Part 4 (1/2)
Such a development is entirely legitimate and within bounds desirable both for the United States and to the countries to which our capital (and trade) will go. The possible field of investment in Latin America and the Orient, to say nothing of other regions, is still immensely great, and as capital develops these areas their {70} international trade will also grow. There is no reason why the United States should not take its part both in the investment of capital and the development of trade with these non-industrial countries.
As we so invest and trade, however, we must recognise the direction in which our policy is leading us and the dangers, both from within and without, that we are liable to incur. The more we invest the more we shall come into compet.i.tion with the investing nations of Europe. We are already urged to put capital into South America on the just plea that trade follows investment, and the same forces that are pus.h.i.+ng our trade outward will seek opportunities for investment in the mines and railroads of the politically backward countries. Like European nations, we too shall seek for valuable concessions, and may be tempted (and herein lies the danger) to use political pressure to secure investment opportunities. What happened in Morocco, Persia, Egypt, where the financial interests of rival nations brought them to the verge of war, may occur in Mexico, Venezuela or Colombia, and the United States may be one of the parties involved.
We seem thus to be entering upon an economic compet.i.tion not entirely unlike that which existed between Germany and England. We too have gone over to a policy of extending our foreign markets and of protecting our foreign investments. More and more we shall be interested in politically and industrially backward countries, to which we shall sell and in which we shall invest. Inevitably we shall face outwards. We shall not be permitted by our own financiers, manufacturers and merchants, to say nothing of those of Europe, to hold completely aloof. We have seen, even in the present Mexican crisis, how American investment tended to precipitate a conflict. We have learned the same lesson from England, {71} France and Germany. As we expand both industrially and financially beyond our political borders we are placed in new, difficult and complicated international relations, and are forced to determine for ourselves the role that America must play in this great development. We can no longer stand aside and do nothing, for that is the worst and most dangerous of policies. We must either plunge into national compet.i.tive imperialism, with all its profits and dangers, following our financiers wherever they lead, or must seek out some method by which the economic needs and desires of rival industrial nations may be compromised and appeased, so that foreign trade may go on and capital develop backward lands without the interested nations flying at each other's throat. Isolation, aloofness, a hermit life among the nations is no longer safe or possible. Whatever our decision the United States must face the new problem that presents itself, the problem of the economic expansion of the industrial nations throughout the world.
[1] This comparison is not exact, since the British statistics include articles under manufactures which we do not include, and exclude articles which we include. I cite these figures merely to show that there is a vast difference in the relative importance to the United Kingdom and the United States of their export of manufactures, but not to show exactly what that difference is. Similarly the comparison above between the total product of American manufacturing and our export of manufactures is approximate.
[2] See an a.n.a.lysis--let us say of Argentine trade.
[3] On the other hand the very extension of our home market tends to make us negligent of foreign exports of manufactures and to consider the profits from this business as a mere by-product. A large and successful foreign market can be maintained only by careful study and continuous work.
[4] Hutchinson (Lincoln), ”The Panama Ca.n.a.l and International Trade Compet.i.tion,” p. 105 _et seq._ New York, 1915.
[5] Despite the fact that as yet the _absolute_ increase is greater in the British than in the American trade with these countries.
[6] Hutchinson (Lincoln), _op. cit._
[7] From 1914 to 1916 our exports of merchandise increased from 2365 to 4334 millions of dollars (an increase of 83 per cent.) and our balance of exports over imports rose from 471 to 2136 millions (an increase of 354 per cent.). Monthly Summary of Foreign Commerce of the United States, June, 1916. (Corrected to Aug. 9, 1916, subject to revision.)
[8] ”In spite of inexperience, crude methods, lack of banks and of s.h.i.+ps we have made notable gains in South American trade. There seems to be no reason to question the probability of a continued rapid increase during the next few years.... The process of building and making more efficient our own manufacturing plants has been carried far, so that we are prepared, in the opinion of competent judges, to proceed more rapidly than ever with the production of goods for foreign markets.”--William H. Lough, ”Banking Opportunities in South America,”
Bureau of Foreign and Domestic Commerce (Dept. of Commerce), Special Agents Series No. 106, Was.h.i.+ngton, 1915, p. 7.
[9] In a recent address (see date) to the American Iron and Steel Industry, Mr. Edwin W. Hurley, vice-chairman of the Federal Trade Commission, points out how during the last quarter of a century the Germans have co-ordinated their foreign trade, with the result that of the steel business 90 per cent. has been brought under a single control. The effect has been a victory for the German over the British export business. Mr. Hurley states that while a constructive programme has been worked out by the Interstate Commerce Commission for the railroads, and co-operation among the farmers has been stimulated by the Department of Agriculture, the manufacturing industries concerned in the export trade are hampered by provisions of the Anti-Trust Law.
