February 14, 1958

MEMORANDUM FOR HENRY A. KISSINGER

Mr. Thomson also sent us a copy of his speech in which
he summarizes CED proposals.

I think we should be a little careful not to pick up CED
language in our agriculture section. Both proposals appear to
me to be pretty much the same.

You might want to talk to him about the difference between
them. We don't want to be accused of "copying" without footnoting.

Nancy

FOR AFTERNOON RELEASE FEBRUARY 15, 1958

An Address by J. Cameron Thomson, Chairman of the Board of Northwest Bancorporation and Vice Chairman of the Committee for Economic Development before the National Farm Institute Meeting in Des Moines, Iowa, February 15, 1958.

A BUSINESSMAN LOOKS AT AGRICULTURE

Gentlemen, it's good to be here. It is always warming -- whatever the outside temperature -- for a Minnesotan to visit Iowa, first in production of livestock and livestock products and second ranking state in cash receipts from farm marketing. We of Minnesota, no pikers at farming ourselves, have to take our hats off to you.

I want to congratulate your businessmen on the interest they have shown in maintaining a sound and prosperous agriculture as demonstrated by their continued support and participation in the National Farm Institute.

I come to you today, not as a farmer, but as a businessman -- a banker, to be precise. However, I have been associated with banks serving farmers, directly or indirectly, all of my professional life, have served as a director of the Land O' Lakes Creameries for a number of years, and, as chairman of the sub-committee which studied the so-called "farm problem" for the Committee for Economic Development (CED), I can say in all humility that I've had an extensive exposure to the economics of the agricultural situation.

I must hasten to add that the mass of solid facts which we were able to glean from all the hoop-la disseminated about the perennial "farm problem" has only increased my appreciation of the integral and vital part which the farmer plays in our national life. We were very happy at CED that our recent program statement, "Towards a More Realistic Farm Program", attracted so much attention over the country that it fulfilled, in large measure, CED's purpose of focusing public attention constructively upon problems which affect the well being of all of us.

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We refer to farmers and businessmen as though farmers were not themselves businessmen. The modern, commercial farmer, of which the farmers in this audience are excellent examples, are engaged in a substantial business. The farmer's capital investment equals or exceeds that of many of his counterparts inside of city limits. He is in a complex business in which success or failure results from a wide range of difficult decisions. Available data indicate the rise of output per man-hour has been more rapid in agriculture than in the non-agricultural segment of the economy in the past 20 years.

In considering the problems of agriculture, are we not being carried away by the political emphasis on support prices? After all, the so-called "basics" under mandatory supports bring in only about one-fourth of the farm income from marketings. Adding the other commodities under direct supports still leaves fully half of the products outside of such supports.

Iowa is the leading corn state and corn is one of the basics. However, the market for your corn is animals. You are interested in hogs, cattle and poultry lines which are managing quite well without price supports. But, Iowa farmers can't be unmindful of the stocks of feed grains piling up under the support program. Unless this is corrected, sooner or later these will turn into surpluses of pork and beef with depressed prices for Iowa farmers.

While it is clear that the economic problems of agriculture are real and that farmers have not shared adequately in the relatively favorable income period of recent years, the facts show that the American farmer is by no means the bankrupt, pathetic character that he is so often said to be. We need go no further than Iowa to prove the contrary. The facts in your state indicate that farming is not only a substantial operation but one which brings in returns as well. Look at the deposits in Iowa state banks over the seven years ending last December 31st. These banks (80% of them located in smaller communities of less than 2500 population which

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handle most of the farmers' accounts) showed a 31-1/2% increase in deposits over that period, rising from $1.4 billion in 1950 to $1.9 billion in 1957. In only one year out of seven -- 1955, the year of the overproduction and low prices for hogs -- did they fail to gain.

