Upon entering office in 1961, President John F. Kennedy very much hoped to burnish the image of American foreign assistance, which had been skewered in such recent books as Eugene Burdick and William J. Lederer's best-selling The Ugly American (1958), a novel about an ignorant, insular set of foreign service officers-at-large in Southeast Asia, hopelessly losing the battle to communism owing to their maladroit application of foreign aid. Kennedy saw the Peace Corps as one way to revamp this impression of America abroad. The notion of volunteers living alongside those they sought to help was a far cry from The Ugly American 's out of touch bureaucrats and was particularly appealing in an era that came to represent the "high-water mark of idealism concerning what overseas aid could achieve," as Paul Mosley wrote. Kennedy established the agency by executive order less than six weeks after he took office.
While The Ugly American no doubt had a salubrious influence on him, perhaps the president should have paid closer attention to a far more chilling and penetrating critique of American foreign intervention in this era, Graham Greene's The Quiet American (1955). In this novel, an arrogant, clean-cut young American character, Alden Pyle, idealistically destroys innocent lives in order to save the Vietnamese from communism, eerily foreshadowing the U.S. role in that country that Kennedy helped propel in the early 1960s, in part through foreign aid.
In September 1961, Congress enacted the Foreign Assistance Act (FAA), still the governing charter for U.S. foreign aid. Like the MSA earlier, the FAA attempted to systematize all existing foreign aid programs and included a Development Loan Fund, which would assist with large projects, as well as a Development Grant Fund for technical development. In addition, the FAA provided a "supporting assistance" program (later called the Economic Support Fund) to promote economic and political stability and launched a program to protect American business abroad, the antecedent of the Overseas Private Investment Corporation.
Later that fall, the Agency for International Development (USAID) opened for business, coordinating U.S. assistance programs under the aegis of the State Department. As this flurry of activity shows, Kennedy was a great promoter of foreign aid, which he envisioned as part of his goal to "pay any price, bear any burden" to assist the free world. The fundamental task of our foreign aid program in the 1960s, he said idealistically, "is not negatively to fight Communism … it is to make a historical demonstration that in the twentieth century, as in the nineteenth … economic growth and political democracy can develop hand in hand." As Michael Hunt notes skeptically, Kennedy and other foreign aid advocates were convinced that "thanks to American wisdom and generosity and to the marvels of social engineering, the peoples of these new nations would accomplish in years what it had taken the advanced countries decades to achieve."
Despite Kennedy's words, fighting communism remained a priority. By its very dynamic, as he recognized, the modernization process that was necessary for economic growth could also unleash unpredictable forces, including mass unrest. This was just the sort of milieu that communists might exploit through sponsorship of internal insurrection, "the so-called war of liberation," as Kennedy put it in a June 1961 speech. An American military response alone would be ineffective in combating such uprisings; aid, too, was necessary, as it would "help prevent the social injustice and economic chaos upon which subversion and revolt feed." Foreign assistance and American counterinsurgency expertise, it was believed, would steer countries through these difficult transitions without their resorting to revolutionary, communist regimes.
As USAID administrator Fowler Hamilton put it plainly to Congress in budget hearings in 1962, "The communists are active. The total commitments they are putting out now run on the order of $1.2 billion to $1.3 billion a year." Fortunately, "the free world" was more than holding its own, supplying the Third World with $8 billion in both aid and private investment. "I think that we have the resources and the good sense to prevail," said Fowler, mindful of his budgetary ambitions.
Yet Representative Marguerite Stitt Church of Illinois raised one of foreign aid's most vexing questions during Fowler's testimony. While agreeing with the importance of defending "the cause of human freedom, as exemplified by the ideals of this country," she also worried that the emphasis still placed on major huge projects "would not reach the lives of the 'little people' whom we must touch." A similar plea was made at the time by the foreign aid analyst John D. Montgomery in The Politics of Foreign Aid, who argued that the United States was too willing to overlook the undesirable aspects of certain recipient regimes, giving the United States the reputation of being "divorced … from the social progress" of the people in these countries.
As such observations revealed, even in the heyday of foreign aid the program faced sharp criticism. Representative J. L. Pilcher asserted that despite over $1 billion already spent in Vietnam, leader Ngo Dinh Diem's lack of popular support would mean that the country would be "in the hands of the communists" within twenty-four hours of the departure of U.S. troops—not such an inaccurate prediction, as it turned out. "Where is all our economic aid going to help stop communism in that country?" he wondered. It was an unanswerable question, and the spending continued.
Indeed, U.S. representatives in the newly decolonizing countries quickly learned that aid would get them improved access to government officials, and by 1963, there were twenty-nine aid programs operating in Africa. Some members of Congress, however, remained dubious about the expansion of foreign aid, and, for that reason, Kennedy asked a prominent detractor of foreign assistance, General Lucius Clay, to look into the matter—the confident Kennedy certain that even the critic Clay would be convinced of the program's value once he looked into it. However, Clay's committee's findings showed that "these new countries value their independence and do not want to acquire a new master in place of the old one … there is a feeling that we are trying to do too much for too many too soon … and that no end of foreign aid is either in sight or in mind." Clay's verdict as to the indeterminate nature of this program was certainly borne out. And despite Kennedy's fervent conviction of the effectiveness of foreign aid, programs like the Peace Corps and the Alliance for Progress were hard-pressed to meet the social and economic challenges they confronted in the Third World.
Kennedy's idealism, too, could not alter the fact that throughout the 1960s, foreign aid programs were conceived with increasingly close attention to U.S. security interests. Foreign assistance remained largely focused on keeping the Third World from turning to communism, and included support to strengthen resistance to internal communist movements as well as to meet the external Soviet threat. Funds for infrastructural improvements and education were a favorite vehicle for these objectives. Secretary of Defense Robert McNamara, demonstrating the close link Washington envisioned between aid and U.S. predominance in the Cold War, declared in 1964 that "the foreign aid program … and the military assistance program [have] now become the most critical element[s] of our overall national security effort." Making the connection even more precise, President Lyndon B. Johnson added that the foreign aid program was "the best weapon we have to ensure that our own men in uniform need not go into combat."
Actually, foreign aid went right into war alongside the soldiers in Vietnam, as part and parcel of the large U.S. pacification program in the southern half of that country. Vietnam drew the fervent involvement of USAID, which, as Nicholas Eberstadt has pointed out, made that country the donor for nearly half of its development grants by 1966. Much of this went to fund the ill-fated strategic hamlet program and other disastrous measures, which, while feeding the dislocated South Vietnamese, gutted their economic foundations and thus worked exactly against the traditional objectives of foreign aid. But at the same time, the United States also showed its sensitivity to indigenous economic conditions by hosting the Tidewater conference in Easton, Maryland, where representatives of seventeen nations mobilized in 1968 in response to the threat of famine in India. Their work led to the "green revolution," a movement that brought innovations to agricultural cultivation in the Third World to produce more staple foods and prevent famine.