As we read the imperialistic literature of to-day, we discover that the
chief emphasis is laid on the great value of new countries as a field
for this sort of profitable investment. Investment, not commerce, is
the decisive factor, and money is to be made out of opportunities to
build railroads, open mines, construct harbours and irrigate arid
districts. The diamond mines of the Transvaal were more {82}
attractive to the English than the chance to trade, and what was of
immediate value in Morocco were the iron mines and future railways and
not the right to sell tallow candles to the Berbers.

In large part this foreign investment of capital has the effect of
broadening the agricultural base. While to the individual investor,
capital export means getting eight per cent. instead of four, and to
the promoter, a chance to make a few hundred thousand dollars or
pounds, to the industrial nation it means that a fund is created which
will help pay for a steady flow of agricultural products and raw
materials. To the whole complex of industrial nations and to the world
at large it means even more. The export of capital increases the
capacity of the agricultural nation to serve as a feeder to all
industrial peoples. It provides cheap transportation and improved
agricultural machinery. Had Great Britain not invested in American
railways during the fifties the United States would have exported less
food to Europe in the seventies. Freight rates dropped and the
industrial nations were flooded with cheap wheat. British capital in
American railways aided British manufacturing more than if the same
capital had been placed at home. To-day for the same reason the
process continues elsewhere. In Russia, South East Europe, Canada,
Australia, South America, Asia and Africa, capital, furnished by the
industrial countries, is increasing the production and exportation of
food and of raw materials, and is thus indirectly promoting the
industry of western Europe.[4]

{83}

Such investment abroad is not new. In the Middle Ages the bankers of
Northern Italy, and later of Spain and Portugal advanced small sums to
impecunious foreign sovereigns. But the thousand marks borrowed by
Henry V from Genoese merchants, or the loans made by Holland in the
18th Century, did not compare with the vast sums invested by England
since the Napoleonic Wars, nor by other countries since 1850. For, as
in manufacturing, so also in the export of capital