In fact, American farmers generally are also a pretty solvent lot. Proof of the solid solvency of the farmers is to be found in the Accrual Balance Sheet for Agriculture prepared by the Department of Agriculture for the Federal Reserve Board and brought up to date as of last October. It showed total equities -- that is, the net value of property owned by all farmers -- had risen in value progressively from $43 billion in 1940 to $157.6 billion in 1957. But, much more significantly, farm real estate debt was only 9% of land values in 1957 compared with 20% in 1940. What is more, non-real estate debt of farmers was more than covered by liquid assets. This is not to deny that heavy farm debt presents some real problems in individual cases. The same, of course, applies to non-farm people as well.

It is important to make clear what we have in mind when we talk about farms. The 1954 census reported a total of nearly 4,800,000 farms but classified only 70% of these as "commercial farms". It, in turn, grouped the commercial farms into six classes according to dollar value of sales. The first four of these included farms with sales of $2500 and up in 1954. These are really the commercial farms. While they included only 44% of the farms, their sales were nearly 91% of the total cash marketing receipts. These are the farms with which this discussion is primarily concerned. Incidentally, nearly all of them are family farms.

Now, turning back to Iowa, we find that 80% of your farms fall within this definition of commercial farms. They operate over 93% of the state's farm acreage. Iowa farmers are substantial, as businesses go, with an average capital investment per farm of $36,000 for just land and buildings -- exclusive of equipment, inventories, and personal property. The average net income for all Iowa farms, including the 20%

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whose cash receipts from farm marketings was less than $2500, has been approxi-
mately $4300 in recent years. While this is not high in view of the ability and
productivity of the typical, commercial farmer, it is not as bad as some tearful
commentators try to make us believe.

Also, let's face it -- the Iowa businessman, particularly in the smaller community, is much more dependent upon the farmer than the other way around. In fact, if it hadn't been for the farmers settling out here and developing your lush agricultural economy, there would not have been so many opportunities for businessmen. Business, as the saying goes, follows the dollar. And, it is clear that in Iowa it was the farmers who made that kind of bankable green stuff grow so profusely. Furthermore, Iowa citizens can consume only a small fraction (30%) of what Iowa farmers produce. Only a national market -- even, in some commodities, an international market -- can absorb the abundant produce of this state. The maintenance of a climate conducive to the continuance of a national high level of employment is essential to the businessman and farmer alike.

What is more, the farmer is a wonderful customer for the nonfarmers. Thus, the businessman should find a real kinship with the farmer because they're both in business endeavoring to make a fair return on their capital and for the even better reason that they are customers of each other. So far as the businessmen of this country are concerned, they cannot afford to blink the fact that farmers spend in the neighborhood of $13 billion a year just for production goods -- that is, for machinery, fuel, fertilizers, feed, livestock, seed, and other aids to production as distinguished from consumer goods.

Even though the farmer is quite a formidable and generally successful busi-
nessman, as I have tried to point out, the fact is that farm income has not kept pace
with national income since 1951.

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The overall net income of farm operators from farming declined by 41% from the peak in 1948 through 1956, falling from $17,180,000,000 to $10,167,000,000. However, because there are fewer farmers now and, because of a rise in income from non-farm sources, the decline in income per capita of the farm population from 1948 through 1956 was only 6% ($958 to $902).

But: while this dip was occurring in farm income, overall U. S. per capita personal income increased 33% (from $1,279 in 1948 to $1,708 in 1956).

This is, in essence, the farm problem to which we at CED addressed ourselves. We wanted to find out how to correct this unfair and costly imbalance. We had no alternative but to start from the premise that something must be wrong with national farm policy if the income of farmers continued to fall after a quarter century of Federal intervention costing taxpayers an average of nearly $2 billion a year ($3.3 billion in fiscal 1957 for price support and related programs). If the patient still couldn't walk with the help of such an expensive crutch, then there must be something very wrong either with the patient -- uncured -- or with the crutch -- ineffective. CED took a long look at both the patient and the crutch and came up with the following diagnosis: --

**First:** Government price supports for some commodities have been at levels which have provided incentives for farmers to continue production at levels above available markets so that the excess has piled up in government storage.

During the years 1951-56, as a result of price supports and continuing technological improvements in production, agricultural production increased and Commodity Credit Corporation inventories increased by over $6 billion while cash receipts from farm marketing and realized net income declined.

