the population is ever larger, the rising percentage increase involves huge
absolute increments. In the short space of 34 years (1920 to 1954) the abso-
lute number added was greater than the entire world population of 1750.

If the rate of growth between 1900 and 1950 is maintained the world's
population will increase by a third in the next generation or by one billion. In
another century it will have doubled; in two hundred years it will have

[lc]

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multiplied five and a half times to about 15 billion. All indications are, moreover, that the present rate of increase is accelerating. If the trend of the past half century is projected into the future, the world's population will double in the next generation, quadruple in a century and in two hundred years will reach the fantastic total of 191 billion or forty times its present size.

The problem is made acute by the fact that the rate of increase is greatest in the underdeveloped countries, where it is most difficult to assimilate increases in population. Advances in public health, which have produced a startling drop of the mortality rate while the birth rate remains relatively constant, account for this phenomenon. Its consequences are vast. In the "advanced" countries the greatest increase in population occurred only *after* industrialization had widened the economic base. When industrialization began in Europe and the Western Hemisphere the relation of population to resources was much more favorable. In the New World, there existed and still exist virgin lands so that increases in population led to the settlement of new lands and the development of natural resources. In Europe industrialization and technological advance was able not only to absorb the growing labor force but also to increase the standard of living. In what is now considered the "advanced" part of the globe, industrialization and population growth therefore tended to reinforce each other.

It is different, however, in most of the currently underdeveloped regions, with the exception of Latin America. The contemporary agrarian nation

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is more populous in relation to resources than was the case in western Europe
in the eighteenth or early nineteenth century or in North America at any time.
The enormous increments of population are thus being added to already large
numbers. As a result, it is extremely difficult to raise national income to
keep pace with population growth, much less to improve the standard of living.
If the population is increasing at the rate of 2 to 3 per cent a year, even a
rate of annual savings of 10 to 15 per cent will probably do no more than main-
tain per capita income. Thus many underdeveloped countries will have to grow
very rapidly simply to stay even. To improve the standard of living may
require savings on the order of 20 to 25 per cent. Such a rate of savings is
unattainable for most countries where the population pressure is most severe.
At the same time these are also precisely the areas where rabid nationalism
produces a reluctance to accept foreign assistance.

MCCORMACK: "slower" relative to population and knowledgeable aspiration.

The slower economic progress, the greater is political instability: a
condition which in turn is fostered by another aspect of a rapidly growing
population -- the predominance of youth in the population. In Algeria, for
example, the age group between 10 and 24 represents 86 per cent of the popu-
lation and in Egypt 65 per cent, while in the United States it is 38 per cent
and in France 32 per cent. Since all governments are seeking to raise the
educational levels of the masses the inevitable result is that dissatisfaction
becomes more articulate and more organized.

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The more desperate the domestic population pressure, the more irres-
istible will be the temptation to divert attention to international problems.
Nationalism is the one sentiment strong enough to justify sacrifice and to turn
men's minds from their deprivations. Militarism may seem an easy way out
for countries with rapidly growing populations and chronic unemployment. A
man in uniform is no more costly -- perhaps less so -- than one in a beggar's
costume. If it suits some industrial power to furnish arms for the use of
superabundant manpower, the leaders of overcrowded and impoverished nations
will be able to contribute to the tenseness and explosiveness of the inter-
national situation.

No assessment of the contemporary scene can ignore this mushrooming
increase of population. It is perhaps the single most intractable force churn-
ing the world. Generations will pass before an eventual equilibrium brought
about by social policy or by the sheer limits of nature, will balance growing
populations and available resources. Meanwhile the population explosion
will continue to a large extent to destroy or frustrate the explosion of aspir-
ations.

It would be idle to pretend that this all-important problem is amenable
to United States action. Perhaps the sobering lesson which it holds out for
us -- a lesson very foreign to our temperament -- is that some of the most
fundamentally disturbing problems of the contemporary world are beyond our
power to control. If we are to face the challenge of the great international

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transformation with realistic hopes for what national action can accomplish,
it is wise to have a prior understanding of what cannot be done.

