United States. Dept. of State. Office of Public Co.

Department of State bulletin (Volume v. 22, Apr- Jun 1950) online

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lated to that of other peoples. We can participate
in this kind of a program because it serves both
the interest of other peoples and our own interest
as well.

Economic development will bring us certain
practical material benefits. It will open up new
sources of materials and goods we need, and new
markets for the products of our farms and fac-
tories. Our friends in Europe, who depend far
more than we do on foreign goods and markets,
will benefit in similar ways. The volume of world
trade will inevitably expand.

And finally, the peoples of the underdeveloped
areas will begin to see new opportunities for a
better life, and they will associate those oppor-
tunities in their minds with the helping hand of
the American people. Even more important, they
will associate economic progress with an approach
to the problems of daily life that preserves and en-
larges the initiative, dignity, and freedom of the

The bill now before you establishes economic
development of underdeveloped areas for the first
time as a national policy. Its purpose is to en-
courage the exchange of technical skills and pro-
mote the flow of private investment capital where
these skills and capital can help to raise standards

of living, create new wealth, increase productivity,
and expand purchasing power.

There are other conditions. American aid will
be furnished only where it contributes to the
development of a balanced economy. It may go
only where it is actually needed, and where the
country receiving it cannot provide skills and
capital for itself.

Most of the capital needed for economic devel-
opment must come from the underdeveloped areas
themselves. However, foreign capital will be
needed from three main sources : from private in-
vestors, from the International Bank for Recon-
struction and Development, and from the Export-
Import Bank. The latter two should supplement,
not compete with private capital. They should
finance projects, such as transportation and irri-
gation, wliich are foundations for economic de-
velopment and which are not ordinarily attrac-
tive to i^rivate investment. We put primary em-
phasis, however, on the need for stimulating an
expansion of private investment not only to pro-
vide capital but also to provide the technical and
managerial skills that come with capital.

Confldence for Capital Investment

On the subject of capital investment, the bill
makes some important findings. It recognizes that
if investment is to do its job, the people of these
underdeveloped areas must have confidence that
foreign investors will not squander their natural
resources, will pay taxes, will obey the local laws,
and will provide decent wages and working con-

At the same time, it recognizes the fact that
investors must have confidence that their property
will not be confiscated without fair compensation,
that they can take their legitimate profits and their
capital out of the country, and that they can have
reasonable freedom to manage their business, sub-
ject to local laws that apply to everybody equally.

This, in a nutshell, is the essence of the invest-
ment problem, and as j'ou see, it is a problem of
confidence. I don't think there is any quick or
easy solution to this problem. We are, however,
taking steps which seem likely to help solve it.
We are negotiating for treaties with other coun-
tries which will protect our investors from some
of the risks I have mentioned. But protection
from some of the risks cannot be provided by
treaty no matter how sincere the intentions of the
participating governments. Therefore, a bill has
been introduced and favorably reported by the
Senate Banking and Currency Committee, which
would permit the Export-Import Bank to sell cer-
tain kinds of guaranties, in other words, insurance
to investors; specifically against expropriation,
confiscation, and seizure, and against inability to
convert local currencies. AVe are trying to work
out proposals to amend our tax laws to give some
measure of tax relief as an added incentive to

Apr/7 JO, 7950


investors. We are also trying to make treaties
to avoid the hardship of double taxation.

But when you put all these things together, I
think you will find that there is no foolproof way
of guaranteeing investors against the variety of
nonbusiness risks that they face in many parts of
the world today.

Broadening Technical Cooperation

Fortunately, we can go ahead with a program
of technical cooperation, while we are trying to
develop what the economists call a "favorable cli-
mate" for investment. In fact, it seems clear that
one of the best possible ways to help create that
climate is to get on just as energetically as possible
with technical cooperation.

As you know, the United States Government has
been in the business of technical cooperation for
10 years. Most of the work has been concentrated
in Latin America. A little has been done in the
Far East. Now, this bill authorizes the President
to do three important and necessary things.

