Regional President Speech

Presbyterian Council held at the Federal Reserve Bank of Philadelphia on Monday, April 4, 1966. R I C H L A N D l P O O R L A N D I. INTRODUCTION: WHY TALK ON THIS TOPIC? A. B. TTrraaiinneedd as an economist — problem has eeccoonnoommiicc aspects! C. Have concern for international economic relations. 1. Balance of payments. 2. Technical Secretary at Bretton Woods. D. Because Bob Hilkert asked me tol II. THERE ARE RICH NATIONS AND POOR NATIONS. A. 3. B. Rich becoming richer; poor becoming poorer HI. FEELING THAT SOMETHING SHOULD BE DONE. A. Selfishlyt 1. Explosive character of situation. 2. Poor now know about differences and have aspirations. B. Moral imperative. 1. Guilt 2. Positive Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis ¿v£o ¿^ 4 ¿ d e ^& ^í. U r& tjt' ¿o ít í* ^ V » / -V* 0 -Zt/jL*^ / / ¿ X . / ^ w _ j ^ rá~. ^ mW.J -T^t»L^ . «*'*'~*»/ ^ ^ át^X. c *^ , -& *~4 *¿C.+r+~ ¿« y\JL j f*Cj /é^jU tcX **'i } uJL> fb A u ci . ¿r%S -V-U^ò r / ' 5 . Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis (Presbyterian Council, p. 2) IV. WHAT SHOULD BE DONE? A. Simplistic solution. 1. Transfer GNP from rich to poor. B. Depends on character and organization of people involved. Ca.'L/j&w i 1. Character. a, Liberian student wants job — "big wheel." (I) I happen to fear power. (Goes back to ray childhood.) (II) Some relish exercising it. b. First-class air travel — cleaning your plate. c. Our character is a function of our genes and our environment and experience. d. These change slowly — usually. 2. Organization. a. Meaning of democracy in tribal countries. b. Shintoism and Japanese defeat. The success (?) of materialismi V. NOT SO MUCH AN ECONOMIC PROBLEM AS A SOCIAL AND POLITICAL PROBLEM. A. Effectiveness of the Marshall Plan. B. Relative ineffectiveness of aid to underdeveloped countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis (Presbyterian Council, p. 3) I. WHAT THE UNITED STATES HAS DONE. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis , C-QQ.—United States foreign assistance by type and area, fiscal years 1946-65 Table [Millions of dollars] Net obligations and loan authorisations Type and fiscal period Near Total S E a o n a u s d t t h A L m a e ti r n ica E F a a s r t Africa Europe a r n e O g d t i h o n n e o r a n l - Asia Foreign assistance: Total postwar................... 115,875 23,600 10,343 25,842 3,237 44,676 8,178 1062-44 average................... 6,505 2,120 1,210 1,369 480 664 782 1865..................................... 6,958 2,045 1,346 1,390 347 611 320 Economic aid: Total postwar..................... 81,197 17,324 9,430 16,191 3,061 30,292 4,910 Loans........................... 32,008 9,366 6,720 2,926 1,286 11,494 218 Grants.......................... 49,189 7,958 2,710 13,267 1,766 18,797 4,692 1962-64 average................... 4,861 1,792 1,114 764 464 335 402 Loans........................... 2,682 1,234 767 220 170 266 25 Grants.......................... 2,179 658 347 646 285 69 376 1066..................................... 4,645 1,680 1,282 726 329 204 424 Loans....................... 2,643 1,336 778 190 157 182 Grants.......................... 2,002 344 604 635 172 22 424 AID and predecessor agencies: Total postwar.................... 40,030 *103 3,010 8,625 1,683 10,230 2,479 1962-64 average................... 2,314 922 648 356 248 4 230 1965..................................... 2,028 669 632 408 160 -1 207 Food for Peace: Total postwar.................... 13,225 6,311 1,390 1,960 862 2,334 358 1962-64 average_________ 1,671 798 226 283 161 164 60 1965..................................... 1,527 922 107 210 117 118 62 Kxport-Import Bank long­ term loans: Total postwar.................... 8,770 987 3,573 896 380 2,909 26 1862-64 average................... 461 67 115 83 30 166 O 1965..................................... 622 78 258 86 34 66 Other economic aid: * Total postwar__________ 19,172 922 1,456 4,791 136 9,819 2,048 1962-64 average................... 416 6 226 42 16 11 115 1965...................................... 671 11 385 22 27 22 106 Military assistance:* Total postwar.................... 34,678 4276 913 <9,661 186 14,384 3,268 Loans_____________ 586 160 132 «35 11 126 134 Grants......................... 34,092 0,126 781 <9,616 176 14,269 3,134 1962-64 average................... 1,644 328 96 <695 26 219 380 Loans........................... 50 2 6 <12 0) 19 11 Grants. ....................... 1,694 326 90 <683 20 200 309 1965..................................... 1,313 365 64 <664 18 307 -104 Loans......................... 71 25 8 (0 19 19 Grants.......................... 1,242 340 66 <664 17 288 -123 Addendum—Repayments and Interest:* Economic assistance: Total postwar.............. 12,156 1,312 2,474 830 298 7,129 116 1965............................... 1,012 275 324 166 36 211 10 Military assistance: Total postwar_______ 302 67 69 14 3 101 07 1965............................... 