D. <u>The Precarious Position of Our Industrial Allies</u>

Yet another aspect of the contemporary international economic scene
is the precarious position of certain of its advanced industrial societies. This
is no temporary difficulty suffered by one or two of them in isolation. It is a
long-term problem common to many of them, resulting from profound changes
in the structure of the world economy.

The long-term character of the difficulty facing our industrial allies
can be illustrated by two examples -- the United Kingdom and Japan. The
British problem is a central one. About one-quarter of Britain's prewar national
wealth was lost in the last war, in the form of shipping casualties, physical
destruction at home, the running down of industrial equipment, the liquidation
of external investments, the loss of gold and dollar reserves. These wartime
losses gravely impaired Britain's capacity to achieve a postwar equilibrium.
British leaders estimated that merely to keep up her prewar level of imports
the United Kingdom would have to increase its exports by 75 per cent -- a
figure which proved too conservative. And meanwhile, postwar exports had
fallen to one-third of prewar levels.

From this weakened economic position, Britain has been trying to carry
out its responsibilities as a world power. Amid growing postwar tensions, it
has sought to maintain military forces around the globe and to develop the

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capacity to wage modern war. It has clung tenaciously to its position at
the center of one of the two great financial systems of the world -- the ster-
ling area. Thus it continues to serve as banker for a group of countries whose
populations total 700 million persons and which account for nearly one-half
of free world trade. In performing this function, it is obliged to maintain a
large measure of free trade and payments with these countries and to offer
them liberal credit facilities. It does this with reserves of only $2 billion
against annual imports of $10 billion and external liabilities of $12 billion.
In such a situation, normal fluctuations in the foreign trade of Britain or
other members of the sterling area can bite deeply into the common reserves,
induce a speculative flight from sterling, and precipitate a full-scale finan-
cial crisis affecting a large share of world trade.

The position of Japan is comparably precarious. Unlike Britain, Japan
does not carry the burden of upholding a great world currency. However, it
has some extraordinary difficulties of its own. Japan's ratio of population to
domestic resources is even less favorable than Britain's. It supports about
600 persons per square mile (compared to 60 persons per square mile in the
United States). Moreover, Japan has very few mineral resources. Only
about 16 per cent of its land is cultivated, the remainder being in pasture,
forests or rugged volcanic wastelands.

Prior to the Second World War Japan built a prosperous empire by
supplementing its home island resources with coal, iron, raw cotton,

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fertilizers, soy beans, rice, sugar and other necessities from the Chinese mainland, Korea and Formosa. Since the war, the resources and markets of the mainland have been largely closed to Japan. It has had to look elsewhere for its raw material supplies and for the export markets to pay for them.

Unfortunately, it has found few countries eager to expand their imports of Japanese goods. Instead of being able to pay its way in world trade, it is living from hand to mouth on American military expenditures and periodic doses of American aid.

These situations are illustrative of what is in fact a world-wide imbalance of productive capacity, whose monetary aspect we call the dollar shortage. As a result, a substantial faction of international economic exchange takes place not as a mutually profitable trade, but as an artificially inducted transfer. A full-quarter of our exports depend on our own loans, grants, and military expenditures to finance them. This unhealthy situation comes not only as a threat to our own international trade, but as a constant source of danger to the whole complex of international economic arrangements.

## E. The Burden of World Armaments

Another serious problem is the obscuring and confusion of the real economic needs of a nation by the claims of armament. The economic needs of Israel, for example, are hugely complicated by the national resolve to maintain a great defense force; and since this force obviously is not going to

We do, to
a lesser
degree face
the same
problem
(NAR)

McCORMACK

HARBISON, OP-III Meeting, March 14, 1958

P. 64, maybe it's 63 of the report, " 'The problem of high-level manpower cannot be over-emphasized'-- I think that the tone of the report and particularly the writing of this particular section does it's best to under-emphasize the importance of the manpower problem. p. 61. Now I would propose -- I would like to do two things if I could -- I would propose a short statement to be inserted starting with the second paragraph on p. 63.

