Easterly: Foreign Aid System Was Invented Accidentally

Where did the idea of developed countries providing aid to poorer ones come from? William Easterly suggests that the birth of the foreign aid concept was accidental.

Easterly, a New York University economics professor, notes that though U.S. President Harry Truman’s inaugural address in 1949 is widely regarded as the source of the foreign aid concept, he explains that the idea found its way into Truman’s speech by accident.

Referring to an article written by former State Department official Louis Halle, who was familiar to the events in the run-up to the address, Easterly explains that Truman’s speechwriting assistant asked the State Department to come up with proposals of what it wanted to include in Truman’s address.

The department came up with four proposals, but one, on establishing a technical assistance program for underdeveloped countries, was scrapped before the proposals were sent to the White House. The proposal resurfaced and was included in the speech after the speechwriting assistant regarded the three other proposals as boring, Easterly shares.

“’Point Four’ was a public-relations gimmick, thrown in by a professional speech-writer to give the speech more life. When the newspapers dramatized it in their principal headlines on the morning of January 21, the White House and the State Department were taken completely by surprise. No one – not the President, not the Secretary of State, not the presidential assistant or the Director of Public Affairs –knew any more about ‘Point Four’ than what they could read for themselves in the meager and rather rhetorical language of the speech,” he quotes Halle.

The idea was termed “Point Four” because it was the fourth point outlined by Truman in his speech:

“Fourth, we must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas…More than half the people of the world are living in conditions approaching misery….For the first time in history, humanity possesses the knowledge and the skill to relieve the suffering of these people…. And…we should foster capital investment in areas needing development.…this program can greatly increase the industrial activity in other nations and can raise substantially their standards of living.”

About the author

  • Ivy Mungcal

    As former senior staff writer, Ivy Mungcal contributed to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean, and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.