**Second:** In addition to problems, such as excess capacity to produce, farmers suffer from various instabilities, largely beyond their control. The weather may subject the farmer to decided ups and downs in income. If serious depression strikes

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the economy generally, resulting in unemployment and reduced incomes, the effects
on the markets for farm products may be serious indeed.

**Third:** Well over half the units listed by the U. S. Census as farms do not produce enough to provide for the farm family adequately even if prices were materially higher.

The Census of Agriculture divides this class of farms into two categories.
First are farms that market from $1,200 to $2,499 of farm products a year (763,348).
Second are those whose sales run from $250 to $1,199 a year, plus meeting both of
the following two conditions -- the operator works off the farm less than 100 days a
year and he and his family together have non-farm income less than the value of farm
products they market during the year (462,427).

**Part-time farms:** (574, 575)

These are farms that sell from $250 to $1,199 farm products a year but where
the operator works 100 days a year or more off the farm or he and his family together
have non-farm income greater than the value of the farm products they market.

These farms average 16.2 acres of harvested crops and $612 of products sold per farm.

**Residential farms:** (878, 136)

These are farms that market less than $250 of products a year. They average
some 6.1 acres of crop land and about $82 of products sold.

It is evident that some of these represent part-time farms or rural residences
where the family relies mainly on non-farm jobs or other sources of income. How-
ever, in this non-commercial group are found the worst conditions of low income.
These people do not gain from price supports or other programs operating in the mar-
ket. In part, they represent a social rather than a farm problem and its solution lies
largely outside of agriculture.

Recognizing these three problem areas in the farm situation, we decided, after

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considerable study, that there were five desirable avenues of attack. I will restate them briefly: --

First, bring capacity to produce into balance with available markets by programs to shift land now contributing to excess supplies out of farm use or into less intensive use; aid farm people with better opportunities in other fields to make the change; and, maintain an approximate balance from year to year between ability to produce and market demand for agricultural production, eliminating present buyer's market with its lowering effect on prices.

If all the non-commercial farmers were to discontinue production (which won't be done), the elimination of their portion (9%) of total production would not provide for elimination of surpluses and establishment of a balanced supply-demand situation.

It will, therefore, be necessary to provide for taking additional land out of production on a voluntary basis. This could be done on a purchase or a lease basis covering a period of years but, to be successful, must take whole farms out of production.

As adjustment takes place, price supports need to be lowered to avoid having them conflict with the objective of achieving a balance.

Secondly, work out specific programs to assist the transition of some farmers out of farming on a voluntary basis in cases where they cannot make a satisfactory living.

In the third place, standby authority should be retained so that price support loans or market purchases based on normal market prices could be used temporarily to protect the farmer against emergencies due to weather or other factors beyond his control such as temporary market gluts.

Fourthly, at the end of a definite transition period, we favored the removal (after present surpluses have been disposed of and ability to produce is in line with

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normal market demand) of acreage allotments and marketing controls so that the
farmer once again can be master of his own house -- that is, regain freedom to run
his own enterprise.

And, finally, we recommended an Advisory Agricultural Board, responsible
to Congress, to work with the Secretary of Agriculture in applying agricultural policy,
guarding that policy against those seeking crippling exceptions or special privilege,
and seeing that existing policies are constantly re-examined in the light of changing
economic conditions.

Now there was no thought in what we proposed to discriminate against one
group of farmers in favor of another. Some have suggested that we, as businessmen,
were for the big farmer and opposed to the little one. That was not the criteria at
all. There are many of the smaller farms which are highly successful; in fact, we
recognize that the commercial family farm forms the backbone of the agricultural
economy. If our program were to force people off their farms, that would be one
thing. It would be police state totalitarianism. We say, rather, that inducements
should be offered so that they can, of their own free will, make a choice to better
themselves while at the same time helping all the other farmers and the nation as a
whole.

As you all know, this migration away from the farms has been going on
voluntarily for a long time. While total output has been rising, the number of workers
in agriculture has declined from 10,979,000 in 1940 to 9,342,000 in 1950; to
8,451,000 in 1954; and, to 7,869,000 in 1956. The farm community has thus been
able to release 3,110,000 workers -- 28% -- from 1940 through 1956. Without these
recruits from agriculture, the growth of American industry could not have been so
rapid.

