THE BOLD NEW PROGRAM
Collins, Herbert
The Bold New Program A Careful Study of the Many Steps Preceding It By Herbert Collins PRESIDENT TRUMAN'S inaugural address embarked the American people on a bold program for exporting the...
...The mechanics of fostering private capital investments did not receive as much attention at the Senate's ERP .hearings as the saving of Western .Europe from communism, the establishment of a paying market in Europe for American goods, the integration of Europe's economic system, or the re-establishment of the multilateral nature of Europe's foreign trade...
...The Act does not, however, guarantee transfer into dollars of any profits over and above the amount of dollars originally invested and specified in the contract of guarantee...
...TWQ YEARS AGO...
...They exHerbert Collins, now teaching history at the North Carolina State College of Agriculture and Engineering, formerly taught at Brooklyn College, Hunter College and Rutgers University...
...advocated vigorous encouragement of private investment to supply materials and equipment for the expansion of European industry...
...A new perspective concerning our function on the Continent and a new policy in regard to the Ruhr emerged...
...President Truman's Waco address reaffirmed this internationalist economic testament...
...Unable to acquire capital goods from traditional trade sources, they turned to the machine-makers, investors, and engineers of the United States...
...1949...
...they also suggested that American businessmen would have to learn how to finance their overseas customers...
...Although their point of reference was the operation of ECA, the wide implications of that program have already been demonstrated...
...business, agriculture and labor, the industrial activity of other lands might be accelerated...
...The original design for Europe shall now be applied throughout the world...
...pressed judgments which later became policies...
...I beUeve...
...With the cooperation of U.S...
...New issues arise daily...
...In the long run we call sell to other countries only if we are willing to buy from them, or to invert our fundi abroad...
...The Export-Import Bank, the International Monetary Fund, the National Advisory Council, and the International Bank have not completely solved the problem of guarantees and convertibility...
...He outlined the possible scope of this action in his famous "Marshall Plan" address at Harvard, June 5, 1947...
...The guarantee clause in the Economic Cooperation Act of 1948, however, provides for convertibility of profits and original investment...
...At the Senate hearings on the Marshall Plan, however, Paul Hoffman referred to the aid program "as a method of financing the acquisition by the American Government of property rights in Europe and its colonies...
...There is assurance with respect to the integrity of the principal of the investment, but none regarding convertibility or transfer of profits...
...On January 24, 1949, Treasury Secretary Snyder disclosed that work was going forward on« "a series of farreaching programs involving financial assistance for other countries of the world.'' The same month, the first report of the Joint Committee on Foreign Economic Cooperation declared: "Congress apparently must choose between providing a much mora comprehensive guarantee or waiting until a substantial improvement occurs before private investors will assume an important role in European Re covery...
...The spokesmen for this association proposed : (1) consideration of some form of guarantee to American firms taking part in ERP, and (2) inclusion in bilateral agreements with aid-receiving countries of guarantees to Americans of treatment no less favorable than that accorded the country's own businessmen...
...Such new economic developments must be devised and controlled/' he concluded, "to the benefit of the peoples in the areas in which they are established...
...THE GERMAN CRISIS, unfolding in Moscow in March-April, 1947, led to a new principle: Economic unity for Germany was essential to European recovery...
...THERE WERE THREE major deter rents, however, to private investment in Europe which Congress had to consider in writing the Economic Cooperation Act: 1. Cpuld profits be mad* in sufficient amount, to amortix* investment and provide a return transferable into American dotiarsT 2. Could the exchange of a foreign country be converted into currency needed to buy raw materials needed for industrial development...
...But it is important to recognize that although amortization payments on foreign loans are desirable and repatriation of capital investments legitimate, it is generally impossible to repatriate foreign loans and investments on a large scale without causing serious damage to investors as well as to capital-importing countries...
...The Economic Cooperation agreements signed between the United States and seventeen nations have fulfilled the program for private investment and linked it to the emerging network of Western European economic collaboration...
...Whatever action is possible must be taken without delay...
...His article, "Cotton Mill Crusade in the South Before 18*0...
...investors "would not be able to make investments getting returns in local (foreign) currency, and take a chance on being able to get it converted into dollars" unless conversion and repatriation were guaranteed...
