Speech

Remarks on " ; 32, : : The State 'of Israel • " Conrad Hilton Hotel, Chicago, Illinois December 13, 1951 To take part in this meeting, concerned -with the economic progress of the State of Israel, is a source of personal pleasure. Tonight I speak as a follow Chicagoan; this is very much my city and, as you know, it is not unusual for me to take part in Chicago public functions such ai the one which has brought us here tonight to welcome and to hear Ambassador Eban. .As you can well understand, I have reason to know of the interest which Americans have in the welfare of peoples in other countries, and I find it most natural that Americans of Jewish background should take an intense interest in the efforts of the people of Israel. "While it is needless for me to point out that I am not an expert on Israel, it is true that my work requires me to know about the economies of foreign countries. The reports of Israel's achievements confirm my belief that everyone who has in any way participated in the build-up of Israel ought to have a very deep pride — e pride in the things that the.people of that new country have been accomplishing, and a pride in the fact that support and assistance from our country'have helped, to make their accom- plishments possible. Ambassador Eban will no doubt deal with this more fully in his remarks. It is fitting that the United States should encourage the people of Israel to build a sound and prosperous economy. If we have learned any- thing from what has been happening during the last decade or two, it is that we must maintain economic stability at a high level of production find employment in order to be strong. That is our best defense. We also know that it is through the economic well-being of friendly countries that we can hope to maintain world peace. We can see that we in this country will have great difficulty in maintaining our own economic strength unless the other countries of the free world also have healthy economies. But our interest in the State of Israel also has other roots — roots in our feeling of kinship for young and struggling democracies. Our sympathy and understanding spring from our experience and our na- tional heritage. This country was developed by people from every part of the world and every walk of life; people who came to this land to find freedom, justice, and security; to build new lives for themselves and to make a contribution to the growth and the flowering of their new country. Whether they came here by virtue of necessity or in search of opportunity, they came with a willingness to work and a love for the country that gave them a welcome and an opportunity for happiness. Living together and working together, we all became one people — the American people. That in itself is an outstanding event in the history of mankind. Now we are a powerful and wealthy nation; but we remember that it was not so long ago that we faced problems very much like those which Israel must now solve, and we do not forget that our own efforts were supplemented by the resources of the then advanced and industrially 33. developed countries. It is interesting to observe how the situation of the State of Israel, with its immigration of peoples'from various back- grounds, and its need to integrate these people into one healthy nation, end with its consequent need of aid from abroad,'is similar to the situa- tion of the United States 100 to 1^0 years ago. In the early 1800's the United States was a small country in terms of population but it was showing a remarkable rate of growth. .It was a young and undeveloped country by European standards. To tie us together and enable us to develop our resources we needed means of transportation} first canals and later railroads. We also needed funds for agricultural development and for mining and manufacturing enterprises. Vhile some capital was brought here by well-to-do immigrants, most of the people who came to these shores had little of the world's goods to bring with them. America, therefore, needed foreign capital oh a scale.that was very large for that period, and we looked to the financial markets of Europe. The first of the big American economic projects financed in Europe was the Erie Canal from Albany to Buffalo. This canal was built by the Government of the State of New York which issued something over 7 million dollars of bonds to help pay the costs. A large part of these bonds were sold in England. While not all of our early economic projects financed abroad were equally successful, fortunately the Erie Canal was a great success financially and, in fact, the tolls that were collected were suf- ficient to repay the bonds even before their maturity. After this first sale of State Government bonds in Europe, various other States followed along. Maryland sold bonds abroad in connection with the building of the Baltimore and Ohio Railroad. The States of Ohio, Indiana, and Illinois \iere also among those whose economic development was helped by the sale of bonds .in Europe in the 1830's. Illinois bor- rowed abroad for various purposes; one of which was the early canal sys- tem in this State. Aside from railroads end canals, securities were sold in Europe to finance industrial enterprises of various kinds, to provide European equipment for mining operations here, and to finance agricultural devel- opment through mortgage loans to farmers and to plantation owners in the South. There do not seem to be any exact statistics on the amount of bonds sold abroad in that period, but one historian has estimated that by 13A0 the amount of American securities held in England alone was about 170 million dollars — a very large amount for those days. While the main object of these investments was economic, we know that many British investors were also influenced by other considerations. It is interesting to see that in British publications of that time British bankers were pointing out.the common ties of kinship and of democratic institutions between Britain and the United States and were suggesting that these ties .made the United States an especially appro- priate place for Englishmen to invest their money. I should like to turn now and look at the State of Israel from a financial and economic viewpoint. I think a few moments' discussion of the special reasons why' Israel needs aid from abroad may help put the whole*Israeli problem in a clearer perspective. 