Memorandum for the Files from David Lloyd

Mr. Springers UNCLASSIFIED 11/12/59 PD- Date Initial December 3, 1949 EMORANDUM FOR THE FILES: SUBJECT: Overseas Investment in Point IV: I gather that the State Department has not given much time to the expansion of overseas investment under the Point IV program, and in fact, is deferring it as a major effort, because they are now in the process of undertaking a gigantic drive to increase imports into this country. Apparently, the policy decision has been made to launch a tremendous drive of publicity, apeeches and activity on the Hill in the direction of increasing imports. This goes beyond the program for reducing tariffs and removing customs barriers, etc. The Department realizes that this is a. tremendous undertaking and means virtually a shift in Ameri gan thinking about foreign trade. Under-playing the role of foreign investment also results from the difficulties encountered or anticipated in this field, and the further belief that technical assistance is in many areas a necessary first step before much investment can be undertaken. I believe that these currents in State Department thinking account for the comparatively negligible role which overseas investment currently has in their Point IV planning. This comparative neglect of the investment feature of Point IV seems to me a mistake for several reasons. While we can be most syapathetic toward the efforts to increase imports, it is certain to be a slow and laborious process, and quite unlikely to close the dollar gap in the foreseeable future. Secondly, an increase in investments is also a slow process and requires a great deal of agitating and prodding before good investments can be made. The danger is that we vd.ll coast into 1953 and later not only without any appreciable increase in overseas investment, but also without the mechanism and preliminary groundwork necessary for such an increase. We should certainly ask, for example, for an increase in the Ex-Im Bank's authorization for the fiscal year '52. Unless the Ex-Im Bank does more foreign lending than it has done or is now doing, we will not be in a position to justify such a request with the emphasis that is required.