First, it authorizes him to expand the work and
to spread it to other underdeveloped areas where
the right conditions prevail.

Second, it authorizes him to coordinate all the
work of our Government in this field.

Third, the President may contribute funds and
personnel to the United Nations and to other inter-
national organizations for such technical cooper-
ation progi'ams as he is convinced they can carry
on as well as we can, or better.

Now, I think there are obvious advantages in
giving vigorous support to the work of the United
Nations in this field. Anything that gives the
organization gi-eater authority and experience is
good for the United Nations and good for us.
There are other compelling reasons. The United
Nations and particularly the related agencies
like World Health and Food and Agriculture
Organizations are set up to do certain things we
cannot do.

They can, for example, mobilize the resources of
many countries, some of which have skills that we
don't have. We certainly do not claim to have a
monopoly of skills, nor do we flatter ourselves that
we are superior in all fields. The Norwegians, for
example, are expert in the science of fishery, and
our technical people are glad to admit that they
have much to learn from foreign technicians.

Moreover, some of the members of the United
Nations are closer to the i^roblems of the underde-
veloped peoples than we are. Just because some
of them are less advanced, technically, than we,
they have a better understanding of the basic needs
of these people.

We need have no fear in contributing to the
United Nations technical cooperation programs,
since we ourselves are well represented in the
United Nations agencies and will cooperate with

other contributing nations in keeping watch over
the programs. It should be remembered that our
contributions to the work of the United Nations
and its agencies are purely voluntary and that
their continuation and size will depend on the
effectiveness of the programs to which they are

There is one more aspect of the program which
deserves special attention. The gi-eat experience
and fine work of private groups and individuals
has been fully recognized in drafting this pro-
gram, and the bill provides that their participa-
tion shall be sought to the gi'eatest extent.

I think there is a pretty widely held idea that
we are going to builcl large mills, mines, and fac-
tories for these underdeveloped peoples. This is
not true. In most cases what we need to do and
what we are going to do is to try to help these
people satisfy their growing desire to learn to do
things for themselves which will lighten their
burden of poverty. A remarkable thing about this
kind of help is that you can get big results by
making a comparatively small outlay of dollars
for the services of skilled people.

Examples of Technical Assistance

Let me give you some examples, based on what
we have been doing.

In the San Andres Valley in El Salvador, there
is an agricultural experiment station in which
some American technical experts work side by side
with local technicians. A farmer, troubled by
poor crops, came to this station for advice. One
of these specialists studied conditions on the farm
and recommended the use of sodium nitrate fer-
tilizer. Following his advice, the farmer reported
that his corn yield had been tripled. Now, this is
a simple story and the kind of advice offered
would not seem very advanced to an American
farmer. But the point is, that for the farmer in
El Salvador it brought all the best of modern
knowledge. Repeated many hundreds of times,
this kind of help can change the lives of many

Another example: the Institute of Inter-x\mer-
ican Affairs has been collaborating with the Bra-
zilian Government, which is vitally interested in
economic development, in the Amazon Valley of
Brazil. When we went into that area, which is
two-thirds the size of the United States, only two
cities had safe water supplies. Typhoid fever and
dysentery were all over the valley, and cliildren
were dying off in a shocking manner. A few ex-
perienced sanitation engineers went in there and
showed the people how to plan and build safe
water systems. The results in Aimores, a little
town of .5,000 inhabitants, are typical of what has
been accomplished. These jjcojile used to have
from 20 to JJO cases of typhoid a year not to men-
tion the other diseases from polluted water. Thej-
built a small, economical public water system,


Department of State Bulletin

uiulcr expert fiuidiiiioe, and tlie next j^eiir not a
sinjjle ease of typhoid developed.

The Brazilian Government also invited three
American jrovernment

Online LibraryUnited States. Dept. of State. Office of Public CoDepartment of State bulletin (Volume v. 22, Apr- Jun 1950) → online text (page 10 of 116)