National and International Control of Foreign Investments

In the course of the last eight years, economists and political scientists in the United States have become increasingly aware of problems created by government influence on private foreign investments. For an understanding of these problems, they have turned to an analysis of the experiences of England, France, and Germany before the World War and of the United States since. But little attention has been given to the implications of control of foreign investments for international organization. It is the purpose of this paper (1) to summarize the nature of the control in each country; (2) to outline the theory underlying government control; (3) to point to the international effects of this control; and (4) to propose certain changes which are necessary to bring this aspect of state policy into line with recent developments of international organization.In a sense, it is inaccurate to speak of government control in England, because the influence exerted by the government there was not in the nature of regulation. The relationship between government and bankers was one as different from legal control as is the theory of the common law from that of the civil law. That is to say, there was no statute on the basis of which the government influenced the outward flow of capital. Such relationship as there was, such similarity of policy as existed between finance and government, depended upon the existence of an accord which was the result of a common heritage and a common purpose.