American Academy of Political and Social Science
The President's Message to the Congress on "Point Four Legislation"
Author(s): Harry S. Truman
Source: The Annals of the American Academy of Political and Social Science, Vol. 268,
Aiding Underdeveloped Areas Abroad (Mar., 1950), pp. 184-187
Published by: Sage Publications, Inc. in association with the American Academy of
Political and Social Science
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The President's Message to the Congress
on "Point Four Legislation"
To the Congress of the United States:
In order to enable the United States, in
cooperation with other countries, to assist
the peoples of economically underdeveloped areas to raise their standards of living, I recommend the enactment of legislation to authorize an expanded program of
technical assistance for such areas, and
an experimental program for encouraging
the outflow of private investment beneficial
to their economic development. These
measures are the essential first steps in an
undertaking which will call upon private
enterprise and voluntary organizations in
the United States, as well as the Government, to take part in a constantly growing
effort to improve economic conditions in
the less developed regions of the world.
The grinding poverty and the lack of
economic opportunity for many millions of
people in the economically underdeveloped
parts of Africa, the Near and Far East, and
certain regions of Central and South America, constitute one of the greatest chal-
lenges of the world today. In spite of
and stronger nations will be associated
with us in the cause of human freedom, it
is also a promise of new economic strength
and growth for ourselves.
With many of the economically under-
developed areas of the world, we have
long had ties of trade and commerce. In
many instances today we greatly need the
products of their labor and their resources.
If the productivity and the purchasing
power of these countries are expanded, our
own industry and agriculture will benefit.
Our experience shows that the volume of
our foreign trade is far greater with highly
developed countries than it is with countries having a low standard of living and
inadequate industry. To increase the out-
put and the national income of the less
developed regions is to increase our own
economic stability.
In addition, the development of these
areas is of utmost importance to our efforts to restore the economies of the free
European nations. As the economies of
the underdeveloped areas expand, they
their age-old economic and social handicaps, the peoples in these areas have in
will provide needed products for Europe
and will offer a better market for European
recent decades been stirred and awak-
goods. Such expansion is an essential part
ened. The spread of industrial civilization,
of the growing system of world trade which
the growing understanding of modern conis necessary for European recovery.
cepts of government, and the impact of Furthermore, the development of these
two world wars have changed their lives
areas will strengthen the United Nations
and their outlook. They are eager to play
and the fabric of world peace. The preamble to the Charter of the United Naa greater part in the community of nations.
tions states that the economic and social
All these areas have a common problem.
They must create a firm economic base for
advancement of all people is an essential
the democratic aspirations of their citizens.
bulwark of peace. Under article 56 of the
Without such an economic base, they will
Charter, we have promised to take separate
be unable to meet the expectations which
action and to act jointly with other nathe modern world has aroused in their
tions "to promote higher standards of liv-
peoples. If they are frustrated and dis-ing, full employment, and conditions of ecoappointed, they may turn to false doctrines nomic and social progress and develop-
which hold that the way of progress lies ment."
For these various reasons, assistance in
For the United States the great awaken- the development of the economically uning of these peoples holds tremendous derdeveloped areas has become one of the
promise. It is not only a promise that new major elements of our foreign policy. In
through tyranny.
184
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THE PRESIDENT'S MESSAGE
185
my inaugural address, I outlined-a pro-the field of education, channels of exchange
and communication have been opened begram to help the peoples of these areas to
tween our citizens and those of other counattain greater production as a way to prostries. To some extent, the expert assistperity and peace.
ance of a number of Federal agencies, such
The major effort in such a program must
as the Public Health Service and the Debe local in character; it must be made by
the people of the underdeveloped areas partment of Agriculture, has been made
available to other countries. We have also
themselves. It is essential, however, to the
participated in the activities of the United
success of their effort that there be help
from abroad. In some cases, the peoplesNations, its specialized agencies, and other
international organizations to disseminate
of these areas will be unable to begin their
part of this great enterprise without initial
useful techniques among nations.
aid from other countries.
