810.20 Defense/3–1748

The Acting Secretary of State to the Secretary of Defense ( Forrestal )


Dear Mr. Secretary: In reply to your letter of March 17 in which you referred to the need for an interdepartmental study group on [Page 241] strategic materials to work out detailed programs, it is my understanding that Mr. Thorp is working out, with the Chairman of the Munitions Board, plans for the establishment of a Working Group on Problems of Strategic Material Availabilities and Procurement with which the existing Working Group on Strategic Materials under the European Recovery Program would be merged.1

The Department does, as you have indicated, hope to bring about the liberalization or removal of discriminatory laws toward foreign capital in Latin American countries and to encourage international investment of United States capital through tax incentives. With this in mind the Delegation at Bogotá will probably introduce the following statement for inclusion in the Basic Inter-American Economic Agreement:2

“Each of the American States, within the framework of its own institutions, will seek to liberalize its tax laws as they apply to income from foreign sources and to avoid discriminatory and unduly burdensome taxation, in order to stimulate the free international flow of private investment for economic developmental purposes without, however, creating international avenues for tax avoidance. Each State will also seek the speedy consummation of bilateral agreements to prevent double taxation.”

The only loan program contemplated at the moment involving Government funds is the extension of the lending authority of the Export-Import Bank by $500 million.3

Sincerely yours,

Robert A. Lovett
  1. The Strategic Materials Working Group, a subcommittee of the Executive Committee on Economic Foreign Policy, was established by interagency agreement in April 1948 to consider problems of access to, and availability of, strategic materials of foreign origin and to make recommendations to appropriate agencies in connection with procurement for the stockpile. The Department of State was represented on the Committee and provided its Chairman. For a report of June 21, 1948 of the Strategic Materials Working Group with respect to strategic materials urgently needed for stockpiling, see the documentation on United States National Security Policy in volume i .
  2. See Chapter IV, Private Investments, of the Economic Agreement of Bogotá, in the report of the United States Delegation at the Bogotá Conference (Department of State publication 3263), p. 207.
  3. For the President’s message to the Congress on April 8, 1948 in which he recommended an increase in the lending authority of the Export-Import Bank to finance economic development in the other American Republics, see the Department of State Bulletin, April 25, 1948, p. 548.