It seems to me this reference to the problem of manpower in the underdeveloped areas is perhaps the most underdeveloped part of the report and I would like to read just a few things that I thought might be helpful. I beg your indulgence in doing this because I plead guilty to having made these same remarks before, so they won't come as anything new. I would then like to take just a couple of minutes afterwards to introduce some new evidence as to why I think it is important in this report to emphasize the problem of high-level manpower. First

First, with regard to the suggested change in the wording, I would put it this way: "It is becoming increasingly clear that the development of high-level human resources is as important as capital loans, military equipment, and foreign trade in helping other countries to make progress consistent with the goals of free nations. And here, the critical manpower problem of nearly all of the industrializing countries is the development of high-level, highly trained, human resources. In the

III - Meeting
March 14, 1958

HARBISON

- 2 -

industrializing countries require outside assistance in finding and training
administrators, managers, engineers, technicians and supervisors and
certain kinds of skilled labor. They are dependent upon the advanced countries
for materials, staff and equipment for their technical colleges and universities.
They are unable to use machinery purchased abroad unless technicians are
loaned to install it, and to instruct local personnel in its proper utilization.
They need help in the establishment of vocational schools, colleges and
universities and programs of in-plant development of the capacities of people.
They will need to send abroad even larger numbers of bright young men for
study in technical institutions and universities in the advanced countries.
They will require consulting services of all kinds in building their industrial
enterprises. And in some cases they must continue to invite foreign enterprises
to establish and operate factories within their borders. Thus, governments,
private enterprises, labor unions, consulting firms and universities in this
country all have a vital stake and role to play in the development of high-
talent manpower in foreign countries. The greatest achievement of the United
States is that it has built an industrial system which has enhanced the worth,
the dignity, and the freedom of human beings. The greatest contribution has
been in developing people rather than in building factories. It's real success
lies not in the efficient exploitation of natural resources but rather in the
successive improvement of human resources. Our most spectacular achievements
in other words are humanistic, rather than materialistic. Here, the United

III - Meeting

March 14, 1958

HARBISON

- 3 -

States has impressive experience. For example, we lead the world in programs for training administrators and managers. Our engineering universities are pioneering in giving more attention to the human aspects of industrial organization. In short, the unique feature of our industrial society in comparison to others lies not in its economic efficiency alone but in its preoccupation -- primary preoccupation -- with the problems of people and their development. These then are the ideas we must export to the industrializing countries, and our technicians, consultants, machinery installers, and private enterprises, can and should be the carriers of such concepts."

That's the statement that I would suggest or something along those lines, to strengthen this particular section on manpower resources and technical assistance. And if you would permit me for a minute of two in I would just like to give a couple of examples to support it.

pivitoh

You take a country such as Iraq which after all is a country in the Middle East and particularly to United States' foreign policy. By no stretch of the imagination is Iraq short of natural resources, water either in terms of land or mineral oil resources. It certainly has plenty of capital to carry on a development program which is conceivable. The major economic bottleneck is Iraq is high level manpower. It is trained government administrators; it is engineers; it is applied scientists; it is university administrators and professors, etc. Iraq has one-fifth the number of people

- 4 -

III Meeting

March 14, 1958

HARBISON:

of Egypt and 5 times the economic resources but only 1/10th the number
of highly trained and skilled technical manpower. You can go to other
countries and witness the same thing -- I have just returned from a trip to
Ghana and Nigeria. Ghana is a country just emerged into independent
status with perfectly tremendous problems of replacing with Ghanians the
former civil servants which had been supplied by the British. The same pressure
and indeed the primary problem faced by the enterprises there -- the British
and our own -- is that of the rapid AFRICANIZATION of, not the skilled
and unskilled workers -- that's already done, but the higher people as well.
At this stage in Ghana's development, we haven't muddied up the record by
poor foreign policy -- we are still in a position where we are respected and
liked. The Ghanians are very friendly people and there are a great many people
competing for the wave length of the Ghanians. I would give you one rather
humorous story which illustrates ... (Professors welcoming Americans and
mistaking them for the Russian scientists.) In a more serious vein what we
were observing there was an extremely active Russian influence in the technical
assistance field and the morning when we called on Mr. T, the head of the
Trade Union Congress he showed us a letter from the Soviet Union inviting all
expenses paid the entire top command of the labor unions in Ghana. Query:
Does the U.S. every do this? Answer: We don't know.