This voluntary migration is a normal part of technical progress that as
machines do more of the farmer's work, farms tend to grow larger and farmers fewer.

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Things should be better and better for the remaining farmers if they can only bring themselves to the realization that getting back to a free market and getting out from under subsidies is fast becoming a political necessity. The public has appreciated the fact that all is not well with agriculture and has accepted the added tax load involved in financing farm programs. Now, however, increasing questioning is in evidence. More and more people want to know why the large expenditures have not brought about basic improvement. Increased needs for more expenditures on defense together with strong desires for reduction in the tax burden emphasize the importance of making sure that expenditures on farm programs lead to solutions of the problem rather than its perpetuation.

The need for non-farm opportunities for farm people not required in agriculture stresses the importance of aiding and encouraging the development of industries to add to the opportunities. The fact that Iowa already has over $700 million in manufacturing payrolls is encouraging but there is opportunity for further growth.

This is all to the good. If those who leave the farms have no non-agricultural employment to go to nearby, they will leave their communities and their home states to find jobs elsewhere. I would even raise a question as to whether, in view of our increasingly diversified economy, we are providing sufficient non-farm training in our high school vocational courses. Even without such specialized non-farm training, the mechanical aptitudes of our average farm boys and girls are well known to industry and constitute an important element in attracting manufacturing into our communities.

If we are to find adequate and permanent solutions to our farm problems, farmers must arrive at a consensus as to the best solution. Whatever the program, it must have the wholehearted support of our farm population and the public and participation by farmers in administration of the program at the local level.

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The businessman is interested in seeing the farm problem solved because he is beginning to appreciate the fact that the farmer is also a businessman. The principles applicable to a sound solution of the farm problem are appropriate to maintaining a favorable climate for businessmen. The businessman appreciates the farmer as a customer and hopes to see him increasingly prosperous.

Businessmen are alert to the necessity for finding a sound and adequate farm program and will support sound measures which commercial farmers determine will best solve the problem on a basis consistent with our American free competitive economy.

I cannot close without trying to put the farm problem into the context of the challenging time in which we live. It should be apparent by now that we are up against grim and desperate competition from the Soviet communist state. One thing they can do with their system which we cannot very well do with ours is to assign national priorities to programs which the Kremlin believes of major importance.

It is worth noting that, although the Soviets with their priority system were able to beat us into outer space with their Sputnik, no amount of priorities has been effective in solving their farm problem -- one so colossal that it makes ours look small in comparison. They even had to come here to Iowa, as you will recall, to find out how to run their farms!! So, we have more proof of what we always believed -- that the Soviet system has no magic after all - notwithstanding Sputnik. If we Americans can solve our farm problem in the context of freedom (finding the means for the best use of human and material resources in farming on a basis that enables the farmer to share adequately in our national prosperity) -- without any enforced priorities -- we shall have demonstrated in very dramatic and understandable terms that the way of freedom is still the best order of life for inhabitants of this planet. I can assure you that businessmen are willing and anxious to join with farmers in achieving this result.

Thank you.

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February 14, 1958

# I. THE NEED FOR THIS STUDY

We Americans are passing through a great divide in our national history. We were brought up to assume that time was on our side -- that history would insure our preeminence among nations and prove the superiority of our free institutions. These assumptions have been rudely challenged by recent events. We have moved from an era of complacency to an age of anxiety, from a time of easy confidence in our national policies to a testing time when we must prove their adequacy before a grave threat to the survival of our way of life.

The Sputnik has dramatized one major aspect of this challenge: the challenge to our military and technological preeminence. It has forced us to test the adequacy of our defense effort and our strategy for resisting forcible extensions of Soviet power. But there are other aspects of this challenge. We face a challenge also in the economic field. The nature of this challenge and its relation to our national objectives and policies in their international aspect form the subject of the present study.

