Evening star., 1932-02-07

in evaluating the trend Of foreign in
veStmentS is the part which the United
States Government has played and will
play. There has been an erroneous
concept that the Department of State
passes on the credit value of foreign
bond issues. The fact is that foreign
bond issues are submitted to the De-
partment of State only because that
department must be kept informed of
such large private deals, and is ready
to object to such loans if they go to
countries with which our relations are
strained or if, on the other hand, the
terms are so onerous that the country
in question may become an enemy po-
litically.
Neither the Department of State nor
any other department or bureau of
our Government passes on the value
of an investment in foreign country.
The approval" given to loans is al
ways negative, the terms being so
couched as to avoid international fric-
ton. not to advise the American in
vestor. These terms are usually that
"the Department of State has no OBJ
lection to offer" One investment
banker stated in an announcement
that the loan he was issuing had been
approved by the Department OF
State" with the result that he was
called to Washington to explain, ana
was convinced that it would be wise 10
make public retraction.
Z. S, Help Necessary.
Such are the elements OF the correc-
tion of the past and of the bases OF the
new era in Latin American investments
The need. of our help is great, and the
value. properly supervised, Is SOUND
Bankers who discuss the issue, business
men of long relationship with otner
business men in those countries, unite
in proclaiming the moral risk excellent
Recently this has been proved again
and again by hundreds OF merchants
and others who have scorneo 10 take
advantage of optional moratorlums.
Future investments IN Latm America
probably will not be, to any extent, IN
government securities for general use
The typical productive loan Is one loI
public works, which, like well planned
highways, promise an immediate and
continuous return in taxes on automo-
biles and gasoline, or like irrigation
dams, port works schools ana certain
other public buildings and sanitation
plants, add to wealth and progress
Loans of this type can, and Will, con-
tinue and increase. Perhaps they will
be carefully earmarked for such service
and supervised by foreign eng1neers-a
not unnatural reaction to the mistakes
of the past
But the great bulk of new loans prob
ably will be to industries. The indus
trial financing Of the past has been
through companies controlled In the
country from which the money came
These will continue, but beside them
will inevitably grow up investments IN
the industries of Latin America itself.
Such, at least, is the ideal. Invest
ments in Latin America will continue
for two very definite reasons. One Is
that, with lowering money rates and
lowering returns on investments IN the
United States and Europe, the foreign
bond or the share In foreign business
must have its place in every portfolio
of investments as proposed "sWeeten-
ing" The second is the realization that
Latin America is definitely the field
where our money, as we'll as our en-
ergies and our machines, must serve In
the building of an incubator Of new
wealth and new markets.