”Is it reasonable to suppose,” he asks, ”that Congress meant to obstruct the development of our foreign commerce by forbidding the use in export trade of methods of organisation which do not operate to the prejudice of the American public, are lawful in the countries where the trade is to be carried on, and are necessary if Americans are to meet compet.i.tors there on equal terms?”--New York _Evening Sun_, June 21, 1916.
[10] In the last forty years the balance has been against us in only three years, 1888, 1889 and 1893. The real balance is not nearly so great as the apparent balance, but there can be little doubt that it represents a considerable repayment of the princ.i.p.al of our great debt to Europe.
[11] According to W. Z. Ripley the American debt to Europe amounted in 1899 to $3,100,000,000 of which $2,500,000,000 was owed to England, $240,000,000 to Holland, $200,000,000 to Germany, $75,000,000 to Switzerland, $50,000,000 to France, and $35,000,000 to the rest of Europe. After 1899 there was a reduction in the amount of European holdings of American securities (mostly railroad bonds and stocks), but since 1907 there was again an increased purchase, so that by 1914 the American debt to Europe was considerably greater than it had been in 1899. See New York _Journal of Commerce_, Dec. 6, 1911. Also, Hobson, C. K., ”The Export of Capital.” New York, 1914, p. 153-5. According to a compilation made by President L. F. Loree of the Delaware and Hudson Railroad, the American railroad securities formerly held in foreign hands but which were absorbed by the American market during the eighteen months ending July 31, 1916, amounted to $1,288,773,801 par value and to $898,390,910 market value. The railroad securities remaining abroad (July 31, 1916), amounted to $1,415,628,563 par value with a market value of $1,110,099,090. In other words according to these statistics of returned securities (which Mr. Loree believes are largely underestimated) about 45 per cent. (market value) of the railroad securities held abroad on January 31, 1915, had been returned eighteen months later. (New York _Times_, Sept. 25, 1916.) The New York _Times_ states that ”it is high banking opinion that at the outbreak of the war, the total of industrial securities held abroad amounted to about 25 per cent. of the railroad securities, and that the liquidation of industrials since has been in about the same proportion to the total as the liquidation of rails.” On this basis the foreign holdings of American railroad and industrial securities on July 31, 1916, would have amounted to only $1,375,000,000 (market value).
[12] For data used as the basis of this estimate, see Hobson, C. K., ”Export of Capital” (p. 153 and following), together with sources there cited.
[13] ”The adoption of the Federal reserve system has ... released and made available for other forms of financing great sums which were formerly tied up in scattered reserves. We have only to look at the monetary history of the German Empire during the last forty years to see how powerful an influence on industry, trade, and investment is exerted by the centralisation and control of bank reserves. The London _Statist_ has calculated the ultimate increased lending power of American banks, under the Federal reserve system, at $3,000,000,000.”--Lough, _op. cit._, p. 8.
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PART II
THE ROOT OF IMPERIALISM
CHAPTER VI
THE INTEGRATION OF THE WORLD
For decades, the foreign and domestic policies of the United States were determined by our ambition to subdue and people a wilderness. Our immediate profit, our ultimate destiny, our ideals of liberty, democracy and world influence, were all involved in this one effort.
To us the problem was one of national growth. To-day we are beginning to realise that this Western movement of ours affected all industrial nations, and was only a part of a vaster world movement--an economic revolution, which has been developing for more than a century. That revolution is the opening up of distant agricultural lands and the binding of agricultural and industrial nations into one great economic union. It is a world integration.
To this world development the crude physical hunger of the Western populations has contributed. The urbane Chinese official, who voices the sentiments of Mr. Lowes d.i.c.kinson, attributes Europe's solicitous interference in China to the fact that the Western World cannot live alone. ”Economically,” he says, ”your (Western) society is so const.i.tuted that it is constantly on the verge of starvation. You cannot produce what you need to consume, nor consume what you need to produce. It is matter of life and death to you to find markets in which you may dispose of your manufactures, and from which you may derive your food and raw material. Such a {76} market China is, or might be; and the opening of this market is in fact the motive, thinly disguised, of all your dealings with us in recent years. The justice and morality of such a policy I do not propose to discuss. It is, in fact, the product of sheer material necessity, and upon such a ground it is idle to dispute.”[1]