We are deeply divided over questions which confront us. Are we receiving adequate returns from our foreign aid? Why have our aid and trade policies failed to cure the "dollar shortage"? Will the Common Market in Europe clash eventually with our interests? Is our reciprocal trade program consistent with our domestic prosperity and national defense? Is it consistent with the various elements of our foreign policy? And, superimposed on all these questions of foreign economic policy: Is our economy sound? Can we maintain our postwar rate of economic growth?

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February 14, 1958

In the midst of this confusion of our national leadership is calling
for the strengthening of existing programs of trade and aid. Yet these
same programs have met increasing resistance in recent years both from
Congress and from the public at large.

The confusion is deepened and made shrill by the impact of Soviet
Russia's economic offensive. Our last Thanksgiving holiday, the tradition-
al occasion for rejoicing in our material abundance, was interrupted by a
particularly blunt statement of the economic challenge by the recognized
leader of world communism. Said Nikita Khrushchev: "We declare war
upon the United States in the peaceful field of trade. The threat to the
United States is not the ICBM, but in the field of peaceful production."

The Soviet Union, while growing at a rapid rate at home, is un-
questionably mounting a major effort in the foreign economic field. It is
using its large and growing domestic market as a powerful magnet to
attract the exports of countries of the non-communist world. It is using
its growing supply of capital goods and technicians to assist in the indus-
trialization of the underdeveloped countries. By both trade and aid it is
seeking to make non-communist countries dependent upon communist favor
and thereby vulnerable to communist influence. Within this overall
strategy communist foreign economic policies are well-conceived, well
executed, and, for the most part, extremely effective.

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February 14, 1958

We believe this situation will continue to deteriorate until we can
clarify our international objectives and the ways in which foreign economic
policy can help in their achievement.

This study is designed to be a contribution toward that clarification
of ends and means which our foreign economic policy so desperately needs.
In undertaking this task we must deal with the following questions:

What are the ends we seek?

What are the problems we face in seeking those ends?

What foreign economic policies should we adopt to deal with these
problems and promote these ends?

How can we achieve the domestic support necessary to adopt and
carry out such policies?

This study concerns itself, in turn, with each of these questions.

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February 14, 1958

II. THE WORLD WE SEEK

Foreign economic policy is not an end in itself. As its name suggests, it is a part of our total foreign policy and our total economic policy. These, in turn, are only instruments for achieving our national objectives. Therefore we cannot know what our foreign economic policy should be unless we know what our national objectives are.

There are many people who, in thinking of our national objectives, focus almost exclusively upon the defeat of communist imperialism. We reject this conception as too negative, too narrow and too short-term.

Communist imperialism is an ugly reality which must be faced, met and thrown back. Yet even a decisive repulse of communist imperialism would be only a step -- although an indispensable step -- in the continuing effort to achieve the aims of our society. Those aims exist, have existed, and will exist quite independently of communism.

The objectives of American society are numerous and complex and can be classified in many alternative ways. For the purpose of this report, we find it convenient to summarize them under certain broad headings.

We begin with human freedom. This is the primary and essential objective, which springs from what we are and makes us what we are. Our concept of freedom is not merely a negative one -- that every man should have the opportunity to realize to the full his potentialities as a human being.

opjective, which springs from what we are and makes us what we are. Om

step -- although an indigenerable step -- in the continuing effort to achieve

pack. Yet even a decisive reprieve of communist imperialism would be only a

Communist imperialism is anuly reality which must be faced, met and thrown

II. THE WORLD WE AFFECT

September 14, 1928

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February 14, 1958

In this positive aspect, freedom is a short-hand summary of the deepest
values of our society, and reflects our belief in the dignity and worth of the
individual.

It is this goal of human freedom that distinguishes us most sharply
from the communists. For them, men and women are pawns to serve the
state, and the party which controls the state, and the dictatorial group which
controls the party. For us, the purpose of the social process is the develop-
ment of the free creative individual personality. We believe that certain
elements of social organization are necessary to promote this goal: political
rights -- freedom of speech, press, and assembly, the right to vote, equality
before the law; economic rights -- freedom to work, freedom to strike, freedom
to participate in the benefits accruing from increased productivity; and social
rights -- freedom from discrimination based on race, color, nationality,
religious belief, caste, or sex. Since we are not concerned with power and
wealth alone, we do not regard our society or any society as entirely success-
ful unless it includes all of these elements.

