36. Letter From the Secretary of the Treasury (Humphrey) to the Chairman of the Council on Foreign Economic Policy (Randall)1

Dear Clarence : I am sorry not to have written you before but I was away for a few days when your letter with the Fairless Committee report came.

Enclosed herewith is a memorandum prepared for me which gives some points of interest to us.2 However, the principal thing which I find lacking in the report is the statement of the basic philosophy of just what it is that we are trying to obtain by the use of money of this kind.

It is all well and good to talk about helping to stabilize the world, etc., but it seems to me that we are in a great contest between two almost opposite ideologies: one based on freedom of the individual in the development of individual initiative for his own benefit, the fruits of his initiative to belong to him; the other based on the all-powerful state directing the activities of the individual for the benefit of the state and the common interest. The basic distinction between the two is a recognition of the rights to and protection of private property because private property is the reward for individual activity freely indulged in to whatever extent each individual desires for his own benefit. This, of course, is entirely lacking in the other system.

My great criticism of our past programs has been that we have been, in many cases, building up governmental regimes, strengthening the power of states, and thereby lessening the opportunity for the advancement of individual freedom. When we give money in large amounts for the development of projects, not only governmental in nature but also commercial, to the politicians who then happen to be in control of a country, we are tremendously strengthening the state as opposed to the individual and lessening the opportunity for the individual ever to compete with the state.

This is exactly the opposite of the ideology which we are spending so much money to defend and of which we are so proud, I think our gifts, grants, loans, or whatever in the future should be directed much more to the development of individual activity and much less to the aggrandizement of any state or the politicians temporarily running it.

[Page 177]

It is true that there are some proper governmental activities which serve as a base for the operation of individual activity in which we can properly participate but the development of transportation systems other than highways, power and water systems, and all sorts of commercial enterprise by the state simply entrenches its system against the individual and retards the development of individual freedom. We are getting the cart before the horse because until you first have the development of individual productivity, there are few customers for the transportation, power and water systems, etc. that we have been building up.

The first need is the development of a people with initiative and enterprise, with hope of reward for their own effort. This can come only when government protects the fruits of effort, viz., the security of private property created as a result of such effort. You can count the countries anywhere in the world (especially backward ones) on your fingers where this prerequisite exists and where it is guaranteed, especially to foreigners. Under no other circumstances will foreign capital flow freely into a country, and we are doing very little to promote and require it. Wherever it does exist, the country is developing and flourishing.

This prime objective should always be first in our consideration of any case and unless it is promoted, our favorable action should be withheld. Otherwise, we will simply continue to build up a flock of foreign dictators who will be absolutely unreliable and whose friendship and support we can never count on. For dependable support, we must count only upon individual freedom-loving and individual freedom-practicing countries which believe in and want to continue to live in our way of life. There are, of course, many degrees of the extent to which this can obtain, but our support should be curtailed or entirely eliminated unless constant progress toward our own ideals is actually being made.

1) If we stick by this cardinal principle, 2) if we put the cost of supplying military equipment and military economic support directly on the Defense Department which has to agree to the force goals of the countries involved so that the cost of that support will come directly out of Defense funds, 3) if we work out a simple, cooperative coordination for the handling of defense support funds by the Foreign Economic Division of the State Department but for the account and expense of the Defense Department, and 4) if we limit actual economic aid only to those Countries which are progressing in accordance with our ideals, with a comparatively few well-chosen projects in a comparatively few conspicuous places, we will be able to control and build up friends and supporters whom we can depend upon in time of need. The great complexity of the present set-up [Page 178] will disappear as its organization and activities are drastically reduced and centered only on a few important, well-chosen projects.

No great structure ever was built by scattering efforts all over the place in homeopathic doses. Rigidly controlled concentration will permit finishing just one thing at a time and having it so commercially sound and well set that after once started it will continue to prosper and grow on its own without further aid and be an example of free enterprise for the community. In this way, if well done when the job is finished, we will gradually build a great and strong network of dependable associates.

Detailed comments on your numbered list are enclosed.


  1. Source: Eisenhower Library, CFEP Chairman Files. a copy was sent to Hollister.
  2. Not printed, but see infra .