Friday, Oct. 05, 1962

Going Global

At the turn of the century, U.S. industry's herculean hunger for capital forced most private businesses to "go public." Today, entering an even more radically different era of expanding world trade and multiplying common markets, U.S. corporations may have to take the next logical step and, says General Motors' Chairman Frederic G. Donner, "go global."

What Donner proposes is a vast broadening of industry's base that would make "the ownership of international corporations truly international." Before 2,500 delegates from 50 nations who attended the Eighth International Congress of Accountants in Manhattan last week, Donner argued that stock ownership of worldwide companies by the citizens of the countries where they operate would be a "natural complement to the rapidly widening acceptance of free world trade."

100 Nuclei. "There is, of necessity," said Donner, "a close relationship between the business and the citizens of these countries. This relationship takes many forms--producer to customer, employer to employee, purchaser to supplier. Can we not now visualize the extension of these relationships in many cases to include the relationship of corporation to stockholder?"

G.M.'s chairman pointed out that the free world already has more than 100 organized markets in which international corporate securities can be traded. Though mostly small by comparison with the great stock exchanges of London, Paris, Amsterdam, Frankfurt and New York, he said, "even the smallest provides a nucleus for bringing together the technical skills and understanding required for intelligent investment and efficient distribution of the shares of the worldwide corporation."

A New Capitalism. The era of global stock ownership is not yet at hand. Overseas investors, particularly in underdeveloped nations, are still reluctant to put money in "foreign" companies--however much the investment may benefit their own economies. In many countries, including 15 of the 20 nations where G.M. has subsidiaries (all of which are now wholly owned by the U.S. firm), governments have laws specifically limiting their citizens' opportunity to hold foreign stocks. Tax laws also would have to be revised so that dividends were not taxed by the U.S. and foreign governments as well.

Conceding these initial difficulties, Donner suggested that U.S. corporations could help overcome them by such simple measures as printing their annual reports and stock certificates in foreign languages and quoting stock prices in local currencies. The benefits of global stock ownership, he declared, would infinitely reward such efforts. Individual investors the world over would benefit from "the stability provided by the broader markets and larger financial resources" of an international corporation. And the corporations would have created "a new kind of capitalism"--one, declared Donner, that could "make free private enterprise a more effective servant of us all."

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