of wage-earners, that is the supreme element
making for peace.

We must beware, however, of welcoming all foreign investment as a
portent of a growing internationalism of capital. Much that is
accounted economic internationalism is in truth merely an extended
nationalism, an extra-nationalism. For investments to allay
international discord they should create a community of interest
between nations potentially hostile. If Britain invested freely in
Germany and Germany in Britain there would be created a mutuality of
interest which would render peace probable. Each nation would have a
stake in the prosperity of the other; each would have given hostages to
peace. {281} But when the London financier puts his money in India,
Canada or the Argentine, he is not co-operating but competing with
potentially hostile nations. The process is an extension of the
national economy to outlying districts, a transition to a larger
national unit, like that created in the Middle Ages when the free
cities ruled adjoining farm territory. Such an economic extension
exacerbates national antagonisms and leads to war.

While foreign investment is preponderatingly of this sort, however,
there also exist the beginnings of a movement more truly international.
The securities of one nation are dealt with upon the stock exchanges of
another, capital flows across national borders and great international
business concerns are created. The movement in favourable
circumstances is likely to accelerate, either by the mutual economic
interpenetration of nations, as when the French build factories in
Germany or the Germans in France, or by the amalgamation of the
capitals of two countries and their use in joint enterprises. The
formation of large international syndicates for the exploitation of
backward countries, whatever its other consequences, tends towards the
creation of a community of interest. If the powers unite, for example,
and can agree upon a Chinese loan, a step forward will have been taken
towards an internationalism of capital.

The process of trust formation tends in the same direction. As
competing industries within a nation frequently end by combining, so in
many great industries the competing national units may develop a
gentleman's agreement to regulate output and finally may establish an
international cartel. Considerable progress has already been made in
the division of the international field. A further development along