Kenneth C. Crowe
Kenneth Crowe

Fellowship Title:

The Foreign-Investment Watcher

Kenneth Crowe
April 12, 1976

Fellowship Year

The views expressed by the author in this newsletter are not necessarily the views of the Foundation.

(THE CONTEXT: Foreign investment in the United States is burgeoning, while public consciousness of this perennial phenomenon has been raised by the prospect of Middle Eastern oil money buying large pieces of American corporations and real estate. The traditional investors in the U.S. have been the Europeans, but in recent years, nouveau investors…the Japanese, the Arabs, the Iranians…have appeared on the American horizon. An understanding of the impact of foreign money and foreign ownership is obscured by a lack of knowledge. The following article deals with a “foreign-investment watcher”, who turns out a monthly newsletter on the subject.)

Frank Hawkinson had just turned 41 in 1973, the critical age for so many men in American society, often provoking them to change the direction of their lives in acting out the nation’s mythological dream of standing alone and independent. Hawkinson chose as his medium the publication of a newsletter on foreign investment in the United States.

After 15 years in advertising and public relations in New York City, Hawkinson had accumulated some money and a desire to own his own business. Clearly, he wanted to start a newsletter, a venture which would require a negligible amount of capital. The problem was selecting a virgin arena which would attract paying clientele. Hawkinson sifted through 30 or more topics including museums and options before selecting foreign investment. “I was looking for some sort of newsletter subject,” Hawkinson said. “This seemed like an area that was totally neglected. It looked like an opportunity to inform the American public as well perhaps to fill a need.”

For almost a year, Hawkinson researched foreign investment in the United States. He worked to establish the framework of a nationwide reporting chain of stringers in large cities, newspaper clipping services and personal contacts with businessmen and the omniscient Washington bureaucracy. He lived most of his day on the telephone.

The first issue of “Foreign Investment Inside USA report” appeared in December 1973, coincidentally a month when the Shah of Iran was establishing an American branch of his Pahlavi Foundation to invest in the United States and when the Middle Eastern OPEC nations decided to raise the price of oil from $5.119 per barrel to $11.651. Hawkinson, with beginner’s luck, had selected a subject that everyone wanted to know more about, because the new enormous price for a barrel of oil appeared to be shifting the wealth of the non-Communist industrial world — of the United States, of Western Europe, of Japan — into the money bags of the mysterious and wiley Arab sheiks.

How Much for the Alamo?

The fantasy of the Arabs buying America at depression prices stirred the adrenalin and imaginations of millions. Stories began appearing in newspapers, in magazines and on television about offers from the Middle East to buy into Lockheed and Pan Am. A desert sheik was said to have expressed an interest in buying the Alamo in Texas as a curio for a favorite son. Hawkinson’s new monthly publication drew thousands of subscribers at $96 a year. The attraction to “Inside USA” spun around the newsletter mystique of inside information in advance of the ordinary media.

Hawkinson produced an appropriate number of scoops, carefully identifying what was rumor and what was substantiated fact. He also compiled summaries of pending bills in Washington on foreign investment and pithy analysis pieces. In an outstanding special report, “Inside USA” presented its readers with a comprehensive laundry list of Arab and Iranian investments in the United States along with insights into Middle Eastern investment attitudes, the impact of the Arab Boycott and thumbnail sketches of important figures in the Arab investment world.

The Hawkinson newsletter goes far beyond the strictures of Middle Eastern investments; it covers all foreign investments: Japanese, European, and even the occasional Iron Curtain country slipping its money into the land of capitalism and profit.

From the perspective of two-and-a-half years of publishing the newsletter, Hawkinson said that his most significant achievement is the development of “a theme rather than a hot news item.” The theme is that foreign investment is good. Hawkinson said, “Foreign investment isn’t the bugaboo that many people, sensationalists or demagogues like to turn it into…I find when you really look at this thing, it isn’t the terrible evil that some like to make it out to be. There have been so many Congressmen who turn it into an issue. You know: ‘The foreign invaders’, making these people out to be villains. Xenophobia is a completely false issue. The real issue is that investors come here and put their money in for the same damned reasons Americans go abroad to invest in Eurone, Asia or where ever. It is to make a buck.”