3h. As you know, in anv country that wishes to maintain.its place in modern economic life, there wilJ always be a lot of investment going on in the expanding arid improving of its factories, extending its trans- portation and electric power systems, and the building of new houses; but ordinarily, these various kinds of investments are financed out of the savings of the country's own population. In the United States, for example, since 1945 gross investment has absorbed something like ISO billion dollars of savings. In other words, in comparison v;ith the total amount of goods and services that we Americans produced during this period, we as a nation consumed some 180 billion dollars-worth less then we produced, and this difference corresponded ..mainly to the acquiring of investment assets of different kinds by the people of our country. VMle this figure seems tremendous, - it has amounted only to something like 15 per cent of the total produc- tion of the /merican economy during this period, and it seems clear that vie have been able to set aside and invest this amount of our na- tional output without our suffering any undue hardship. In Israel, however, the investment needs are relatively much greater than in the United States or in European countries, and this is mainly because of the very great inflow of immigrants. The regular and normal investment needs (for example, to keep up the efficiency of Israeli factories so that they can be competitive with modern factories in other countries, and so forth) might be provided for out of the sav- ings of the Israeli people themselves; but this represents only a very small part of the country's total needs. The major investment need arises from the fact that the avalanche of immigration into Israel has more than doubled that country's population and a further increase is likely. It is this factor that makes Israel's conversion into a modern and expanded economy such a very urgent matter. It is evident, therefore, that .in all kinds of manufactured pro- ducts Israel now needs more than twice the quantity of output that it needed before independence and before the present wave of immigration started. "While the new citizens of Israel bring with them a variety of skills, and these are the most important new resources for the advance- ment of their new country, some of these new citizens must undergo a period of training. But to put ell these people to work and make them productive will require new and expanded factories, as well as the power plants and other services that are needed to keep the expanded indus- tries running. The population of Israel cannot possibly save enough out of their own incomcs to supply the tremendous amount of funds needed for this sort of thing even on the basis of an all-out effort to meet the largest- possible amount of these investment needs out of their own resources. The rigorous austerity program in Israel, the shortages of all kinds of consumer goods that the people of Israel are enduring, all this is a reflection of the deliberate policy of the Government of Israel that as much as possible of that country's resources should be directed away from consumption and channeled into investment. However, in view of the magnitude of their building and develop- ment program, it seems clearly too big to be met out of the production that Israel's present-sized economy can turn out. No effort within the 35. ; • . . . ,,, State of Israel could possibly: produce the • entire amount of'• resources needed :J for the kind of program that has to be undertaken there. ,/ Thus the pattern of economic development repeats itself. The fate and the character of the people who have moved to Israel from the four cor- ners of the world make that country a unique area in the picture of world economic development — just as the people who moved to the United States made our country unique. But this uniqueness has not been confined to the economic sphere. For centuries the Jewish people have been distinguished by their strong faith, by just pride .in their moral and intellectual leader- ship, and by the patience and determination that made them sacrifice their very lives rather than compromise their integrity. In Israel, the newly- won national unity and liberty have added a. spirit of optimism, vitality, and pioneering energy. It is this combination of spiritual forces, more than any prospects of material wealth and power, that has already achieved miracles and justifies our hopes for the future of.Israel.

M.S. Szymczak (1951, December 12). Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/speech_19511213_szymczak

@misc{wtfs_speech_19511213_szymczak,
  author = {M.S. Szymczak},
  title = {Speech},
  year = {1951},
  month = {Dec},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/speech_19511213_szymczak},
  note = {Retrieved via When the Fed Speaks corpus}
}