ECONOMICS: Give a Hand, Here

Since World War II, the U.S. has poured out $72.6 billion in grants and long-term credit. As their economies revived, the gold and foreign currency reserves of Western Europe and Japan combined rose from $8 billion to $24 billion—while the U.S.A.’s once huge surplus of gold reserves melted away.

Last week, in the bluntest language yet employed in public, the U.S. told its economic partners that the time has tome when they have got to take on their share of helping other nations, above all the newly independent countries, where continued political independence depends on economic stability and growth. The U.S. spoke out in Washington at the annual meeting of the International Monetary Fund and the World Bank, the two agencies that together comprise a board of trustees for the capitalist system.

Eyes on Germany. Chief target of U.S. criticism—and everybody else’s—was West Germany. For the past three years

West Germany has piled up a favorable balance of payments of $1.3 billion and now has more than $6 billion in gold or gold equivalent. Instead of stashing away such “unnecessary reserves,” said IMF Managing Director Per Jacobsson of Sweden. West Germany ought to be undertaking an imaginative capital export program.

U.S. Under Secretary of State Douglas Dillon joined in: “The eyes of the struggling people of the newly developing countries are upon us. They are looking in particular to the leading creditor countries, especially in continental Western Europe,* for an effort more in line with their capacities. For the safety and progress of the free world we must see to it that their hopes in this regard are met.”

A new organization called the International Development Association (IDA) got under way last week and immediately ran into the familiar experience of seeing other nations avert their gaze when the plate was passed. Conceived as a soft-currency adjunct to the World Bank, in which underdeveloped nations may borrow dollars and other hard currencies but can repay in a variety of nonconvertible currencies such as rupees or drachmas, IDA originally was to start with $1 billion in capital. Though the U.S. dutifully subscribed its promised one-third—$320 million—in full, other nations fell short, and IDA last week began with a capital of only $686 million.

Oops, Sorry. At week’s end the plain talk seemed to be getting home—a little bit. West German Vice Chancellor Ludwig Erhard, speaking in German, said defensively that his country had been forced to deal first with the rebuilding of its war-battered economy. “Not until this task las been successfully accomplished.” said he official translation of his speech, could Germany think of any “moral” obligations to others. World War II ended 15 years ago and the German economic miracle has happened since. Four hours later the uproar in the back rooms had reached such a pitch that the German delegation hustled out a new translation; the interpreter had made an error. Actually, said the Germans, Erhard had said: “It is only now, after this task has been successfully accomplished, that the German economy can undertake in larger measure to cooperate energetically in the extensive work of development aid.” It wasn’t much of a promise, but it at least showed a proper sheepishness.

* Other examples of gold and dollar hoarders Dillon presumably had in mind: Italy, The Netherlands, Sweden, Austria and Japan.