We also seek security. It is obvious that the United States, like any
nation, is resolved to survive as a national entity. We want to preserve the
opportunity to shape our own destiny. When we speak of security we mean
first of all the power to insure our survival. We also mean something more --
the power to reduce threats to our survival to a tolerable level so that we can
pursue our other national purposes in freedom from fear.

bureaucrate on other national burghers in freedom from stress.

that of all the power to impose our arrival. We also mean something more --
ob opportunity to arise our own destiny. When we ask of security we mean
nation, is resolved to survive as a national entity. We want to preserve the
We also seek security. It is obvious that the United States, like any
ful unless it includes all of these elements.

wealth alone, we do not regard our society or any society as entirely success-
religions belief, state, or sex. Since we are not concerned with power and
rights -- freedom from discrimination based on race, color, nationality,

to participate in the benefits accruing from increased productivity; and social
before the law; economic rights -- freedom to work, freedom to strike, freedom
rights -- freedom of speech, press, and assembly, the right to vote, equality
elements of social organization are necessarily to promote this goal; political
ment of the free creative individual personality. We believe that certain
controls the party. For us, the burghers of the social process is the develop-
state, and the party which controls the state, and the dictatorial group which
from the communists. For them, men and women are laws to serve the
It is this goal of human freedom that distinguishes us most sharply
individuals.

values of our society, and reflects our belief in the dignity and worth of the
In this positive aspect, freedom is a short-hand summary of the deepest

February 14, 1928
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To freedom and security, we add the goal of prosperity -- material abundance for the American people. This has two aspects. We want an abundance of economic goods for every American. Moreover, we want to increase that abundance as the years go by.

In considering these broad ends of policy, we should be clear about two things.

**First**, each of the three ends is not only an end in itself but a means toward the achievement of the other ends. If we fail to protect our security we will fail in promoting our prosperity and our freedom. Conversely, if we deal effectively with the security problem we will be able to concentrate our energies and resources on the pursuit of our other ends. In the same way, our achievement of material prosperity gives us the wherewithal to promote security and freedom. Finally, our achievement of human freedom nourishes a climate favorable to security and prosperity. If we lose ground in our progress toward our non-material ends, toward our goal of the free and creative individual personality, we will lose the ultimate foundation of our political and economic strength.

**Second**, our pursuit of security, prosperity and freedom cannot be circumscribed by the continental limits of the United States. In an earlier decade of our history it was aptly said that "foreign policy begins at home." As we enter the second half of the twentieth century we must also recognize that "domestic policy begins abroad." However strongly our natural

that "domestic policy begins abroad." However strongly our natural
As we enter the second half of the twentieth century we must also recognize
decade of our history it was ably said that "foreign policy begins at home."
circumvented by the continental limits of the United States. In an earlier

<u>Second</u>, ourSENTIT of security, prosperity and freedom cannot be
ultimate foundation of our political and economic strength.

our goal of the free and creative individual beraunality, we will lose the
If we lose abroad in our progress toward our non-material ends, toward
of human freedom normahes a climate favorable to security and prosperity.
the wherewithal to promote security and freedom. Finally, our achievement
ends. In the same way, our achievement of material prosperity gives us
able to concentrate our energies and resources on the benefit of our other
CONversely, if we deal effectively with the security problem we will be
our security we will fail in promoting our prosperity and our freedom.

means toward the achievement of the other ends. If we fail to protect
<u>First</u>, each of the three ends is not only an end in itself but a
about two things.

In considering these broad ends of policy, we should be clear
increase that spasm disease as the years go by.

spasm disease of economic goods for every American. Moreover, we want to
spasm disease for the American people. This has two aspects. We want an
To freedom and security, we add the goal of prosperity -- material

February 14, 1928
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February 14, 1956

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instincts and traditions may impel us to close our windows to foreign
problems and concentrate instead on our problems at home we cannot
escape the fact of their interdependence. We are forced to recognize
that events abroad have an increasing influence on the plans and careers
of our young men, on the employment of our scientific and engineering
talent, on the use we make of our national production, on the development
of our political and social institutions, and even on our attitude toward
our most strongly held values.