Through these various activities, we have
gained considerable experience in renderThe aid that is needed falls roughly into
ing technical assistance to other countries.
two categories. The first is the technical,
scientific, and managerial knowledge necesWhat is needed now is to expand and integrate these activities and to concentrate
sary to economic development. This category includes not only medical and educathem particularly on the economic developtional knowledge, and assistance and advice
ment of underdeveloped areas.
in such basic fields as sanitation, communi- Much of the aid that is needed can
cations, road building, and governmental
be provided most effectively through the
services, but also, and perhaps most im-United Nations. Shortly after my inportant, assistance in the survey of re-augural address, this Government asked the
Economic and Social Council of the United
sources and in planning for long-range ecoNations to consider what the United Nanomic development.
The second category is production goods
tions and the specialized international agen-machinery and equipment-and financial
cies could do in this program.
assistance in the creation of productive The Secretary General of the United
Nations thereupon asked the United Naenterprises. The underdeveloped areas
tions Secretariat and the secretariats of
need capital for port and harbor development, roads and communications, irrigation
the specialized international agencies to
and drainage projects, as well as for public
draw up cooperative plans for technical
utilities and the whole range of extractive,
assistance to underdeveloped areas. As a
processing, and manufacturing industries.
result, a survey was made of technical
Much of the capital required can be proprojects suitable for these agencies in such
vided by these areas themselves, in spite
fields as industry, labor, agriculture, sciof their low standards of living. But much
entific reseach with respect to natural remust come from abroad.
sources, and fiscal management. The total
The two categories of aid are closelycost of the program submitted as a result
related. Technical assistance is necessary of this survey was estimated to be about
to lay the groundwork for productive in-$35,000,000 for the first year. It is exvestment. Investment, in turn, brings withpected that the United Nations and the speit technical assistance. In general, how-cialized international agencies will shortly
ever, technical surveys of resources and ofadopt programs for carrying out projects
the possibilities of economic developmentof the type included in this survey.
must precede substantial capital investIn addition to our participation in this
ment. Furthermore, in many of the areaswork of the United Nations, much of the
concerned, technical assistance in improv-technical assistance required can be proing sanitation, communications, or educa-vided directly by the United States to
tion is required to create conditions in countries needing it. A careful examinawhich capital investment can be fruitful. tion of the existing information concernThis country, in recent years, has con- ing the underdeveloped countries shows
ducted relatively modest programs of tech-particular need for technicians and experts
nical cooperation with other countries. Inwith United States training in plant and
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186
THE ANNALS OF THE AMERICAN ACADEMY
animal diseases, malaria and typhus conother government officers, as may be appropriate. With such administrative flexitrol, water supply and sewer systems,
metallurgy and mining, and nearly bility,
all
it will be possible to modify the
management of the program as it expands
phases of industry.
and to meet the practical problems that
It has already been shown that experts
will arise in its administration in the
in these fields can bring about tremendous
improvements. For example, the health future.
of
The second category of outside aid
the people of many foreign communities
has been greatly improved by the workneeded
of
by the underdeveloped areas is the
United States sanitary engineers in setprovision of capital for the creation of
ting up modern water supply systems.
productive enterprises. The International
Bank for Reconstruction and Development
The food supply of many areas has been
increased as the result of the advice of
and the Export-Import Bank have proUnited States agricultural experts in vided
the some capital for underdeveloped
control of animal diseases and the im-
areas, and, as the economic growth of these
provement of crops. These are only areas
ex- progresses, should be expected to
provide a great deal more. In addition,
amples of the wide range of benefits resulting from the careful application of modern
private sources of funds must be encouraged to provide a major part of the capital
techniques to local problems. The benerequired.
fits which a comprehensive program of
exIn view of the present troubled condipert assistance will make possible can only
tion of the world-the distortion of world
be revealed by studies and surveys undertaken as a part of the program itself. trade, the shortage of dollars, and other
after-effects of the war-the problem of
To inaugurate the program, I recommend
substantially increasing the flow of Ameria first-year appropriation of not to exceed
$45,000,000. This includes $10,000,000
can capital abroad presents serious difficulalready requested in the 1950 budgetties.
forIn all probability novel devices will
activities of this character. The sum rechave to be employed if the investment
from this country is to reach proportions
ommended will cover both our participasufficient to carry out the objectives of
tion in the programs of the international
our program.
agencies and the assistance to be provided
directly by the United States.
