Our Orphaned Investments

...Foreign commentators never weary of telling us that it is useless to expect these debts and investments to be repaid except with goods, and that if we have a protective tariff we cannot expect to be repaid...

...First of all we wrote a tariff which made it impossible for anybody to sell us anything, although two-thirds of our imports come in duty free...

...At one time it was Brazil--and any Brazilian issue could be floated here...

...Nobody is agitat- ing the question of the protection of American rights abroad, and only the domestic consumers and the Cuban producers are making any sort of protest...

...When Oklahoma clamors for a protec-tive tariff on oil produced in American-owned wells in Mexico and Venezuela, the theory that we are out to capture and exploit the world's oil supply subsides like a wet rag...

...Then to the great disgust of the international bond houses, we tried our hand in the stock market and ran up the interest rates so high that it became difficult to float foreign bond issues in the United States...

...The old theory was, of course, known as "peaceful penetration," and "dollar diplomacy" had a sinister sound outside of our innocent borders...

...Circumstances beyond our control have forced upon us the r61e of creditor...

...The recent invasion of Europe by American capital has taken the form of associating foreign interests with American enterprise, sometimes even in the form of majority stock ownership...

...We do not like it in theory, and in practice we have no intention of permitting our altered status to injure our basic national inter-ests, even if the theory demands that we should do so...

...For it is apparent that Congress is primarily concerned in the protection of domestic American production, and that American money invested abroad is con-sidered as foreign money...

...the case of Hawaii is mentioned merely in order to dismiss an analogy which might otherwise lead unwary students to impute a Machiavellian motive to the harried and hard-worked members of the Ways and Means Committee...

...yet the far journey of his life gives year by year to the Church at lauds on his day the more excellent memory, the cry of his priests gathered round their shepherd and bishop as he lay dying on that bed of ashes strewn upon the ground: "Why, Father, dost thou forsake us, to whom dost thou leave us desolate...

...At the same time, it should end the theory that these invest- ments, which we regard so lightly, are part of some vast design to enslave the helpless inhabitants of less favored areas to a novel system of imperial economics...

...Fortunately for the stability of our international relations, there is no likelihood that the new tariff will have any such repercussion in Cuba, which is a fully developed nation with strong national sentiment and a proud heritage of Hispanic culture, and which would never consider merging its national identity with that of the United States in order to get around the Ameri- can sugar duties...

...Under the British Companies Act it is possible to exclude non-British shareholders from voting rights...

...From secular labor for the Church he had withdrawn to the solitude of monastic life, his shelter and peace amid all tlle stress of future days...

...As recently as last May the stockholders of the Buenos Aires and Pacific Rail- way voted, on the strength of a rumor that American interests were trying to buy into the company, to ex-clude all but British and Argentinian stockholders from voting rights...

...It was the first monastery in western lands which he founded at Ligug6 near Poitiers, under Hilary its visitor...

...European and South American theories that our foreign investments constitute a form of "financial colonization" are difficult to maintain in the face of a tourist traffic that eats up all the income from all of our foreign loans...

...4n@oda...

...And now shall hungry wolves devour thy fold...

...The Fordney tariff, followed by the current tariff revision, is raising the duty on Cuban raw sugar to an extent which may become confiscatory of the American capital invested in Cuba...

...On top of this is the three-quarters of a billion in the interest earned by these investments...

...The greatest loss, in this case, would fall upon American capital and not upon the Cuban people...

...Such a decision would not seem unreason- able and such a tax would be perfectly within Cuban competence...

...Yet we do not seem to have decided whether we actually want these investments or not...

...for "every oty and church desired for itself one of Martin's priests...

...The American psychology in foreign investments is distinct from that of the British, who are par excel- lence the creditor nation of the world, because they live so largely on their interest...

...We catch a glimpse of him in the refuge he found and fash- ioned for himself and some eighty followers two miles without the city of Tours: a lonely spot guarded on one side by preci- pice, on the others by the River Loire, only to be approached by a single narrow path...

...Then we forced our own iniquitous products down the gullible throats of our customers, who presumably had no use for the tons of copper, the bushels of wheat, the gallons of petroleum and the bales of cotton which they got July IO, 1929 T H E C O M M O N W E A L 275 from us...

...The elaborate precau-tions of the Ford interests to assure to French and British individuals an opportunity to acquire shares in the Ford companies of France and Great Britain are a case in point...

...We became "bond-con-scious" and then were sold, without much discrimina- tion, the bonds of every country in the world...

...The real issue is the fact that, by raising the duties against a Cuban product which is largely controlled by American capital, the House Ways and Means Committee has unwittingly laid the ghost of that American "economic imperialism" which was becom-ing the bogy of Latin-American alarmists...

...Parenthetically it may be added that this proviso in the Companies Act affords a loophole for speculation of an unwholesome sort...

...Once in the streets of Tours, a thronging crowd from all the region round about acclaimed Martin their spiritual head...