Thus security, prosperity, and freedom are indivisible. Their
achievement at home is intimately related to their achievement abroad.
In a previous study on International Security we argued that security for
the United States requires the building of strong and friendly allies. In
this study we will show why the maintenance and expansion of our domestic
prosperity requires the development of prosperity abroad.

We also believe that the interdependence in domestic and foreign
objectives applies to human freedom as well. The achievement of the
free and creative human personality cannot be accomplished solely within
the continental United States. An obvious reason is that full freedom and
creativity for Americans includes the freedom to travel and partake of the
world's intellectual and spiritual resources. But there is a deeper reason
for our concern with the achievement of freedom on a world scale. It is
not merely a means to our own enjoyment of freedom -- it is an end in
itself. It is part and parcel of our national purpose.

itself. It is part and parcel of our nationalture.

not merely a means to our own enjoyment of freedom -- it is an end in
for our concern with the achievement of freedom on a world scale. It is
world's intellectual and spiritual reason. But there is a deeper reason
creativity for Americans includes the freedom to travel and barter of the
continental United States. An obvious reason is that full freedom and
free and creative human personality cannot be accomplished solely within
objectives ablie to human freedom as well. The achievement of the

We also believe that the interdependence in domestic and foreign
prosperity requires the development of prosperity abroad.

this study we will show why the maintenance and expansion of our domestic
the United States requires the building of strong and friendly allies. In
In a previous study on International Security we argued that security for
achievement at home is intimately related to their achievement abroad.

Tuna security, prosperity, and freedom are indivisible. Their

of our political and social institutions, and even on our attitude toward
talent, on the use we make of our national production, on the development
of our young men, on the employment of our scientific and engineering
that events abroad have an increasing influence on the bane and careers
esCAPE the fact of their interdependence. We are forced to recognize
problems and concentrate instead on our problems at home we cannot
institute and traditions may impel us to close our windows to foreign

February 14, 1968, race

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February 14, 1958

This universal element in our national purpose is nothing new. It has been expressed by American leaders from the earliest days of our history. In the opinion of John Adams the settlement of America was "the opening of a grand scheme and design in Providence for the illumination and emancipation of ... mankind all over the earth." With a similar world view Woodrow Wilson declared a century later that "America was created to unite mankind" and advised his fellow Americans that to be truly American they must "think first of humanity". The same high purpose has been restated in our own times by President Eisenhower.

In the present world situation the universal element of our national purpose has tremendous importance. For the American people, their unprecedented wealth and power represent an opportunity to express their basic moral, spiritual and religious beliefs about one God, the brotherhood of man, the dignity and worth of the individual, and the love of their neighbors. These beliefs provide the deeper purpose for the direction of our creative energies. In the long run, we can fail to pursue freedom in the wide world only at the cost of frustrating it at home.

This does not mean that we are crusaders for an ideology seeking to impose our own political, economic, and social institutions on other peoples. To others we must never say "be like us," but "be what you want to be." We must help men everywhere to realize the goal of human freedom through institutions which are suited to their own traditions and environments.

environments.

freedom through institutions which are suited to their own traditions and
want to be." We must help men everywhere to realize the goal of human
peoples. To others we must never say "be like us," but "be what you
to impose our own political, economic, and social institutions on other
This does not mean that we are crusaders for an ideology seeking
the wide world only at the cost of frustrating it at home.

of our creative energies. In the long run, we can fail to burake freedom
of their neighbors. These beliefs provide the deeper purpose for the direction
hood of man, the dignity and worth of the individual, and the love of
basic moral, spiritual and religious beliefs about one God, the brother-
brecedented wealth and power represent an opportunity to express their
burboae has tremendous importance. For the American people, their un-

In the present world situation the universal element of our national
buraoe has been reasted in our own times by President Etaenmüller.

truly American they must "think first of humanity." The same high bur-
created to unite mankind" and advised his fellow Americans that to be
world view Woodrow Wilson declared a century later that "Americas was
tion and emancipation of ... mankind all over the earth." With a similar
"the opening of a grand scheme and design in Providence for the illumina-
omy history." In the opinion of John Adams the settlement of America was
It has been expressed by American leaders from the earliest days of

This universal element in our national burboae is nothing new.