By far the most prominent influence there -- again all in the technical
assistance field -- this country doesn't need capital particularly. It needs helps
in trained manpower. The Israeli ambassador I think is probably the most efficient

- 5 -

III - Meeting

March 14, 1958

HARBISON:

person in the area of technical assistance, having great influence in that
country. Many others are in there too. The U.S. is dragging its heels. We
have no program -- little concept of program -- very little understanding of
the problems in GHana -- very little programming other than going at some
very low-level problems which are not strategic, whereas people plead with
us -- "Can't you send us somebody here who is a really top-shot in the
field of public administration to help us develop. Ghana has 5 million people.
Nigeria is the largest country in Africa in terms of population with 35 million.
Two of the regions of Nigeria are now independent. In 1960 the entire country
is scheduled to be independent. The problems of shortage of high-level manpower
in Nigeria are multiplied not by 7 times, but by the fact that there are fewer
Nigerians trained to take over these responsibilities either in industry or in
government and also by the fact that there is a great deal more cleavage and
difference between the so-called Moslem North and the Southern tribal territories.

Yet in these two areas perhaps turns the fate of many of the newly emerging
countries -- emerging to political independence. Here again, these countries
are rich countries. There is a problem of capital, certainly. There is a problem
of resources, certainly. But as an economist I say that the principal economic
problem is high level manpower. Now I could go on our previous project and program
project where we have made studies on the problem of human resources and
economic development in 20 different countries including the Soviet Union,
I could go through many of these and point to the fact that the bottleneck factor
is high level manpower. I should like to end this statement by saying that the
problem of investment of time of funds of resources in the development of high-

- 6 -

III - Meeting

March 14, 1958

HARBISON:

level manpower is a matter of most urgent importance in the developing countries of the world. And I don't mean by that that in a report like this we *ax* merely emphasize -- this problem cannot be over-emphasized. I think what we should say is "this problem is critical and here ... steps one, two three and four are some measures which private enterprise, government, etc. could do to help solve this particular problem.. After all, you know you can build a dam in 5 years but it takes almost 15 years to build a good engineer. Returning just for a minute to the Middle East -- we have opportunities in the Middle East now to influence the development of the educational system in Iraq due to the development in Iraq of an *aw* awakening within the universities that they must do something. We have American universities out there, in the form of American university in Beirut, American university at Cairo, Roberts College, which are in danger of folding up because of lack of resources. All of these things are in the particular area of development of high level human resources.

I don't want to be unduly harsh by saying that this business of going around and helping in vocational schools, digging water wells, better methods for health -- those are all well and good -- we do those *ax* for humanitarian reasons. By doing so we also increase the population and complicate the economic problem. I think that we must think *ax* in terms of investment in high-level strategic human resources as a necessary thing to develope the productive capacities of the country, as something quite separate and distinct from general educational for all which should be a consequence, of one of the fruits of general economic development. I should like to see in the report therefore some emphasis given to this human element which I think is *ax* of vital

III - Meeting

March 14, 1958

- 7 -

HARBISON:

importance.

To sum up:

In any country where we have foreign aid problems that some kind of
an assessment be made of the manpower problem in such countries to determine
which are the high priority or bottleneck manpower problems which should be
tackled: (a) immediately, and (b) the ones which must be tackled now in order
so that your program will be solvent in the future. Let me give you an example.
An immediate problem in Iraq may be to get consulting firms in to set up a plan.
The ultimate problem in Iraq may be first-class engineering training in universi-
ties with some administrative and economic training combined. The latter will
unless
take many years to bear fruit, but still something is done about it now five to
ten years from now you would have no particular fruit. This assessment then would
be point number one. I believe that progress is being made in such assessment,
there is now an interdepartmental committee within the government that is
tackling this thing along these very lines and which is planning to make recom-
mendations to Congress with respect to certain types of funds for high level
manpower and its development.

