The Broadening Road To Foreign Investment

AMERICAN investment in foreign mining interests today faces its greatest task. U. S. dollars must make possible the. steady procurement of the minerals our defense effort consumes in huge quantities. The two most vital factors involved in foreign procurement are time and the continued good will of the nations from which minerals are purchased. The Point IV program was formulated to care for the second item, but it has failed to do the job. Its lack of success has not been from intent or from basic failure in formula. Foreign Investment, Four Eras Foreign mineral development, in so far as participation by private capital from the United States is concerned, may be divided into four main chronological categories: First: The period prior to the first World War when people, capital and products moved with relative freedom across international boundaries, and London was the recognized mining seat of the world. By the end of 1919 the United States direct investments abroad amounted to $3.9 billion of which some $900 million were in mining and smelting and $600 million in petroleum. Investment climate throughout most of the world was excellent. Second: The period between the end of World War I, when the international economy had been shaken from its foundations, and the beginning of the great depression of the 1930's, which still further disrupted the world economy. By that time the world mining center had moved across the sea and the United States direct investments abroad had increased to $7.7 billion of which mining and smelting accounted for $1.2 billion and petroleum for $1.1 billion. Investment climate was good in most parts of the world. Third: The period of the depression of the 1930's and the beginning of World War II during which foreign trade was still further disorganized and the international economy collapsed. Nazi barter agreements were initiated in many parts of the world, and Soviet propaganda commenced to make its, influence felt in many countries. During this period United States direct investments abroad decreased to $7.3 billion. Mining and smelting investments during the same period decreased some $200 million, though direct investments in foreign petroleum areas increased an equal amount. Investment climate became less and less hospitable in all parts of the world affected by economic nationalism. Fourth: The period since the beginning of World War II during which total direct investments abroad increased from $7.3 to $13.7 billion. Of this sum, at the beginning of 1950 investment in foreign mining and smelting is reported to have been $1.2 billion-back to where it was in 1929, and in petroleum to have reached $3.7 billion. Investment climate remained favorable in the countries respecting contractual obligations and fair in their treatment of invested capital. [ ] As noted above, the relative freedom of passage across international boundaries by people, capital and products ended with World War I and the situation remains unchanged in a greater part of the world. While this same war upset international economy, the depression of the 1930's caused the collapse of world trade, and exports from all countries fell to an alarmingly low figure. Some countries almost ceased to export. Chile, for example, reported a drop of 88 pct in exports. Countries with