...The National Foreign Trade Council likewise advocated tapping the reservoir of private investment capital for industrial development abroad...
...My italics.j "We will find it prolitable...
...The technological and engineering implications of the European RecoveryProgram are lucidly expounded in the Final Report of the Herter Committee...
...Guarantees "to the investor must be balanced by guarantees in the interest of the people whoso resources and whose labor go into these developments...
...Affiliation with the International Monetary Fund, the International Bank for Reconstruction and Development, and the International Trade Organization had evidenced the search for exchange j ate stabilization, the freer flow of loan and investment capital, and multilateral agreements in international trade...
...bey declared...
...ERP is, basically, the prelude to industrialization of the world's backward areas under American auspices...
...If ERP could restore the European economy to prewar production levels, renew the flow of trade, and stabilize tottering governments, the last two doubts would dissolve...
...Marshall later reminisced that "our experience at Moscow . . . brought us to the important conclusion t^at we faced the choice of quitting Europe altogether or of completing the task of European Recovery which we had no intention of quitting...
...There is no real guarantee against unreasonable fiscal obstacles to conversion of profits into foreign currencie...
...Furthermore, the colonial and unindustrialized areas of the world—that customarily looked to, European industry for finished products—were now intent on their own industrial development...
...According to the Herter Report, participation of American business in ERP is important from two points of view: (1) to provide an incentive to American management to send its best technical and managerial personnel abroad to assist in the reconstruction program, and (2) to provide additional funds to supplement government investments from this country...
...th* President declared, "that w* should make available to peace-loving peoples the benefits of our store of technical knowledge in order to help them realise their aspiration for a better life...
...In spite of the continued reluctance of venture capital to seek foreign fields of investment, the United States overseas development program is apparently on the threshold of legislative formulation...
...What President Truman declared to be a new policy is securely anchored m the whole conception and structure r>f the European Recovery Program...
...awareness of its part in the world economy...
...appeared in the Journal of Southern HUtary...
...the Council of Economic Advisors wrote that the abundant capital and savings, capital goods and technological knowledge of America constituted enabling factors in embarking on a development program abroad...
...Nevertheless, Presidential economic ,-dvisors did not halt there...
...Establishment of the Marshall Plan as American foreign economic policy thereby became a major facet in the American vision of a world-wide development program...
...The Bold New Program A Careful Study of the Many Steps Preceding It By Herbert Collins PRESIDENT TRUMAN'S inaugural address embarked the American people on a bold program for exporting the benefits of science and .ndustry to the World's undeveloped i reas...
...they continued, "to Invest a part of our savings In developing the world's productive resources through sound loans and investment of equity capital abroad...
...THROUGHOUT THE WAR, various agreements had contributed to the emerging design of international development: The Atlantic Charter, the Dumbarton Oaks proposals, and the activities of UNESCO and the UN's Monetary and Financial Conference...
...But a strong effort to remove the first doubt had to be written into the statute...
...In this undertaking he invited other countries to pool their technical resources...
...The "guarantee of convertibility" clause in the Economic Cooperation Act empowered the ECA to guarantee conversion into dollars of earnings from approved new investments or of proceeds from liquidation of such enterprises...
...In his address on Greece and Turkey (March 13, 1947) President Truman declared: "I believe that our help should be primarily through economic and financial aid which is essential to economic stability and orderly political processes...
...But it was the International Trade Organization Charter that laid a foundation for agreement on treatment of private investment...
...WHEN THE PRESIDENT'S ADVISORS stated that "Nations that are industrialized are our best customers," they not only recognized that American engineering would have to be mobilized...
...IN THEIR REPORT for January...
...All the tasks laid out for U.S...
...I believe,"Secretary Marshall broadcast on his return, "that action cannot await compromise through exhaustion...
...Nations that ar* industrialised are our best customers...
...engineering personnel rested on the premise that European industry had fallen behind ours and would require professional advice in bringing designs and techniques up to date...
...3. Would private capital seek investment where political conditions are unstable...
...the Council of Economic Advisers wrote into the First Economic Report U.S...
...The principle was thereby recognized that U.S...
Vol. 32 • June 1949 • No. 23