The second step that I would suggest is some sort of conference or
commission or agency which would bring together governmental governmental,
private enterprise foundations and that kind of thing to provide some means of
integration and joint assessment of the things that can be done by various
stages. Obviously the United States government at the present time is not

III - Meeting

March 14, 1958

- 8 -

HARBISON:

in position to have much influence on developments in Egypt, because of political considerations whereas an organization such as the Ford Foundation is in a position to have a great deal of influence, indeed, has been asked to supply manpower consultants to the Egyptian Planning Board. In other cases, take for example in a country such as Saudi Arabia, I think we have an excellent example there of private enterprise, ARAMCO, through it affiliated or subsidiary Arab development Corporation, in developing local industries, entrepreneurs, and so forth. The thing about it is, there is no agency or group or mechanism whereby all of the people struggling in this area can take a look at the net impact and the division of the job.

The third step that I would recommend would be focusing attention, preferably for purposes of legislation, on the fact that we cannot spend money on technical assistance of all kinds in an indiscriminate way. We cannot in other words, fire technical assistance around like buckshot. We really have to concentrate within the means we have, on certain strategic priority objectives and use the rifle shot approach in furtherance of those objectives.

So therefore I would say that one of purposes of this commission or intergovernmental private industry foundation organization, would be to devise the mechanisms for the pinpointing and assessment of relative priorities in approaching these particular problems. Well, those are some of the things I recommend doing.

PRINCETON UNIVERSITY
INDUSTRIAL RELATIONS SECTION

P. O. BOX 243

PRINCETON, NEW JERSEY
U.S.A.

FREDERICK HARBISON, Director

HAZEL C. BENJAMIN, Librarian

NELLIE OFFUTT, Secretary

Faculty Associates

J. DOUGLAS BROWN

RICHARD A. LESTER

WILBERT E. MOORE

February 10, 1958

Research Associate

WARREN W. RAYSON

HEINZ HARMSWART

SAMUEL V. HILL

GAYTON J. R. MUNRO

Research Staff

MARY E. KLEIN

JOHN C. SHARPE

Mr. Nelson A. Rockefeller, President
Rockefeller Brothers Fund
30 Rockefeller Plaza
New York 20, New York

Dear Mr. Rockefeller:

I have read with great interest the first three parts of the number three panel report. On the whole, I am favorably interested with what I have read. The style is excellent; the point's made clear; and the analysis is sound. It represents a great improvement over earlier drafts which I read last year. I am confident about it.

There is one major shortcoming, and I feel an important one. There is practically no reference to the problem of manpower and human resources. In the section "The world we live in," reference is made to the population explosion. There should also be a discussion of the technological revolution which might well stress the increasing importance of highly-trained manpower resources - such as professional and technical personnel, managers, entrepreneurs, public administrators, and political leaders. As we know, the problem of such "high-talent" manpower have been increasing in the societies, the lack of such resources is a major limitation on development of the less advanced countries. In some cases, high-talent manpower, rather than natural resources and capital, is the most critical factor limiting economic development.

In the section dealing with the challenge of Communist Russia, there is almost no appraisal of the high-level manpower problem. For example, the Soviets are turning out more scientists and engineers than we are. No mention is made of the Soviet educational system, despite the fact that there are now available excellent materials on this as well as on Soviet technical and engineering manpower. One of the great dangers to the U.S.A. is the Soviet step-up of technical training, the new methods of training the scientists, and similar measures to develop large numbers of very high and well-trained people. In this area, the U.S.S.R. is leading investments. Likewise, there should be mention of the Soviet population problem. Here the situation is favorable for us. There is now, because of losses incurred during World War II, a shortage of youth of university and pre-university age. Part of the step-up

Mr. Nelson A. Rockefeller

- 2 -

February 10, 1958

technical education within the past 5-10 years has been to develop
sate for this gap. If you like, I could supply some materials
at this point.

Finally, I notice from the outline of the parts which are
yet available a similar omission of reference to the human rese-
problem. If we have a section on U.S. investment policy, should
not also have a section on technical assistance - or something
related to investment in the human agent? I would suggest that
important aspect of our foreign operations is in technical as-
stance, both that rendered through the government or the United
Nations and also by our private enterprises with operations at
I am currently, making a study of the latter, and I find that the
impact here has been as great as the impact of pure investment
funds.

