Foreign Relations of the United States, 1958–1960, Volume V, Microfiche Supplement, American Republics

ETA–52. Letter from the Acting Secretary of State to the Secretary of the Treasury (Anderson)¹

Washington, September 16, 1960

Dear Bob:

I am seriously concerned over the threatened decline in the flow of U.S. private investment to less-developed countries and am certain that you fully share this concern since we just continue to rely heavily on American private enterprise in the task of financing economic development in these countries.

I am advised, for example, that recent actions taken by the Cuban government have drastically reduced the willingness of American investors to subscribe to new security issues intended to finance an expansion of activities by U.S. firms in Latin America. It appears inevitable that the rising concern over the safety of existing foreign investment, which has already reached a high level, will seriously restrict new investment outside of Europe. Whereas our foreign policy objectives require an increase in the volume of private foreign investment in less-developed countries, we appear to be threatened with a decline.

We therefore propose to give serious consideration to means of reviving the interest and confidence of U.S. investors in the foreign field, especially Latin America. Perhaps we should seek to make available broader insurance coverage against expropriation and non-convertibility. The requirement of a bilateral Investment Guarantee Agreement as a prerequisite to guarantees administered by ICA should be re-examined. All other possibilities should be identified and explored.

In this context, it would be most helpful if the Treasury Department could undertake a review of present tax legislation to determine the advisability of changes which would reduce the losses taken by U.S. firms when their overseas investments are seized by permitting recovery out of U.S. taxes to an extent and under conditions decried to be appropriate in view of the basic objective to which I have referred.

I should appreciate your reaction to these suggestions and any other suggestions you may have on this important subject.

With best wishes,

Sincerely,

DOUGLAS DILLON
Acting Secretary

1. Source: Department of State, Central Files, 820.05111/9–1660. Confidential. Co-drafted by Edwin M. Martin, Assistant Secretary of State for Economic Affairs, and Peyton A. Kerr, Director of the Office of International Financial and Development Affairs, on September 9, and retyped in the Executive Secretariat on September 14.