Unfortunately for Hawkinson, the public’s focus on the Arab money invasion has deteriorated for the obvious reason that anticipated dramatic Arab acquisitions of the nation’s supercorporations never occurred. Hawkinson has had to return to work as a public relations man for an insurance company association while continuing to turn out his newsletter from his home in Whitehouse, N.J. “I had anticipated making a comfortable living (from the newsletter alone), but the blossom came off the foreign investment excitement,” Hawkinson said. He is reluctant to reveal his circulation figures, but he did say: “I did have an enormous amount (of subscribers). I had several thousand subscribers at the height of the Arab scare. They were transitory. They weren’t interested in foreign investment, they were interested in finding out about the villains. The foreign invaders.”

The Villains of 1974

Hawkinson’s point is that public fascination with foreign investment is a faddish affair. “Back in 1972, it was the Japanese. They were the villains. In ’74, it was the Sheiks.” Hawkinson said that the general fear of Middle Easterners as the villains of investing has passed. “The only people really keeping this (issue) alive is the Israeli lobby,” he said, adding: “Originally, there was a much broader-based fear of the Arabs.”

“My newsletter is considered as having a point of view those against foreign investment don’t agree with,” Hawkinson said. “They feel I’m slanted in favor of foreign investment. Quite honestly, I do feel foreign investment is a healthy thing for the economy. First of all it’s not a danger as so many of the anti-groups see it. The Israeli lobby, for instance, doesn’t agree with my views on Arab investment in this country. They see it as a menace and a great conspiratorial move to take over this country. I couldn’t disagree more. I don’t see the Arabs presenting a united front in their investments. Each (Middle Eastern) country has different investment goals…different aims and expectations, different styles of investing.” Hawkinson doesn’t see a growth in Arab influence in the United States with the arrival of investments from the Middle East since those investments are primarily in porfolio, real estate and bank deposits, rather than in direct investments in manufacturing and publicly-held companies. This is a point on which I strongly disagree with Hawkinson, and which I will discuss in the conclusions section of this newsletter.

Hawkinson said that at the outset of his venture into a watch on foreign investment in the United States: “I didn’t know enough about it. I didn’t really have that much perspective on the situation. I quickly became a believer. The people in favor (of foreign investment) made greater, more eloquent pleas. They began to convince me that this was the future of world peace — if we all get so invested in each other, we’re not going to jeopardize each other’s security and investments. One of the famous philosophers said, with trade comes understanding.”

While Hawkinson can work up a philosophic glow over the benefits of foreign investment, he dredges up the ugly aura of racism in searching for a reason for the American public’s occasional opposition to Japanese and Arab investments. “Nobody has ever objected in the least bit to the British and Canadian (largest direct investors in the U.S.) presence. There’s never been a concerted outcry about what you might call the Anglo-Saxon foreign investments here.”

Some Conclusions:

Influence is rarely a measurable substance, but since the events in the fall of 1973 when the Middle Eastern OPEC nations wrenched control over oil prices from the multi-national oil companies and began the spiral of higher prices which filled their national treasuries, the influence of the Middle East in the United States has increased geometrically — to the level of voices being heard and points of view being recognized from an area whose only prior influence bordered on a vacuum.

The growth of Middle Eastern influence is obviously fostered by the multiplying numbers of affiliations of American banks, corporations and personalities with the Arab and Iranian government institutions and private companies and individuals investing in this nation. Just to mention a few of the American names: Chase Manhattan Bank, Citibank, Morgan Guaranty Trust Company, ex-Senator J. William Fullbright, ex-Secretary of State William Rogers, John Connally…I see foreign investment in the United States not in the terms of the transfer of capital alone, but in the movement of ideas, the interaction of culture, the development of new friendships and the acquisition of new influence — whether it is a leased influence through the hiring of a potent Washington or New York lawyer or a commonality of interest such as business ventures and huge deposits with banks.

Received in New York on April 12, 1976

©1976 Kenneth C. Crowe

Kenneth C. Crowe is an Alicia Patterson Foundation award winner on leave from Newsday. He is studying the investment and movement of foreign funds into the U.S. with emphasis on the OPEC nations’ oil monies. This article may be published with credit to Newsday and Mr. Crowe as a Fellow of the Alicia Patterson Foundation.