《国际政治经济学》文献资料（Use of History and Sociology in International Political Economy）Sectoral Conflict and Foreign Economic Policy

Sectoral conflict 63 national borrower and host of foreign direct investment before 1900,by 1920 the United States was the world's leading new lender and foreign direct investar.The development of American overseas investments was in itself unsurprising,and in this the United States simply repeated the experience of other developed countries.Yet the rapidity of the country's shift from a major capital importer and raw-materials exporter to the leading exporter of capital,largely because of the peculiarities of the international economy in the ten years after 1914,was quite extraordinary.Even as a few major American economic actors were catapulted into global economic leadership, most of the economy remained as inward-looking as ever.This division in American economic orientation was at the root of the foreign-policy prob- lems of the 1920s and 1930s. As American industry and finance matured and the country became richer in capital,many large American corporations and banks looked abroad for markets and investment opportunities.United States overseas investment thus grew gradually from the 1890s until the eve of World War I.As Table 1 indicates,American foreign direct investment was appreciable by 1900;it was concentrated in raw materials extraction and agriculture in the Caribbean basin.By 1912,foreign direct investment was quite substantial and overseas lending had become of some importance;the focus was still the Caribbean area. The gradual expansion of American overseas investment,especially over- seas lending,was given a tremendous shove by World War I.The war forced several belligerent countries to borrow heavily from the United States,and previous borrowers from European capital markets now turned to the United States to satisfy their needs for capital.As Table 1 shows,American holdings of foreign bonds soared from less than 5 percent of total American holdings of non-government bonds in 1912 to nearly 17 percent in 1922. Foreign direct investment also grew rapidly,as European preoccupation with war and reconstruction cleared the way for many American corpora- tions to expand further into the Third World and,after the war ended,in Europe itself.The 1920s saw a continuation of the wartime increase in overseas American lending and investment.American overseas investment in industrial production-especially manufacturing and utilities-and petro- leum grew particularly rapidly. By 1929 American overseas private assets-direct and portfolio invest- ments,along with other assorted long-and short-term assets-were twenty- one billion dollars.Overseas investments in 1929 were equivalent to over one-fifth of the country's gross national product,a level that was reached again only in 1981.5 Although America's overseas investments were substantial by the 1920s, they were very unevenly distributed among important sectors of the U.S. 5.For figures on U.S.foreign private assets,see Raymond Goldsmith,A Study of Savings in the United States,vol.1 (Princeton,N.J.:Princeton University Press,1955),p.1093

Sectoral conflict 63 national borrower and host of foreign direct investment before 1900, by 1920 the United States was the world's leading new lender and foreign direct investar. The development of American overseas investments was in itself unsurprising, and in this the United States simply repeated the experience of other developed countries. Yet the rapidity of the country's shift from a major capital importer and raw-materials exporter to the leading exporter of capital, largely because of the peculiarities of the international economy in the ten years after 1914, was quite extraordinary. Even as a few major American economic actors were catapulted into global economic leadership, most of the economy remained as inward-looking as ever. This division in American economic orientation was at the root of the foreign-policy prob￾lems of the 1920s and 1930s. As American industry and finance matured and the country became richer in capital, many large American corporations and banks looked abroad for markets and investment opportunities. United States overseas investment thus grew gradually from the 1890s until the eve of World War I. As Table 1 indicates, American foreign direct investment was appreciable by 1900; it was concentrated in raw materials extraction and agriculture in the Caribbean basin. By 1912, foreign direct investment was quite substantial and overseas lending had become of some importance; the focus was still the Caribbean area. The gradual expansion of American overseas investment, especially over￾seas lending, was given a tremendous shove by World War I. The war forced several belligerent countries to borrow heavily from the United States, and previous borrowers from European capital markets now turned to the United States to satisfy their needs for capital. As Table 1 shows, American holdings of foreign bonds soared from less than 5 percent of total American holdings of non-government bonds in 1912 to nearly 17 percent in 1922. Foreign direct investment also grew rapidly, as European preoccupation with war and reconstruction cleared the way for many American corpora￾tions to expand further into the Third World and, after the war ended, in Europe itself. The 1920s saw a continuation of the wartime increase in overseas American lending and investment. American overseas investment in industrial production-especially manufacturing and utilities-and petro￾leum grew particularly rapidly. By 1929 American overseas private assets-direct and portfolio invest￾ments, along with other assorted long- and short-term assets-were twenty￾one billion dollars. Overseas investments in 1929 were equivalent to over one-fifth of the country's gross national product, a level that was reached again only in 1981 .5 Although America's overseas investments were substantial by the 1920s, they were very unevenly distributed among important sectors of the U.S. 5. For figures on U.S. foreign private assets, see Raymond Goldsmith, A Study of Savings in the United States, vol. 1 (Princeton, N.J.: Princeton University Press, 1955), p. 1093

