Exploiters & Victims

At a United Nations Economic and Social Council meeting in Manhattan last week, Soviet Representative Semyon K. Tsarapkin recited an old Communist charge: private U.S. investment abroad brings huge profits to the capitalist "exploiters" and retards the economic development of the foreign victims. Next day U.S. Representative Preston Hotchkis, a California insurance executive, answered Tsarapkin with a few facts and figures.

Tsarapkin had cited Latin America as a horrible example of how U.S. capitalists keep foreign nations from industrializing and force them to concentrate on production of raw materials for U.S. industry. Hotchkis answered that of the $441 million invested by U.S. citizens in Latin America in 1951, half went into manufacturing industries. He reeled off a list of U.S. industrial investments in Latin America, from tires and chemicals in Brazil to glass and textiles in Chile. The U.S. Export-Import Bank, he added, has made loans to Brazilians and Chileans for steel and textile mills, to Mexicans for steel mills and chemical plants. U.S. experts have shown Cubans how to grow and process kenaf fiber, starting a whole new textile industry on the island.

In a bit of statistical sleight of hand, Tsarapkin implied that profits on U.S. private investment overseas average 85%, or $1.5 billion a year on a yearly investment of $1.75 billion. Hotchkis pointed out that profits are returned not on the current year's investment alone, but on the total investment, i.e., $1.5 billion on $16 billion, or less than 10%. On gross profits, said Hotchkis, the investors pay foreign taxes of more than 30%. Of the net profits, they plow back well over half --62% in 1952--into reinvestment in the countries where the profits were earned.

For example, said Hotchkis, Sears Roebuck & Co. "has invested over $28 million in five countries in Latin America [since opening its first Latin American store in Havana in 1941], With the exception of one small dividend from a Cuban subsidiary, every cent of profits earned between 1941 and 1952 was reinvested in the countries in which they were earned to finance new stores and new products."

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