These contributions [federal taxes on consumption of foreign goods] enable us to support the current expenses of the Government, to fulfill contracts with foreign nations, to extinguish the native right of soil within our limits, to extend those limits, and to apply such a surplus to our public debts as places at a short day their final redemption, and that redemption [of debt] once effected," he said, "the revenue thereby liberated may, by a just repartition among the States and a corresponding amendment of the Constitution, be applied, in time of peace, to rivers, canals, roads, arts, manufactures, education, and other great objects within each State. In time of war,—if injustice, by ourselves or others, must sometimes produce war,— increased as the same revenue will be increased by population and consumption, and aided by other resources reserved for that crisis, it may meet within the year all the expenses of the year without encroaching on the rights of future generations by burdening them with the debts of the past. War will then be but a suspension of useful works, and a return to a state of peace a return to the progress of improvement.

As a nation we have two tasks; the one is to provide goods and services for our home needs, the other is to pay for the food and raw materials which we must get from abroad. Before the war we were rich; we owned money and railways and so forth abroad. The income from these helped to pay for our imports; but we sold these in order to help to win the war. We have therefore borrowed large sums from Canada and the United States to tide us over while we build up again, but when this money runs out we must pay for what we want from our own resources. To do this we must devote a far larger part than ever before of the wealth we produce to pay for imports.

The power of creating new funds upon new objects of taxation, by its own authority, would enable the national government to borrow as far as its necessities might require. Foreigners, as well as the citizens of America, could then reasonably repose confidence in its engagements; but to depend upon a government that must itself depend upon thirteen other governments for the means of fulfilling its contracts, when once its situation is clearly understood, would require a degree of credulity not often to be met with in the pecuniary transactions of mankind, and little reconcilable with the usual sharp-sightedness of avarice.

My hon. Friend must be aware of the words used by the Chancellor on Tuesday, when he said that, this year, the Government expect to make a surplus of £14 billion—part of which will be used to pay off the national debt. In those circumstances, would it not be more appropriate and beneficial to the rest of the world if more money were given for overseas aid and to assist the very poor countries in the usary levels of debt repayments that they are forced into at present?

It has been in accordance with these principles that we have made generous settlements of our foreign debts. The little sentiment of "live and let live" expresses a great truth. It has been thought wise to extend the payment of our debts over a long period of years, with a very low rate of interest, in order to relieve foreign peoples of the burden of economic pressure beyond their capacity to bear. An adjustment has now been made of all these major obligations, and they have all but one been mutually ratified. The moral principle of the payment of international debts has been preserved. Every dollar that we have advanced to these countries they have promised to repay with some interest. Our National Treasury is not in the banking business. We did not make these loans as a banking enterprise. We made them to a very large extent as an incident to the prosecution of the war. We have not sought to adjust them on a purely banking basis. We have taken into consideration all the circumstances and the elements that attended the original transaction and all the results that will probably flow from their settlement. They have been liquidated on this broad moral and humanitarian basis. We believe that the adjustments which have been made will be mutually beneficial to the trade relations of the countries involved and that out of these economic benefits there will be derived additional guaranties to the stability and peace of the world.

There's a lot of money to pay for this. It doesn't have to be U.S. taxpayer money. We are dealing with a country that can really finance its own reconstruction, and relatively soon.

The question is how do we work with the private sector to recover the necessary financing and diversify the economy?

In countries where there is great private wealth, much may be effected by the voluntary contributions of patriotic individuals; but in a community situated like that of the United States, the public purse must supply the deficiency of private resource. In what can it be so useful, as in prompting and improving the efforts of industry?

Self-reliance in no way means “self-seclusion” and rejection of foreign aid. We have always considered it beneficial and necessary for the development of the national economy that countries should carry on economic and technical exchanges on the basis of respect for state sovereignty, equality and mutual benefit, and the exchange of needed goods to make up for each other’s deficiencies.

I propose that where private enterprise has been proved to be palpably unable, under present conditions...to solve our national difficulties and fulfil our national needs unaided by the State, the administrative and financial resources of the nation as a whole should be made responsible for setting on foot and supporting those developments in town and country which would bring into fruitful activity our undeveloped resources and opportunities.

While we are thus desirous of the economic welfare of other countries in part because of its relation to world peace, we ought to remember that our own Government owes a great duty to the American people in this direction. It is for this reason in part that I have insisted upon a policy of constructive economy in the national administration. If we can make the circumstances of the people easy, if we can relieve them of the burden of heavy taxation, we shall have contributed to that contentment and peace of mind which will go far to render them immune from any envious inclination toward other countries. If the people prosper in their business, they will be the less likely to resort to the irritating methods of competition in foreign trade out of which arise mutual misunderstandings and animosities. They will not be driven to the employment of sharp practices in order to support and maintain their own position. Being amply supplied with their own resources, they will not be so inclined to turn covetous eyes toward the resources of other nations.

I would like to turn now to a vital subject in connection with economic development in the hemisphere, namely, the role of private investment. Now, clearly, each government in the Americas must make its own decision about the place of private investment, domestic and foreign, in its development process. Each must decide for itself whether it wishes to accept or forgo the benefits that private investment can bring. For a developing country, constructive foreign private investment has the special advantage of being a prime vehicle for the transfer of technology. And certainly, from no other source is so much investment capital available, because capital, from government to government on that basis, is not expansible. In fact, it tends now to be more restricted, whereas, private capital can be greatly expanded. As we have seen, however, just as a capital-exporting nation cannot expect another country to accept investors against its will, so must a capital-importing country expect a serious impairment of its ability to attract investment funds when it acts against existing investments in a way which runs counter to commonly accepted norms of international law and behavior. Unfortunately, and perhaps unfairly, such acts by one nation in the Americas affect investor confidence in the entire region. We will not encourage U.S. private investment where it is not wanted or where local political conditions face it with unwarranted risks. But I must state my own strong belief, and it is this: I think that properly motivated private enterprise has a vital role to play in social as well as economic development in all of the American nations. We have seen it work in our own country. We have seen it work in other countries--whether they are developing or developed--other countries that lately have been recording the world's most spectacular rates of economic growth. Referring to a completely other area of the world, the exciting stories of the greatest growth rates are those that have turned toward more private investment, rather than less. Japan we all know about, but the story is repeated in Korea, in Taiwan, in Malaysia, in Singapore, and in Thailand. In line with this belief, we are examining ways to modify our direct investment controls in order to help meet the investment requirements of developing nations in the Americas and elsewhere. I have further directed that our aid programs place increasing emphasis on assistance to locally-owned private enterprise. I am also directing that we expand our technical assistance for establishing national and regional capital markets. As we all have seen, in this age of rapidly advancing science, the challenge of development is only partly economic. Science and technology increasingly hold the key to our national futures. If the promise of this final third of the 20th century is to be realized, the wonders of science must be turned to the service of man. In the Consensus of Vina del Mar, we were asked for an unprecedented effort to share our scientific and technical capabilities. To that request we shall respond in a true spirit of partnership.

Countries as well as families benefit from the ability to trade with one another. Trade allows countries to specialize in what they do best and to enjoy a greater variety of goods and services. The Japanese, as well as the French and the Egyptians and the Brazilians, are as much our partners in the world economy as they are our competitors.

As a country we are blessed. We are rich in natural resources which include petroleum, minerals, energy resources, agricultural land, beautiful weather and rich soils. The political stability and the peace that is prevailing in the country right now create a conducive climate for us to exploit these natural resources.