66 



Experience with the administration of subsequent technical assist- 

 ance programs has shown that the development of the economically 

 underdeveloped areas ^vill not occur without the presence of large 

 sums of public capital (both bilateral and multilateral) for "social 

 overhead" or public capital investment (public works, education, 

 health, sanitation, etc.).^^ The Congress and the Administration, were 

 not eager to begin another tax-supported program of foreign aid. They 

 were aware of the influence of American business and earnestly solicited 

 the advice and support of this private sector for enactment of the 

 point IV legislation. In the end, the Congress acceded to the need for 

 guarantees for private capital. The program was judged to be a political 

 necessity to meet the Communist threat. 



Immediately after the President's inaugural speech the Administra- 

 tion sought the reactions of industrialists to the proposed program. 



Interested businessmen were actively responsive to the develop- 

 mental role assigned to them by the Administration. At first many 

 business spokesmen wanted unequivocal assurance that the Admin- 

 istration did not propose to sujjply either the funds or technicians for 

 foreign development operations; that these tasks would be entrusted 

 solely to private enterprise. In May 1949, the National Association of 

 Manufacturers said that the best way to promote development would 

 be to encourage a flow of private capital and to protect such invest- 

 ments by requiring the signing of bilateral agreements between the 

 United States and the recipient governments to provide reimburse- 

 ment in case of confiscation or nationalization, diasaster or civil 

 disorder.'^ 



As reflected in the press and congressional hearings, the business 

 community offered three arguments in justification for its claim for 

 preferential treatment in the program.'^ First, it was suggested that 

 economic development should proceed and develop according to the 

 lines of a free enterprise system whUe the use of Government funds 

 would inevitably reshape the beneficiary nation into a socialist system. 

 For instance former Ambassador Spruille Braden said : 



Having spent the majority of my mature life, both in business and diplomacy, 

 either in or in direct contact with the so-called undeveloped areas of this hemi- 

 sphere, it is my firm conviction that the best and often the sole effective means 

 of developing these areas is through free, private, competitive enterprise and not 

 through Government. 1^ 



Second, the business community contended that private enterprise 

 possessed unique technical skills needed to accomplish the job: 



Private industry has the industrial know-how. Government has not. The most 

 effective assistance in industrial development abroad can be provided by skilled 

 technicians of American companies which are investing their funds. '^ 



12 "The lack or shortage of roads, ports, and powerplants are well-known obstacles to economic develop- 

 ment. A complete listing * * • would include all forms of transportation, telecommunications, schools, 

 hospitals, sewerage and water systems, streets, administrative buildings, and many otlier forms of capital 

 investment." (In Lloyd D. Black, "The Strategy of Foreign Aid" (Van Nostrand, 1968), p. 54.) 



13 "Bilateral Pact Urged on Point IV," New York Times (May 24, 1949), p. 41. 



" See articles of Henry Hazlitt in Newsweek, 1949-50; Hebert Harris, "Point IV Is Big Business," United 

 Nations World magazine (vol. 3, No. 12, December 1949), pp. 55-58; Fortune magazine (October 1949) and 

 Februarv 1950 (issue devoted to U.S. foreign economic policies — especially "Point IV, Has U.S. Capital 

 the Incentive to Carry It Out?" pp. 89-96, 176, 178, 181-182). 



16 Statement of Hon. Spruille Braden. In U.S. Congress. House Committee on Foreign Affairs. Inter- 

 national Technical Cooperation Act of 1949 (point IV program). Hearings before the * * * on H.R. 5615, 

 a bill to promote the foreign policy of the United States and to authorize participation in a cooperative 

 endeavor for assisting in the development of economically underdeveloped areas of the world. Sept. 27, 28, 

 30, Oct. 3, 4. 5, 6, and 7, 1949. 81st Cong., 1st sess. (Washington, U.S. Government Printing Office, 1969), 

 p. 225. 



18 Report of Special Committee on Point IV Program, Chamber of Commerce of the United States. 

 The point IV program, approved by board of directors. In House. International Technical Cooperation 

 Act of 1949, Hearings, op. cit., p. 156. 