Reference should also be made, I think, to the need for
cooperating and pooling the high-level manpower resources of the
U.S. and its European allies. Here there have been interesting de-
ments in NATO. We should have some analysis of these measures
the section on "What we can do."

Enclosed is a monograph jointly authored by Doug Brown and
myself. In essence, it is a revision of the papers which we pre-
pared for your Special Studies Project. It contains some of the
ideas which might be used, particularly the last two sections.

I am sorry that I will be unable to comment on the drafts of
the later sections, which were to be sent on February 2nd. However,
I will be glad to supply any material you want on the points which
I have raised.

I feel strongly that Panel III should have another meeting
before the draft of the final report is completed. At such a
meeting, I should argue strongly for the points which I have made
in this letter.

During the next four weeks, I will be in Africa and the
Middle East. I shall be back in Princeton on March 2nd. You may
reach me en route through my office at Princeton.

With best personal regards,

FM/dm

Written in Dakar 2/1/58 - Transcribed in Princeton 2/10/58.
Enc.

III - Meeting

March 14, 1958

WILDE: Why can Egypt welcome a man sponsered by the Ford instead of
sponsored by the State Department?

HARBISON: Well, there is not a great deal of friendliness for United States foreign policy, for kind of obvious reasons and for political reasons, whereas there is a great desire to have some kind of contacts with the West and there is also a great desire to have any possible bit of information on what we are doing in developments of top-level manpower. Now it's very interesting, if Dr. Teller might be interested in this, that Egypt has made a complete inventory of its scientific manpower.

They have an atomic energy commission, of sorts, they also have a national science council, of sorts. They are a country with great aspirations and not too much in the way of resources. In nearly all of the technical assistance for these projects, not nearly all, but a good part of it, has come from the Soviet Union.

They are very, very anxious now to find some ways and means of developing contacts, getting ideas and information, from Western countries, particularly from the United States. A manpower consultant on an independent basis, not being suspect as part of foreign U.S. foreign policy, with some status as a scholar or an independent person, is greatly sought after in Egypt. We are in the process of trying to meet that particular need. Now you wouldn't have to an operate that way in Iraq. That would be entirely different problem. One of the difficulties of our technical assistance approach abroad to this problem and to others is that we attempted to deal with countries on a universal basis and to get one doctrine to apply to a group of countries or certain countries and we don't

III - Report

March 14, 1958

GRANGER: I read this report from the standpoint of a dissenter, though I go along with everything that is in it. I was thinking of the impact made upon the average reader and tried to put myself into the position of some of the people whom I know very well who would disagree philosophically with the approach, and tried to read into it the instances that may be taken as examples of starry-eyed wishful thinking. It seems to me that at two points the report is open to attack: In the statement of the challenge and in the point that John Gardiner just raised and Milton Katz responded to. Isn't it true that our uncertainty, the fickleness of our approach to issues of foreign policy is a reflection of our basic uncertainty and fickleness in our approach to domestic issues. I question whether we have an unquestioned and generally accepted belief in the dignity of man as a prerequisite of liberty. We pay lip service to it but there are so many divergencies at the point of the application. I think that there should be some recognition taken of that in the statement of the challenge. And by doing so we have a chance to point to the fact that this uncertainty which is implicit in American living dogs us in our approach to overseas problems and interests. That is the first point that worries me and second, ..

ROCKEFELLER: Could I interrupt you on that, Lester, and ask you whether you don't think really this is a basic point that runs through all of these things, these panel studies, and whether we don't have to, at some point in one of them, face it just as you are putting it. We must have some basic belief which does motivate us in all of it.

- 2 -

GRANGER: We profess and we believe but we shrink away from application of it. And the other point has to do with this matter of raising the level of living in other parts of the world. It's true that economic growth in underdeveloped areas does stimulate certain psychological satisfactions as well as a sense of physical well being. But it is also true that the psychological satisfaction feeds nationalism. Nationalism in turn let's itself pull strings and that is manipulating politically. And the political manipulation comes back and impairs the economic growth. This, to me, points up the need for something which is referred to, the development of the internal political leadership, but the need for being aware of the necessity for negotiating with that political leadership skillfully and consistently. I would like to see that worked up a little more in the references on page 55.