February 14, 1928
III-Report

iii-report

February 14, 1958

Essentially this is the transfer to the world scene of the concept of the open society which we have at home. We have been able to pursue our objectives of security, prosperity and freedom within a loose social framework permitting great diversity in cultural, linguistic and religious patterns. Our job is now to do among nations what we have done for ourselves. We should tolerate diversity abroad as we do at home. We should not seek to foreclose the development of any system in foreign countries except one which seeks to destroy human values and the open society. It is not only the right and need of self-defense, but also this belief in humane values and the open society which constitute the real basis of our opposition to Communism or any other totalitarian system.

Our emphasis on the idealistic element in our national purpose may be attacked by some as "unrealistic." They will argue that national policy must be founded on power rather than morality. We believe this is a false contrast, it begs the question. Idealism is realism. Moral values are a basis of power. Ideas influence the minds of men, upset nations, defy armies, and write history. Our policy must have a moral basis or we will not remain strong.

Our national actions must reflect a keen appreciation of the relation between power and moral values, between our objectives of security, prosperity, and freedom. For our own and for the world's sake, we must be not simply an arsenal of weapons or a storehouse of commodities, but a society which encourages the highest realization of man's nature and destiny.

society which encourages the highest realization of man's nature and destiny, not simply an arena of weapons or a storehouse of commodities, but a prosperity, and freedom. For our own and for the world's sake, we must be between power and moral values, between our objectives of security, a prosperity, and freedom. For our own and for the world's sake, we must be between power and moral values, between our objectives of security, a

Our national actions must reflect a keen appreciation of the relation we will not remain estranged.

Our policy must have a moral basis or are a basis of power. Ideas influence the minds of men, shape nations, a false contrast, it p edges the question. Ideality is realism. Moral values policy must be founded on power rather than authority. We believe this is may be attacked by some as "unrealistic". They will arise that nations Our emphasis on the idealistic element in our national purpose

basis of our opposition to Communism or any other totalitarian system. Proliferate in humane values and the open society which constitute the real society. If it is not only the right and need of self-defenses, but also this country except one which seeks to destroy human values and the open should not seek to foreclose the development of any system in foreign on ourselves. We should tolerate diversity abroad as we do at home. We battema. Our job is now to do among nations what we have done for framework permitting great diversity in cultural, linguistic and religious our objectives of security, prosperity and freedom within a loose social of the open society which we have at home. We have been able to burles Essentially this is the manner to the world scene of the concept

February 14, 1928

iii—rejoice

III - THE FACTS WHICH CHALLENGE US

PART FROM THE COMMUNIST THREAT

A clarification of our national objectives along the lines we have sug
suggested is a necessary foundation for the formulation of our foreign economic
policy. By itself, however, it is not enough. We need a clear conception of
not only of the ends we seek but of the specific problems we face in pursuing
those ends.

Many of our national leaders grew to maturity in the years before the
First World War. The world of which they formed their first impressions was
essentially the world of the latter part of the nineteenth century in Western
Europe and the United States. In the economic field, it was a world of orderly
growth, of free trade and stable currencies, with a single center in Western
Europe, more specifically, in the City of London. It was a world in which the
United States could go about its domestic business without paying much atten-
tion to economic developments in other countries.

It is understandable that many Americans should regard this world of
their youth as the "normal" world whose reconstruction (with some compara-
tively minor alterations) is the primary object of American policy. But the
beginning of rational thinking in this field is to realize that this world is
gone -- shattered beyond recall by the two World Wars and the Great Depress-
ion. We have to deal with the world as it is, not as we should like it to be.
If we are to build a foreign economic policy to serve our national objectives