Needed: An Open Door

In the 15 months since it was first blueprinted, President Truman's Point Four program for developing backward nations has yet to get off the drawing boards. Last week, after a noisy debate, the House of Representatives finally voted $25 million as a start toward getting it under way (see NATIONAL AFFAIRS).

U.S. businessmen were not impressed. While the Administration dawdled and Congress argued, businessmen had boldly gone ahead with their own private Point Four plans. Despite currency and trade restrictions, shaky governments and threats to nationalize industry, U.S. businessmen had been willing to take chances.

Last week, for example, the first of five projects to help modernize Persia under a seven-year plan got under way. The first project, costing $6,000,000, was started by Manhattan's Kennedy-Van Saun Manufacturing & Engineering Corp. with the shipment of equipment for a 200-ton-a-day cement plant at Shiraz. Around the plant will be built a model city, complete with hospitals, electric lights, etc.

Frozen Food & Iron. All over the globe, U.S. businessmen were at work. In Australia, Pepsi-Cola Co. was spending $1,200,000 to buy and renovate two factories, and Borden Co. was planning a new milk-processing plant. In Canada, Cleveland's M. A. Hanna Co. was developing the rich iron-ore deposits in the Ungava area of Northern Quebec and Labrador, a project that may cost $200 million. Automaker Henry J. Kaiser had landed a $2,500,000 contract with Israel to build an auto assembly plant in Haifa. In Latin America, considered an "undeveloped" area by Point Four planners, some of the biggest U.S. companies were hard at work. In Venezuela, U.S. Steel Corp. had discovered ore deposits of higher iron content than Mesabi's; it planned to spend at least $200 million mining the ore and shipping it to its U.S. plants. Bethlehem Steel Corp. was also at work in Venezuela. By spending some $50 million on its El Pao open-pit mine, which has reserves of at least 60 million tons, Bethlehem hoped to be ready in late 1951 to ship out about 2,400,000 tons a year.

Across the South Atlantic, Republic Steel Corp. was working a concession in the rich mountain area of Liberia. Within two years it hoped to be shipping 1,000,-ooo tons of iron ore a year from Monrovia to steel mills in the U.S.

The Rockefeller brothers had poured more than $7,000,000 into their International Basic Economy Corp., and had started new Latin American businesses in partnership with local capital. Another $5,000,000 had gone into such enterprises as Filatures & Tissages Africains, to make textiles in the Belgian Congo for the local market. Sears, Roebuck, which had spent $20 million on new stores in Mexico, Brazil and other countries, last week opened a $2,000,000 store in Caracas.

The biggest single investor of all was the oil industry. It had spent some $450 million in the last year developing the Middle East and other areas. Standard Oil Co. (NJ.) alone had invested $1 billion in foreign areas since war's end, planned to spend more millions this year.

Trickle & Flood. Nevertheless, the flow of U.S. investment abroad was not as great as U.S. businessmen think it should and could be. Since war's end, U.S. capital has been invested overseas at the rate of $600 million a year v. a post-World War I rate of $1 billion a year. "It will be difficult to enlarge American capital exports," said Allan Sproul, president of the Federal Reserve Bank of New York, "while the rewards to capital are still substantial at home." In 1948, U.S. investors abroad earned $1,560,000,000 on $10 billion of capital, a return of 15.6% before conversion to dollars. The estimated average domestic return on capital was 13.8%. Thus, a businessman could earn almost the same amount of money by staying at home, without taking any of the manifold risks in foreign investments.

Some Point Four planners in Washington thought that reluctance to invest abroad could be overcome by guarantees from the U.S. Government to reimburse U.S. investors for losses overseas. But many businessmen took a harder-headed view. Said Chairman Philip D. Reed of General Electric, which has invested $85 million abroad since war's end: "What is needed is a real desire on the part of foreign countries for American private capital and know-how to come to their countries."

In short, it was up to foreign nations--and not the U.S.--to open the door to U.S. businessmen and guarantee them a square deal. If the door was open and the deal looked good, U.S. business was showing that it needed no other incentive to move right in.

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