March 15, 1958

MEMORANDUM FOR MR. KISSINGER

Subject: **III Report - Background Material for Revision of March 5 Draft**

1. HAK pencil notes, 3/14 meeting

2. NAR pencil notes, 3/14 meeting

3. Berle Outline of Additional Measures, 3/14 meeting

4. Ilene Slater summaries of "Specific Points" & "Purposes and Objectives" 3/14 (2/10) (2/22/57)

5. Harbison letter, paper and tape transcript (3/14 meeting).

6. Transcript Percy Remarks, 3/14 meeting.

7. Transcript Rusk Remarks, 3/14 meeting.

8. Note from Mr. Lockwood concerning specific advocation of legislation in any report.

9. March 5 Draft Collated Copy (pp. 1 - 14)

10. NAR's comments March 15, Rough form

11. Clean-copy March 5 Draft

**Question:** Should any material be sent to Mr. Katz?

**Note:** Other transcripts requested and remaining pages of collated copy to follow.

Ilene Slater

HAK notes
III - Report
March 14, 1958 meeting

Appeal of universality of Marshall Plan, appeal that it includes even Communism. -- Trade Policy.

KATZ: Three themes, Advanced countries, underdeveloped countries, development.

Four conditions for development:

1. independence from colonialism

2. institutions resting on consent

3. peaceful intentions

4. respect for dignity

Nothing is easier to get in world than agreement that growing U. S. economy essential to economy of the rest of the world.

BERLE: 19th century not crossing back (?) Need institutions

***Get Berle to do something. Cooperative financial arrangements***

WILDE: Prologue, shouldn't inhibit our foreign economic policy because of depression, need for affirmative.

TELLER: Raw materials too static. We'll get substitute materials. Strip mining with nuclear explosives. Accelerating technology gives us opportunity to meet rising expectation.

SPOFFORD:

GARDNER: would like to see some of the institutions of 20th century more clearly defined.

GARDNER:

May be able to rise to power by manipulating aspirations. This educational and institutional stability is crucial. We should ally ourselves with element that wants progress and political stability.

GRANGER: Domestic performance crucial for international. Economic development leads to nationalism, nationalism leads ...... may hurt growth.

RUSK: Problem of idleness in underdeveloped countries. Way to solve problem of development is work. Way to get development is not to redistribute

****HAK, Ilene - Action?

- 2 -

riches, but to develop ........

Protect investment.

HICKEY: Too negative and discourageing. Fraught with danger.

POTOFSKY: Communist challenge chapter should be reexamined. We are not necessarily ahead. If Soviets ever put energy into economic development that they did into science, we'll really be in trouble. PPP. for 66-68 too naive. Must keep our productive machinery going.

JOSEPHS: Problem of choice, what do we use our resources for. Get summary at beginning which lays out trend of argument. Expand section on injury to industry. . Be sure of rels. with other panels.

POTOFSKY: Take out references to 100 year projection in population growth.

PERCY: We are not making enough people unhappy. Should be broader. make propositions of abolishing all tariffs.

CLEVELAND: opposed to terminal dates. How does society do something about its aspiration. Beef up part that quality Americans are hurting factor.

HAK: Put in our own experience of barriers we have raised.

MCCABE: Concerned with public reaction. Agrees with Chuck Percy. Should be less philosophical and more concrete. More partnership arrangements. More emphasis on American experience. Our reliance on foreign capital and more emphasis on American experience. What is wrong is our timidity in dealing with these countries. Disagrees with notion that we are building up trade. Barriers to international investment.

McKEON: 1. view of world order

2. long-range

3. institutional arrangements, moral union, Take Chuck Percy, wants to and aspirations express needs, must be translated into objectives.

Get McKeon's statement; motivation of our personnel abroad compared to Soviet personnel.

Human dignity important but can't be reduced to doctrine. two levels of concept of dignity.