...Especially incensed was the great Bishop Defensor, under whom the strife continued hot t111 the hour of prayer...

...henceforth I fight for Christ," he had hastened to serve Hilary of Poitiers as exorcist, refusing higher rank...

...One need not say that the analogy is perfect, or even that it is substantial, but there is something in it, something--at any rate--which must qualify the assumption that it is our purpose to wring the last cent of principal and interest out of the most uncom- promising debtor...

...the younger members worked at script, the elder gave to prayer all their strength...

...Yet if it happened, does anyone doubt that there would be loud cries of "Confiscation l" from the American capital invested in the Cuban sugar industry and that exceedingly strong pressure would be brought to bear on the United States government to address diplomatic protests to the Cuban govern- ment...

...The estimated expenditure by American tourists in I92 % in fact, amounted to $770,000,000...

...Here dwelt the brethren in cells built of timber, in caves of the mountain rock...

...Without much experi- ence in the investment field, our first impulse was to put our money in the bonds of foreign governments...

...The plain fact is that when we invest our money abroad we do not want it back...

...It has been taken as axiomatic that, as a creditor, we are actuated by precisely the same motives as those governing the actions of Euro- pean creditor nations...

...The bishopric of Tours fell vacant...

...Since I92o, the average amount refunded each year to private American in-vestors has been about $I75,ooo,ooo a year, but the capital itself has not returned to the United States-- it has merely taken another form or passed into dif- ferent hands...

...When the apple farmer demands a duty on bananas, even though he fails to deliver this blow to the solar plexus of the United Fruit Com-pany, the latter's hypothetic r61e as an instrument of American aggrandizement looks rather empty...

...Breeze that brings the charm6d scent Of the tasseled locust tree Wakes a sadness in me blent With ecstasy ] JESSIE E. WILLIAMS...

...While the war was on, and during the first years of reconstruction, this was easy...

...Before the war we were a debtor nation...

...But the subtlety and craft of the devil and man, of heretics and barbarians, was calling aloud in the Western Church of this time for strong and single-minded leaders...

...When then, as it happened, tile words of the sacred Office rang out through the Church: "That Thou mayest still the enemy and the avenger"--"Ut destruas inimicum et defensorem"--the people clamored that God had declared with this voice His will and carried their desire by force of multitude...

...Accordingly, it would appear demonstrable that the purpose of American investments is not the purpose of European investments--profit is the motive in both cases, certainly, but there is no national or economic impulse in the United States to live upon the proceeds of capital invested in other countries...

...and Martin must perforce be dragged by pious strategy from his cell to assume the high office his heart refused...

...No great aristocrat was this in purple and fine linen, no man of form or comeliness...

...Why should an image at my feet Of some shaft or fretted spire Plant swaying boughs on city street-My heart afire...

...A mean-faced creature," mut-tered the dignified prelates who attended this strange congress, "of ragged cassock and untrimmed hair--how could such grace a chapter-house...

...When the British have a good investment they want to keep it to them- selves...

...THE SAINT OF TOURS By ELEANOR SHIPLEY DUCKETT S IN England to Tudor Elizabeth Walter Raleigh made reverent salutation...

...Now the market is being reduced to normal and the process will doubtless be repeated...

...The principle of the protection of American property abroad would be raised immediately and a "sugar war" might be added to our national collection of "oil wars," "rubber wars" and such...

...It shows that we are quite willing to destroy the value of our own investments if at any time they conflict with our major interests...

...There is even a well-authenticated story to the effect that a clever imposter persuaded a group of middle-western bankers to underwrite a $5,ooo0oo, 8 percent, goldmortgage bond issue for the non-existent "South Baltic republic...

...When the value of these investments is threatened, either by confiscation as in Soviet Russia, or by legisla- tion as in Mexico, we spring to their defense...

...We produce such volumes of raw materials and industrial wares that any attempt to repay this sum to us in foreign goods would throw our entire domestic economy out of gear...

...Then we used our profits on this one-sided transaction to buy up the countrymlock, stock and barrel--as against the day when the wicked American financiers would whistle for the White House to annex the country which they had thus purchased...

...No one has yet made the analogy that resides in our system of instalment sell- ing, as a means of financing consumption...

...Our annual "favorable" trade balance amounts to nearly a billion dollars a year...

...When we regard Fords and Buicks manufactured across the line in Canada as foreign cars and subject them to a duty, the bottom simply falls out of the whole silly theory that the American investment in Canada is an "entering wedge" for that annexation which we are supposed to desire so frantically, and which would be met with shrieks of protest from every major pro-ducing interest in this country, led by the farm bloc...

...This monastic home of Marmoutier won great renown as a seminary for future bishops...

...When $I,ooo,ooo,ooo of American capital is calmly or-phaned by Congress, it is time to inquire whether we really want foreign investments or whether we regard them merely as a temporary expedient for financing foreign consumption of American goods...

