Partnership in New Orleans

Foreign private capital cannot be driven. It must be attracted. Real cooperation in this hemisphere can result only from adherence to consistent economic programs honorably and continuously observed . . . The U.S. will seek to be more than a good neighbor. It will be a good partner.

With these words in New Orleans last week, Dr. Milton Eisenhower, the President's special emissary to Latin America in 1953, set the keynote for a new kind of economic conference. Its purpose: to boost future U.S. investment in Latin America through a partnership of businessmen instead of governments. The first Inter-American Investment Conference achieved a notable goal: in many a deal North Americans tentatively agreed to furnish capital for Latin America.

Sponsored by the city of New Orleans and TIME Inc., the idea got its first big boost after last year's Rio Conference where Latin American hopes for U.S. Government loans so greatly overshadowed private economic cooperation that little was accomplished. But in New Orleans, under the spur of Shipping Tycoon (Mississippi Shipping Co.) Rudolf S. Hecht, chairman of the city's trade-minded International House, private businessmen were eager to carry the ball. The Latin American delegations came prepared with a 50-page prospectus of more than 300 specific projects in their home countries to show U.S. investors. At the opening meeting, 1,200 delegates from the U.S. and 20 Latin American nations jammed New Orleans' Masonic Temple auditorium to see filmed messages of welcome from President Eisenhower and Vice President Nixon. Then they got down to brass tacks.

Fever & Profits. In meetings and panel discussions the delegates heard some frank talk from both sides of the border. Pulling no punches, Alberto Lleras Camargo, onetime President of Colombia, told U.S. businessmen flatly that they expect too much. Said he: Let's not waste time arguing about the need for stability. "For over 300 years there was more stability than was good for human nature." Latin America, said Lleras Camargo, is having its industrial and cultural revolution all in a rush; it can either develop under government control or through imaginative private investment. "Is such a spirit lacking in the U.S.?" he asked. "I don't think so." Added Lleras Camargo: U.S. capital cannot let the chance get away by waiting for insurance against "loss, risks and yellow fever."

Sao Paulo Banker Herbert Levy told fretful U.S. businessmen to quit worrying about losing money. Snapped Levy: previous U.S. investors in Brazil have made "excellent profits." In Brazil, he said, "U.S. investors have received $230 million more than they had actually invested."

Chile's Carlos Davila, secretary-general of the Organization of American States (set up at the Bogota Conference in 1948), had even better figures to back him up. Davila told the conference that Latin America has paid back to the U.S. (on public and private loans) $1.5 billion more than the U.S. had put in; for U.S. investors, the profit rate comes to a thumping 13%.

The honest talk brought no bitterness. Businessmen on both sides knew they had made mistakes and admitted it. For the World Bank, Vice President Robert L. Garner told Latin Americans that most U.S. investors want solid, long-term investments, not just a fast dollar. Said he: U.S. businessmen "no longer expect to establish right little, tight little enclaves of foreign enterprise on Latin American territory, skimming off profits but making no contributions in return."

For their part, many Latinos admitted that expropriation, tight currency restrictions and heavy taxes hurt instead of helping foreign investment. Said Venezuelan Industrialist Eugenio Mendoza: "The American investor has the right to expect that he shall not be subjected to restrictions which might fundamentally affect the mobility of either capital or profits. He also has the right to expect that taxes in his own country and in the country of investment shall not duplicate each other so as to remove all incentive for investing abroad. Without such guarantees, it would be foolish to expect substantial help."

In answer, the delegates promised to pressure their governments at home to relax restrictions, hurry along signing of agreements under which the U.S. Government will guarantee investors against expropriation losses if the country involved does not discriminate financially against U.S. firms. In five years only two Latin American nations (Haiti, Costa Rica) have signed. But while the conference was in session, Peru signed, and businessmen from Nicaragua, Cuba and Guatemala said that they too would work to get their governments to sign.

Screens & Trusts. Beyond that, the conference achieved some encouraging overall results. Among them:

P: A continuing committee, headed by Eric Johnston, chairman of the President's International Development Advisory Board, and two other businessmen, was set up to watch the course of U.S. investment in cooperation with regional committees, decide when and where to hold another full-scale conference.

P: The Inter-American Investment Service, a department of New Orleans' International House, will screen and set before U.S. investors new proposals from Latin America. Each of the Latin American nations will form a national committee to screen projects beforehand, send north only the best projects.

P: A $15 million Inter-American Investment Trust was agreed upon to provide a steady flow of risk capital for projects that are too small to qualify for Export-Import Bank loans, yet too big for most local bankers. Financiers will meet with New York bankers this month to work out the final details.

Rayon & Ice Cream. When it came to the actual deals, even hardheaded Rudy Hecht was astonished. All week long, wherever delegates met in restaurants, at parties, gala receptions, in hotel rooms and hallways, they talked business. Brickmaker Jose Saprissa from tiny El Salvador wanted--and thought he had got--$150,000 to expand his factory. Some other, bigger deals on the fire:

P: Venezuelans were working out a deal for $50 million for a 2,400-unit housing project in Caracas. The Bank of America said it plans to lend $15 million to improve sanitation and water systems in several Venezuelan cities.

P: Brazilians reported that Higgins Inc., New Orleans shipbuilders, talked seriously of investing in a shipyard project, that a Texas group was buying shares in a machinery-import corporation, that two U.S. investment syndicates were interested in a new $2,500,000 cement plant.

P: Colombians had offers from New Orleans ice-cream makers to import the country's exotic curuba fruit juice; Esteve Brothers in Dallas were thinking of investing in a cotton project; Cerro de Pasco Corp. was hoping to put new money into Colombian copper mines.

P: Delegates from Cuba, Mexico. Honduras and Ecuador announced that U.S. firms were strongly interested in helping build a bottle-making plant, expanding a $4,000,000 rubber plant (Firestone Tire & Rubber) to make cheap sneakers for Mexican farmers, developing a $5,000,000 building and development project to build homes for Hondurans, operating coffee plantations in Ecuador.

"I Just Made a Deal." Even businessmen familiar with Latin America found opportunities. Said a U.S. investor: "I just made a deal with a Guatemalan I've known for years. Never knew he was interested in that line at all." And for Latinos the conference was a fine opportunity to look around for deals with their colleagues. One Guatemalan investor agreed to put money into a Mexican movie theater specializing in Italian movies.

At week's end the Latino delegates left

New Orleans for Miami, Houston, Dallas, New York, Chicago and Detroit to follow up on their deals. Most U.S. businessmen headed straight home, but many had plans to fly south later to look over the projects they were interested in. Said a Cleveland financier: "This conference will pay off in millions and hundreds of millions through the years to come."

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