42 4 6 14 0) 11 9 1 Less than $500,000. * Includes capital subscriptions to Inter-American Development Bank, International Bank for Recon­ struction and Development, International Development Association, and International Finance Corpora­ tion (1946-65, $1,541 million; 1962-64 average, $135 million; 1965, $312 million) and Peace Corps (1946-65, $246 million; 1962-64 average, $54 million; 1965, $85 million). * Includes grant-aid and credit assistance under the Foreign Assistance Act (FAA) phis military assist­ ance grants under other acts. Regional totals for the former include country aid programs only; all other programs are shown in "other and nonregional.” FAA military data are from the Department of Defense. Annual data are for deliveries. "Total postwar” entries are program totals. * Excludes Australia and New Zealand, shown in "other and nonregional." * Data for certain programs from Department of Commerce. Office of Business Economics, and Depart­ ment of Defense. Calculations for 1962-64 period not available at time of publication. 8ource: Agency for International Development (except as noted). (ECONOMIC REPORT OF THE PRESIDENT - January 1966) 3P3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis UNITED STATES PRIVATE FOREIGN INVESTMENT POSITION END-1964 ($ billions) International West Latin Other Institutions Total Europe Canada America Countries and Unallocated Total U.S. Private Investment Abroad $75-5 $19.5 $24.6 $13.8 $14.6 $2.9 Direct 44.3 12.1 13.8 8.9 7.7 1.9 Portfolio 20.4 5.4 8.8 2.3 2.9 1.0 Short-term 10.7 2.0 2.0 2.6 4.1 ----------- Total Private Foreign Investment in U.S. 42.5 24.8 6.4 5.0 5.6 0.6 Direct 8.4 5.8 2.3 0.1 0.1 — Portfolio 16.6 II.9 1-9 1.6 1.0 0.2 Short-term 17.5 7.1 2.2 3.3 4.4 0.4 Net Private Foreign Investment 32.9 - 5.3 18.2 8.8 9.0 2.3 Net Private Long-term Investment 39.8 - 0.2 18.4 9.5 9.4 2.7 Source: Survey of Current Business, September 1965 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Comments by Karl R. Bopp (Presbyterian Council, p. 1) Monday, April k, 1966 II. REQUIREMENTS FOR INCREASING PER CAPITA INCOME. THE "STANDARD OF LIVING ^ . ... National Income A. Definition: per capita income = — Population---* B. Population developments: For the world: Population tomorrow equals population today - deaths + births. For a nation: Must subtract emigrants and add immigrants. 1. Deaths. a. Survival in an over-populated world. b. Medical science and survival. (I) Survival of the unfit? Bentley Glass lecture. Moron. (II) Euthanasia — of whom? 2. Emigration. a. Not a general solution: would result in lowering of standards all around. 3. Immigration. a. Aggravates the problem. 4. Births. a. Control is only prospect with hope. b. Who shall determine? Eugenics. (I) Individual freedom with education? (A) Slow process. (B) Least effect where most needed. (II) The State. (A) Hazards. c. 700 million ChineseI Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis (Presbyterian Council, p. 2 ) C• Income developments. Income » domestic production + net flow with foreigners. 1. Net flow with foreigners. a. Desirable to have maximum gross trade with others. b. Net exports reduce per capita availabilities. c. Net imports increase per capita availabilities. But no permanent solution. (I) Would involve ever larger gifts or indebtedness where we want (II) Ultimate self-support. 2. Domestic production. a. Factors: Land, manpower, organization, capital. b. Output = consumption + saving. Present versus the future. Distribution of ¥ + I as affecting c. Saving = investment. d. Investment. (I) Intensive vs. extensive use of capital. (II) Pride, religion, tradition and investment. (A) Religion. (1) Sacred cows. (2) No fertilizer. (3) Gilding the Taj Mahal. (B) Pride. (1) Ethiopia - Haile Selassie and his airplanes. (2) The showpieces - modern steel mill. (C) Tradition: unproductive investment (1) Gold. Silver. (2) Precious stones. (Ill) Modern versus traditional sectors of under­ developed countries (A) City versus country (B) Education and Rising Expectations Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis (Presbyterian Council, p. 3) D. Conflict of objectives. 1. No absolute priorities. a* Only 2 per cent of GNP! - and we spend 2+ per cent for some "foolishness. b. Who is to establish what is "foolish"? Incentives to those who want foolish things. c. Marginal utility. 2. Foreign aid ian't ultimately a country to country proposition. a. Poor as well as rich pay taxes. b. Priest on redistribution. 3. National objectives in foreign aid. a. Generosity. b. Self-determination. Do we know what it means for those without our traditions? c. Defense of free world. E. On what conditions should aid depend? 1. Political? 0 „ . 0 On basis of uses. 2. Economic? — X . On amount. The problem of incentives. a. Why not on degree to which recipient improves himself? Per capita income. Not a final solution: Aid would continue forever1 At decreasing rate perhaps? Upper limit? b. Difficulties of measurement. Bretton Woods and the populations of China (Kung) and India (Deshmuck). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Karl R. Bopp (1966, April 3). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19660404_karl_r_bopp

@misc{wtfs_regional_speeche_19660404_karl_r_bopp,
  author = {Karl R. Bopp},
  title = {Regional President Speech},
  year = {1966},
  month = {Apr},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19660404_karl_r_bopp},
  note = {Retrieved via When the Fed Speaks corpus}
}