...After a while, however, money was available for private investments as well...

...No one has yet indicated that our foreign investments are valued chiefly as a device to enable us to continue to sell more goods to the world than the world sells to us...

...The measure was passed amid cheers and general enthusiasm...

...Whereat the Pharisees were shocked...

...For the last three years our new foreign investments have averaged close to a billion and a half a year...

...The Ford-Filene endeavor to ascertain "real wages" in Europe, with the object of paying "Ford wages" to the foreign employees of the American companies, is another instance of our desire to avoid all appearance of milking a market or of wringing the last cent of profit out of a foreign investment...

...We are in receipt of three-quarters of a billion dollars in interest each year...

...Then we became "sold" on countries...

...In effect, therefore, we loan to our foreign consumers the money to pay for the excess of our goods and we do not very much care--nationally speaking--what becomes of the money thereafter...

...From this it follows that the legend of our economie imperialism needs to be radically revised...

...If the board of directors can exclude foreigners from rights, they restrict the market for shares and hence depress their value...

...July IO, I929 THE COMMONWEAL z73 OUR ORPHANED INVESTMENTS By JOHN CARTER ET us suppose that the sovereign republic of Cuba, taking stock of its economic situation, should decide that too many of its eggs were in our sugar bowl, and that an effort should be made to diversify Cuban agriculture by the imposition of an excise tax of $.o2 a pound on the production of raw sugar...

...Selling short under such circumstances would be a highly profitable venture for the directors and would be, of course, entirely legal...

...at another time it was Germany, and we bought German bonds by the billion--good, bad and indifferent...

...The American capital invested in Hawaiian sugar was threatened with extinction and it reacted in the Hawaiian revolution that ultimately brought the archipelago under the American flag...

...Once before we did something of the sort...

...The individual in- vestor wants it back, of course, and he gets it, in the form of refinancing--which means that he sells his investment to somebody else...

...That, in our ignorance and inexperience, we invested unwisely is pretty certain...

...YVe are told by Sulpicius Severus, his devoted friend and biographer, that one of the worthy citizens of Tours, by name Rusticius, lured the holy man forth by entreaty to save his wife in dire sickness...

...The present tariff discussion has had the fortunate effect of compelling attention to this phase of our national attitude...

...On what other ground is it possible to explain the recent flurry of the British General Electric, in the effort to keep American stockholders from acquiring 274 THE COMMONWEAL July io, 1929 a fair share of a new issue of stock...

...However, when we start on the most dramatic phase of our tariff policy--which is regarded as the causa causans of all this sinfulness--by cutting the umbilical cord which ties $ i,ooo,ooo,ooo of our capital in Cuba from the American market, something is wrong with the picture...

...In 189o the McKinley tariff raised the duty on Hawaiian sugar by $.02...

...What is there here in traffic's flow Of freighted blooms and leafy lace That their immortal scent should blow Across my face...

...To the student of political economy, however, this is precisely what we have done and are doing through our tariff legislation...

...We were supposed to be paving the way for annexation...

...so in France of the fourth century the young soldier Martin to Our Lord in the semblance of His least child, the shivering beggar of Amiens...

...As the most casual observer of American life is aware, we are exporting goods and capital in large volumes...

...Such exclu- sion is an increasing practice...

...The effect of all this is that we have a balance of about two billion dollars to play with each year out- side of the United States...

...It is for this simple act of a devoted catechumen that men in general still remember the Saint of Tours...

...This theory is attractive and, in view of the histori- cal conduct of some nations, it is entirely plausible...

...During the war, we bought back about half of the foreign capital invested in this country and entered upon a prolonged phase of favor- able trade balances which gave us money to invest in Europe and South America...

...Yet, bishop or no bishop, a man of prayer Martin remained...

...For from Caesar's camp with the joyous words flung down at feet of Julian's legate: "Thus far have I fought for the emperor...

...The invest-ments themselves were accidents...

...There are, of course, other items which qualify these simplified statements, but it should be obvious that we make no attempt as a nation to utilize our foreign investments, our income from foreign sources, or our favorable trade balances in any way consistent with the generally held theory of the characteristic conduct of a creditor...

...There for some ten years he prayed and wrought works of mercy in retreat till his fame spread far and wide...

...While the British make every effort to keep their foreign investments intact, the Americans go to ex-traordinary lengths to allow foreigners to invest in American foreign enterprise...

...So far not even the most farsighted of foreign observers has suggested the very simple and obvious conclusion that we do not want these investments repaid, either in goods or in cash...

...We do not want that back either...

...Our for- eign investments (exclusive of war debts) stand at nearly fifteen billion dollars...

...their food was frugal, their clothing of camel's hide...

...From thence he journeyed here and there on missions of instruction, of healing, of championship of the Faith against Arian enemies, among ignorant and superstitious pagans, in...

...About a billion dollars m American money is invested in Cuban sugar produc- tion...

...We sell it to tour- ists instead...