- 3 -

**GARDNER:** sense of responsibility of rich. All the rest of world is getting .... share.

**MAY:** Our foreign policy has drastically changed. Our foreign economic policy has not changed, but activity has even deprecated.

**RUSK:** Bargaining power of putt. (?) philanthropy
Institution set up to increase bargaining.power.

**BERLE:** 1. Currency coordination

2. Coordinate technical aid and private investment

3. Short-term should consider key agricultural plans.

**HARISON:** Major bottleneck in Iraq is high level manpower.
Same true in ..... Need for technical assistance.
Dam project can be built in five years. It takes 15 years to train engineers.
sketch in details. Separate what needs to be done immediately
(2) what can only be done ultimately, (3) coordinate governmental and nongovernmental authorities.
Ford Foundation can be effective in Egypt where U. S. govt could not. (4) Priorities for technical assistance.

**RUSK:** In some regions some other country than U.S. in is better position to supply personnel
(HAK: good means of cooperation)
Training within region.
As important for short range as for long-range.

**HICKEY:** Shouldn't write off threat of competition.

**TELLER:** International aspects of science.

Meteorology: 1. Govt effort to study weather

2. Govt effort to study experiments re
affecting weather.

3. Govt efforts to affect weather.

Oceanography, continental shelf, you have usual geological deposits therefore rich, also ..... sea life and influence of ocean.

③ thinks that most helpful kind of cooperation is when it concerns things to be done and not things to be avoided. Such as atoms for peace. Should ask Russians to cooperate (common interests that might be maintained even in war.)

- 4 -

TELLER: .4...BY migratory birds.
We already have whaling and sealing agreements.
Scientific research grows up in chepaer research fields
5. Scientific research grows up in cheaper research afields.
needs only ______________, also government support.
6. References, Dr. Berkner, Roger Ravell.
7. In research fields of oceanography

WILDE: How do you get higher degree of public acceptance for tariff?

HICKEY: What should the goals of economic policy be? The kind of world we would like to help in creating.

JOSEPHS: Our political attitudes are laissez-faire still and no longer good enough.

KARZ: Major problem, domestic pressures which are inconsistent with long-range requirements.
Overseas -- resistance to investment
At Home -- resistance to foreign economic polich.

TELLER: Economic Union, Western Hemisphere - Europe

GARDNER: In favor of free trade with Western Europe

NAR handwritten notes

III - Report

March 15, 1958

Conclusion as to purpose and objectives before getting into structure,
procedures, and institutions.

Long-range objectives as against terminal date.

wants and aspirations translated into objectives.

Sense of direction

purpose

motion

Bold imagination -- scientific

planning

private -- Business

foundations

Marriage of the government, private enterprise and labor.

BUT BUILT AROUND A CLEAR SENSE OF PURPOSE

NAR's Comments - Rough

March 15, 1958

III Report, March 5 Draft

I. Expand on Mr. Katz -- the kind of world we want to see.

We have to get away from a consideration of just problems to
that of the challenges; a vision of the future.

Dev Joseph's point that it is good to give people the problems,
but answers should be presented at the same time.

II. What may be good today may not be good for tomorrow. Levels of action and objectives.

Percy point.

III. Levels of Institutions

A. World order theme: world, inter-regional, regional, national.

B. World-wide: Teller - meterological, geophysical

C. Free World-Soviet : Berle

D. Regional: exploration of Western Hemisphere common market & others with objectives for which it would be organized, i.e.:

1. Low cost housing - FHA approach

2. Eastern Andes Development Authority - great potential, gives sense of momentum, area where we are not under immediate pressure.

3. stabilization, etc. advantages of common market.

4. development of arid areas through water advances.

5. Other exciting ideas that could be mentioned: raising level of herds, etc.

IV. Development Authority Concept

Dean Rusk's recommendation re corporate entities and foundations.

Develop regional cooperation: flexibility, decentralization, institutional quality. Advantage of private corporate set up that sovereignty of nation is not bridged. Position of asking for advice.

Have got to have regional agreements.

V. Difference between immediate and long range. Adjustments made in working for common goals. Stability and framework needed for development.