R.V.S. SMY 64 Clayton, W. L., member, board of directors, Anderson, Clayton & Co.--- Fatouros, A. A., visiting assistant professor, University of Chicago Law School, and George Rublee, Assistant General Counsel for Private Enterprise, Agency for International Development--- Grimes, Francis E., vice president, area executive, Latin America, Chase Moore, John D. J., vice president, W. R. Grace & Co., and chairman, U.S. Peccei, Aurelio, executive director for Western Europe, ADELA, and Warren Wilhelm, executive director for United States, ADELA Ray, Philip A., attorney, chairman, International Bond & Share, Inc. Rublee, George, Assistant General Counsel for Private Enterprise, Agency ADDITIONAL INFORMATION AND EXHIBITS Questions propounded to George Rublee of AID and the answers Correspondence between J. Peter Grace and several members of COMAP pertaining to the report of the Commerce Committee for Speech of Hon. Bourke B. Hickenlooper, of Iowa, in Senate, November 13, 1963, entitled "Recent Developments in Argentina". "Foreign Investment in Latin America: The Role of Private Capital,' article reprinted from the Quarterly Review, July 1963- Griffith, Representative Martha W.: A comparison compiled by the Bu- "Atlantic Community Development Group for Latin America (ADELA)," memorandum, dated September 19, 1963, describing "Comments on the Availability of Equity Investment Opportunities in "Summary Report of ADELA Conference, January 10-11, 1964-- Participants at ADELA Conference, January 10-11, 1964. "Regional Economic Integration in the Development of Latin America," an article by Harvey S. Perloff and Romulo Almeida--- Moore, John D. J., vice president, W. R. Grace & Co., and chairman, U.S. "Proposals To Improve the Flow of U.S. Capital to Latin America," Rublee, George, Assistant General Counsel for AID: Memorandum entitled "Aids to Business (Overseas Investment)," III Table on U.S. direct investments-capital flows, earnings, values.. Table on U.S. direct investments-earnings and income distributed. "United States Still a Bogyman to Latin America," excerpt from Business Week, December 7, 1963. Supplemental memorandum from Chairman of COMAP.. "Private Enterprise Under the Alliance for Progress," supplemental PRIVATE INVESTMENT IN LATIN AMERICA TUESDAY, JANUARY 14, 1964 CONGRESS OF THE UNITED STATES, SUBCOMMITTEE ON INTER-AMERICAN ECONOMIC Washington, D.C. The subcommittee met, pursuant to notice, at 10:35 a.m., in room 1202, New Senate Office Building, Hon. John Sparkman presiding. Present: Senator Sparkman; Representatives Griffiths and Curtis. Also present: William H. Moore, economist; Hamilton D. Gewehr, administrative clerk; and Donald A. Webster, minority economist. Senator SPARK MAN. Let the subcommittee come to order, please. I have delayed opening the hearing for a few minutes hoping that our first scheduled witness for this morning might be present. We are informed that he has arrived in town and will be here any minute. Two other members of the subcommittee are expected also, but I understand one of them has been held up and the other one is coming in from out of town. Those of us who have managed to get here are certainly ready to admit that travel and arrival times are a little uncertain and difficult in face of such heavy snow and winds. The Alliance for Progress, which finds its expression in the Charter of Punta del Este, was signed and agreed to as a cooperative and mutual program. The charter was signed by all of the Latin American Republics including, it is appropriate to remember, Brazil, Argentina, Peru, and Panama, as well as the United States. This historic charter recognized that the cooperation of all parties would be needed if the measures and hopes for economic and social progress to fulfill the commitments of the charter were to succeed. These hearings deal primarily with one specific aspect of that pledge for cooperation; namely, the role of private enterprise in supplying capital and producing the goods and services upon which a higher level of living can be based. The declaration to the peoples of America set out in the charter contains among other worthy goals such as wiping out illiteracy and bringing about a steady increase in average incomes, two express objectives which I believe are worth quoting in full as background for these hearings. The mutual commitments which these sovereign countries countries agreed to included undertakings To stimulate private enterprise in order to encourage the development of Latin American countries at a rate which will help them to provide jobs for their growing populations, to eliminate unemployment, and to take their place among the modern industrialized nations of the world. To maintain monetary and fiscal policies which, while avoiding the disastrous effects of inflation or deflation, will protect the purchasing power of the many, guarantee the greatest possible price stability, and form an adequate basis for economic development. 1 A basic proposition behind the Alliance was that substantial cooperation of private capital would be necessary to supplement Government efforts. Since private capital, to use the words of the Commerce Committee, cannot in a free society be "driven or cajoled into new fields," investment must be welcomed and, indeed, attracted by the opportunities for competitive return and the basic safety of the capital employed. In view of these hopes, one finds much that is disturbing and discouraging in the record and it is because of these reasons for concern that these hearings are being held. The Economic Commission for Latin America of the United Nations. Economic and Social Council reported last year not only a hesitancy on the part of private capital but an actual decline in the net flow of external financing to Latin America as a whole. The Commission notes that "in 1962 no progress was made with respect to net external financing." And they made this further comment: The year 1962 witnessed the initiation of a substantial international effort to increase the flow of such external capital *** in the course of the next 10 years ***. It is therefore surprising that concurrently with this international effort, the data available for 1962 indicate a level of external financing far below the average for the 2 preceding years.1 Newspapers and magazines throughout the year have, moreover, been replete with headlines of expropriation and threats of expropriation, and of political uncertainties that cannot help but be deterrents to the businessman contemplating investment. The magazine Business Week of December 7, 1963, has an article the title of which is "United States Still a Bogeyman to Latin Americans-Main Trouble Spot Is Brazil Where Feelings Run Strong Against Heavy Inflow of North American Capital and Move Is Afoot To Form Common Policy Against United States." The magazine quotes a Brazilian as saying: The biggest sore spot in Brazil is private U.S. capital. To add to the known preference of the ruling "elite" in these countries for the status quo rather than accept land and tax reforms, a Mexican banker back from a tour in South America, where he talked to businessmen in such temperate, commercial places as São Paulo and Montevideo, interpreted local business views in these words: These sentiments are not emotional and not ideological. Their reasoning is economic. They fear U.S. penetration in the Latin American free trade zone and they fear the United States is taking over their channels of trade. The text of the Business Week article will be included at the conclusion of today's record. Whether these views are representative or not I cannot say. In a sincere effort to live up to our Government's commitment under the Alliance, the Commerce Committee for the Alliance for Progress (COMAP) was created by the late President Kennedy to help accelerate the contribution of the private business sector to the Alliance for Progress. The Committee of distinguished U.S. bankers and industrial leaders, after weeks of deliberation, reported to the Secretary of Commerce on the problem and its recommendations for improving 1 Secretariat materials dated Mar. 29, 1963, entitled "Some Aspects of the Latin American Economic Situation in 1962," for use at the 10th session, Mar del Plata, Argentina, May 1963, p. 46. |