All countries concerned with the program
In every case, whether the operation
should
is
work together to bring about confavorable to the flow of private
conducted through the United Nations, ditions
the
other international agencies, or directlycapital.
by
To this end we are negotiating
the United States, the country receiving
agreements with other countries to protect
the benefit of the aid will be requiredthe
toAmerican investor from unwarranted
bear a substantial portion of the expense.
or discriminatory treatment under the laws
The activities necessary to carry out of
our
the country in which he makes his investment.
program of technical aid will be diverse
in
character and will have to be performed by
In negotiating such treaties we do not,
a number of different government agencies
of course, ask privileges for American capiand private instrumentalities. It will tal
be greater than those granted to other
necessary to utilize not only the resources
investors in underdeveloped countries or
of international agencies and the United
greater than we ourselves grant in this
States Government, but also the facilities
country. We believe that American enterand the experience of the private business
prise should not waste local resources,
and nonprofit organizations that have should
long provide adequate wages and workbeen active in this work.
ing conditions for local labor, and should
Since a number of Federal agencies will
bear an equitable share of the burden of
be involved in the program, I recommend
local taxes. At the same time, we believe
that the administration of the program that
be investors will send their capital abroad
vested in the President, with authority on
to an increasing scale only if they are
delegate to the Secretary of State and given
to
assurance against risk of loss through
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THE PRESIDENT'S MESSAGE
187
expropriation without compensation, un- run. Only experience can provide answers
fair or discriminatory treatment, destruc- to these questions.
The bank has sufficient resources at the
tion through war or rebellion, or the
inability to convert their earnings into present time to begin the guaranty prodollars.
gram and to carry on its lending activities
Although our investment treaties will be as well without any increase in its authordirected at mitigating such risks, they can- ized funds. If the demand for guaranties
not eliminate them entirely. With the best should prove large, and lending activities
will in the world a foreign country, par- continue on the scale expected, it will be
ticularly an underdeveloped country, may necessary to request the Congress at a
not be able to obtain the dollar exchange later date to increase the authorized funds
necessary for the prompt remittance of of the bank.
earnings on dollar capital. Damage or loss The enactment of these two legislative
resulting from internal and international proposals, the first pertaining to technical
violence may be beyond the power of our assistance and the second to the encourtreaty signatories to control.
agement of foreign investment, will constiMany of these conditions of instability tute a national endorsement of a program
in underdeveloped areas which deter for- of major importance in our efforts for
eign investment are themselves a conse- world peace and economic stability. Neverquence of the lack of economic develop- theless, these measures are only the first
ment which only foreign investment can steps. We are here embarking on a venture
cure. Therefore, to wait until stable con- that extends far into the future. We are
ditions are assured before encouraging the at the beginning of a rising curve of acoutflow of capital to underdeveloped areas tivity, private, governmental, and internawould defer the attainment of our objec- tional, that will continue for many years to
tives indefinitely. It is necessary to take come. It is all the more important, therevigorous action now to break out of this fore, that we start promptly.
vicious circle.
In the economically underdeveloped
Since the development of underdevel- areas of the world today there are new
oped economic areas is of major import-creative energies. We look forward to the
ance in our foreign policy, it is appropriatetime when these countries will be stronger
to use the resources of the Government to
and more independent that they are now,
accelerate private efforts toward that end.and yet more closely bound to us and to
I recommend, therefore, that the Export-other nations by ties of friendship and
Import Bank be authorized to guarantee commerce, and by kindred ideals. On the
United States private capital, invested in other hand, unless we aid the newly awakproductive enterprises abroad which con- ened spirit in these peoples to find the
tribute to economic development in undercourse of fruitful development, they may
developed areas, against the risks peculiarfall under the control of those whose
to those investments.
philosophy is hostile to human freedom,
This guaranty activity will at the outthereby prolonging the unsettled state of
set be largely experimental. Some investthe world and postponing the achievement
ments may require only a guaranty against
of permanent peace.
the danger of inconvertibility, others may
need protection against the danger of ex- Before the peoples of these areas we hold
propriation and other dangers as well. It out the promise of a better future through
is impossible at this time to write a stand- the democratic way of life. It is vital
ard guaranty. The bank will, of course, that we move quickly to bring the meaning
be able to require the payment of pre- of that promise home to them in their
miums for such protection, but there is daily lives.
HARRY S. TRUMAN
no way now to determine what premium
rates will be most appropriate in the long THE WHITE HOUSE, June 24, 1949.
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