in the 1960s; by the 1970s and early 1980s, an awareness emerged of rising inward investment. America was both politically stable and provided a formidable market. While much of the new investment came from European (especially British, Dutch, and German) sources – often stimulated by the decline in the dollar after 1971–1973, which made American assets cheaper to foreign buyers – what attracted special concern was the newly conspicuous holdings of Arab investors and later of the Japanese.
Suddenly, in the mid-1980s, seemingly overnight, the United States had switched from net creditor to net debtor status in international accounts. And once again, by the end of the decade, America had become the world’s greatest debtor nation. The transitions of 1914–1918 and the mid-1980s had been rapid, yet in each case the foundations had been laid in prior years. Despite much unhappy talk about «foreign multinationals in America» – especially the Japanese «invasion» – foreign investors still had their holdings mainly in liquid assets, portfolio investments. And, as during most of American history, it was still the British who had the largest investments. Moreover, as foreign investment in America grew, U.S. investment abroad persisted and direct investments expanded.
Historically, Americans were always ambivalent about foreign investment. This was true before 1914 when, on the one hand, there was the wish for foreign capital to finance the railroads and, on the other, a deep resentment against British investors. So, too, in many parts of the world, American investment over the years provoked a «can’t live with it and can’t live without it» state of mind – hated for its symbolic «alien» implications and yet desired for its positive contributions. As sizable foreign investment in the United States took place in the 1970s and 1980s, it was both courted by state governments that wanted more employment within their jurisdictions and lambasted by critics who saw «America for Sale.» Despite economic integration worldwide, nations, the United States included, retained – as in times past – a mixed response toward outsiders’ investments.
Mira Wilkins, The Emergence of Multinational Enterprise: American Business Abroad from the Colonial Era to 1914 (1970); Mira Wilkins, The History of Foreign Investment in the United States to 1914 (1989); Mira Wilkins, The Maturing of Multinational Enterprise: American Business Abroad from 1914 to 1970 (1974).
Mira Wilkins
EXERCISES
Exercise 1. Words and expressions. Provide Russian equivalents.
borrow v.
direct investments
debtor nation
assets
creditor country
intermediary
to fund national and state debts
moneys
company’s stock
intergovernmental credits
securities
in default on loans
holdings
OPEC
default on securities
funds
added moneys
capital surplus
raise money
encourage foreign investment
inflow of capital
liquid assets
portfolio investments
Exercise 2. Answer the following questions.
1. In the 19th and 20th century was the United States a debtor or a creditor country? 2. What American securities were most popular in Europe in the 19th century? 3. Why has the US become the world’s greatest debtor nation in the 20th century? 4. How can you describe portfolio investments and direct investments? 5. What was the aim of the Johnson Act in 1934? 6. Did WW II help to restore American economy? 7. How can you describe foreign investment before and after WW II? 8. How did high oil prices and OPEC countries in 1970s influence the caracter of American investment abroad? 9. Why did Americans encourage foreign investment in 1960s? 10. What is the feeling of Americans toward foreign investments? What was the attitude of state governments to foreign investments?
Exercise 3. Translate into English.
1. США брали кредиты в Европе для финансирования революции и консолидирования национального и государственного долга. 2. Большая часть акций крупнейшей американской компании принадлежала иностранцам-нерезидентам. 3. В середине 19 в. Крупнейшие дефолты в отношении этих ценных бумаг больно ударили по европейским инвесторам. 4. Когда США начали строительство железных дорог, возникла необходимость в получении дополнительных кредитов за границей. 5. До 1970 г. прямые инвестиции США за рубежом всегда превышали портфельные инвестиции. 6. В 1930-х г.г. американские кредиторы столкнулись с крупными дефолтами. 7. Закон Джонсона 1934 г. запрещал американским банкам кредитовать страны, невыполняющие обязательства по выплате займов, предоставленным правительством США. 8. Пока Америка оставалась страной-кредитором, доля иностранного капитала оставалась в тени. 9. Из преимущественно инвестиций многонациональных корпораций американские инвестиции за рубежом все больше принимали форму банковских кредитов.
Text 6. Dollar diplomacy
Dollar diplomacy is the term used to describe America’s efforts – particularly under President William Howard Taft – to further its foreign policy aims in Latin America and the Far East through the use of economic power. President Theodore Roosevelt laid the groundwork for this approach in 1905 with his Roosevelt Corollary to the Monroe Doctrine, maintaining that if any nation in the Western Hemisphere appeared politically or fiscally so unstable as to be vulnerable to European control, the United States had the right and obligation to intervene.
Taft continued and expanded this policy, starting in Central America, where he justified it as a means of protecting the Panama Canal. In 1909 he attempted unsuccessfully to establish control over Honduras by buying up its debt to British bankers. In Nicaragua, American intervention included funding the country’s debts to European bankers. In addition, the State Department persuaded four American banks to refinance Haiti’s national debt, setting the stage for further intervention in the future.
Dollar diplomacy was also pursued in China, where Taft’s secretary of state, Philander C. Knox, became convinced in 1910 that America’s free access to trade there was threatened by European financing of the new Hukuang Railroad. With some difficulty, the Taft administration arranged for American bankers to be included in the project and then prevailed on J. Pierpont Morgan to create an American syndicate for the purpose. Taft was also concerned about Russian and Japanese railroad activities in Manchuria and managed to persuade American bankers to join a six-power consortium that would