Words of Advice

At a gathering of the free world's Finance Ministers in Washington last week, U.S. Treasury Secretary George M. Humphrey offered some sound advice on how underdeveloped countries can attract private investments from the U.S. He also made clear that U.S. businessmen have done a much better job of sending capital abroad than most foreign critics realize.

At the end of 1953, said Humphrey, the "U.S. had a whopping $23.7 billion of private capital invested in foreign countries, and much of the profit (about $1.5 billion yearly) is being plowed back in. Moreover, said Humphrey, investments are still going up, climbed $644 million in the first half of 1954.

Will this flow of money from U.S. citizens continue? Said Humphrey: "The prime factor which will determine this is the establishment of confidence in the country seeking investments among investors abroad ... As with individuals, it is best established by a definite course of good conduct . . .

"Actions speak louder than words ... Some of the principal [deterrents] are threats or a history of confiscation or discrimination [and] exchange restrictions . . . Sound, large-scale private investments abroad can only result from assurance of the security and the right of ready repatriation of principal and an opportunity for greater profit than at home Where [as in the U.S.] there are possibilities open, [U.S. investors] will need some additional inducement to undertake the extra risks of going to foreign lands . . ."

Humphrey's advice was seconded by witty, urbane Eugenio Gudin, Finance Minister of Brazil, who is now hoping to relax some of the tight restrictions against outside investors imposed by the late President Vargas. Gudin said underdeveloped countries must rid themselves of "three plagues . . . expropriation of foreign property without payment . . . inflation [and] nationalism." But he also had some advice for Humphrey and the U.S.: give the U.S. businessman an income-tax break on foreign investments. (At present, foreign profits are taxed twice -in the country in which they are made, and in the U.S.) Concluded Gudin: "After all, if you don't give the American businessman some sort of inducement to go outside his country, why should he go?"

This file is automatically generated by a robot program, so reader's discretion is required.