America's Money Machine

230 PART III/DEBACLE OF AN IDEA
That the financial power of the U. S. should undergird the world's
economy during the period of reconstruction was a proposition increasingly
understood and accepted by the American electorate. This electorate
had been suffering a form of guilt complex ever since the close of
World War I for what was called abroad its grasping self-interest in
regard to repayment of the war loans it had made to its allies.
Abroad the popular caricature of the United States had become Uncle
Shylock, and American travellers in Europe were slyly taunted on our
ingratitude to the mother cultures. The argument was made that European
economic stagnation was due to the transfer problem which the U.
S. had created by requiring war debt payments and at the same time
making obstacles through its high tariff policy which impeded the entry
of merchandise by which to discharge the debt.
This theory overlooked the fact that U. S. imports from Europe rose
from $765 million in 1921 to $1,334 million in 1929, whereas U. S.
exports to Europe actually declined slightly, from $2,364 million in 1921
to $2,344 million in 1929, and that Europeans were at the same time
earning large sums from shipping and other services to the U. S. economy
and from the spending of U. S. tourists. It also neglected the fact that
Europeans could also have reduced their buying of U. S. goods, not all
of which went-contrary to popular belief-to feed hungry mouths or to
rebuild bomb damage.
Nevertheless, U. S. popular opinion was greatly influenced by the arguments
and this was reflected in various official steps to repair that fault.
The burden of the war debts was eased by a stretch-out of the payments
and later by a moratorium granted by President Hoover, which is still in
effect. Under President Roosevelt a general reduction of tariffs was undertaken
under what is known as the reciprocal trade policy, whereby it
became settled that the U. S. tariff rates should be steadily lowered.
Following World War II the cry again arose from Europe for assistance
to avert economic and political collapse. It played upon the sense of
discomfort suffered by many Americans over their seemingly undeserved
material blessings* which combined with a natural philanthropy on the
insufficient to meet the demand for loans. In the second place, the capital subscriptions of
the Bank are illusory since subscriptions had to be paid up only to the extent of 10 per cent.
Thus, of total subscriptions of $21.1 billion, only $798 million had been paid in U. S.
dollars.
*Prof. Helmut Schoeck ofEmory University has given most thought to this phenomenon.
See "The Evil Eye: Forms and Dynamics of a Universal Superstition," Emory University
Quarterly, October, 1955, pp. 153-61, and "The Envy Barrier," ch. 5 in Foreign Aid Re­
Examined (Washington: Public Affairs Press, 1958). The general presuppositions in John