Challenge & Opportunity

"Business is much more profitable in Latin America than in the United States," a qualified U.S. authority, Joseph Peter Grace Jr., last week told investment bankers from all over the Midwest. Facing 432 of them at a conference in Chicago's Drake Hotel, the president of W. R. Grace & Co. spoke out eloquently on the opportunities for U.S. private capital in the southern lands where his grandfather started the family firm.*

South of the border, Peter Grace explained, lies the world's fastest growing market. "Latin America's population increase of about 2 1/2% a year is greater than that of any other major area," he said, and the region's buying power is zooming. Example: when Sears, Roebuck opened in Mexico City, "some people thought that potential customers would be limited to the upper 5% or 10% of the city's population. Actually, the customers that Sears has developed represent a cross section of at least the upper 50%."

The challenge for U.S. capital (which already adds up to a fat $6 billion in Latin America) is to build the plants to supply this expanding market. As a hint of the high earnings that are possible, Grace cited the interest on commercial bank loans that businessmen in Latin America are willing and able to pay: Brazil, 9%-12%; Peru, 9%-10%; Mexico 9 1/2% (v. an average 3% in the U.S.). And he neatly disposed of the standard objections to investing in Latin America.

P: Expropriation? "Our firm has been doing business in South America for more than 100 years, and over all that period we have never lost a dollar of our money nor a square foot of our land through expropriations."

P: Revolution? "You know, during most Latin American revolutions, the traffic cop still directs traffic, the postman still delivers mail and life goes on pretty much as usual as far as the foreigner and the foreign investor are concerned."

P: Restrictions on taking out profits? They are transitory, and "in the meantime the accumulated currency earnings can be plowed back into the business."

Said Grace: "More and more Latin Americans want better homes to live in, better clothes to wear, better food to eat, better medicine ... I think you investment bankers have a tremendous opportunity to get in on the ground floor of this new area of expansion."

*The $324-million Grace & Co., the No. 1 trader, banker, shipper, manufacturer and planter of South America's west coast, has itself invested $130 million in the U.S. petrochemical industry (TIME, Sept. 15, 1952). Grace explains that the company hopes to expand its chemical production into a hemisphere-wide operation. Meanwhile, Grace continues to pour into Latin American projects new investments that are expected to total $50 million.

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