64 International Organization TABLE 1.Indicators of the importance of U.S.foreign investment, 1900-1939 (in millions of dollars and percent) 1900 1912 1922 1929 1933 1939 1.U.S.foreign 751 2,476 5,050 7,850 7,000 6,750 direct investment 2.Domestic corporate and 37,275 75,100 131,904 150,326 109,375 119,324 agricultural wealtha 3.Row 1 as a percent 2.0% 3.3% 3.8% 5.2% 6.4% 5.7% of Row 2 4.U.S.foreign 159 623 4,000 7,375 5,048 2,6005 bondholdingsb 5.U.S.holdings of 5,151 14,524 23,687 38,099 37,748 32,502 non-government bondse 6.4/5,percent 3.1% 4.3% 16.9% 19.4% 13.4% 8.0% a.Net reproducible tangible wealth of U.S.corporations and agriculture. b.Due to the different sources used,figures here conflict with those in Table 4:those of Table 4 are probably more reliable,but to ensure comparability Goldsmith's figures are used throughout the table. c.Excludes only holdings of securities issued by U.S.federal,state,or local governments. d.Includes stocks(for 1900 only). e.Author's estimates. f.Figures are for 1934,from Foreign Bondholders Protective Council,Annual Report for 1934 (Washington,D.C.:FBPC,1935),p.224.This includes only bonds being serviced;a more reasonable measure would include the market value of bonds in default.If this av- eraged 30%of par value,figures for 1933-34 would be $5,954 million and 15.8%for rows 4 and 6,respectively. g.Figures for 1939 holdings of foreign bonds are from Goldsmith and are probably under- stated. Sources.Foreign investment:Raymond Goldsmith,A Study of Saving in the United States, vol.1 (Princeton,N.J.:Princeton University Press,1955),p.1093. Domestic data:Raymond Goldsmith,Robert Lipsey,and Morris Mendelson,Studies in the National Balance Sheet of the United States,vol.2 (Princeton,N.J.:Princeton University Press,.1963),pp.72-83. economy.Tables 2 and 3 illustrate that,while overseas investment was extremely important for the financial community and some industrial sec- tors,most other sectors'foreign assets were insignificant.American foreign investments in mining and petroleum were considerable,both absolutely and relative to capital invested in corresponding activities within the United States.Foreign investment was also of great relative importance to corpora- tions in machinery and equipment (especially electrical appliances),motor vehicles,rubber products,and chemicals.Yet these sectors,which ac- counted for well over half of all overseas investment in manufacturing,repre- sented barely one-fifth of the country's manufacturing plant;far more American industries were quite uninvolved in overseas productionl Although only a few industries had major foreign operations,foreign lend- ing was a favorite activity on Wall Street.As Table 3 shows,between 1919 and 1929 new foreign capital issues in New York averaged over a billion

64 International Organization TABLE 1. Indicators of the importance of U.S.foreign investment, 1900-1939 (in millions of dollars and percent) 1. U.S. foreign direct investment 751 2,476 5,050 7,850 7,000' 6,750 2. Domestic corporate and agricultural wealtha 37,275 75,100 131,904 150,326 109,375 119,324 3. Row 1 as a percent of Row 2 2.0% 3.3% 3.8% 5.2% 6.4% 5.7% 4. U.S. foreign bondholdingsb 159d 623 4,000 7,375 5,048' 2,600g 5. U.S. holdings of non-government bondsc 5,151 14,524 23,687 38,099 37,748 32,502 6. 415, percent 3.1% 4.3% 16.9% 19.4% 13.4% 8.0% a. Net reproducible tangible wealth of U.S. corporations and agriculture. b. Due to the different sources used, figures here conflict with those in Table 4; those of Table 4 are probably more reliable, but to ensure comparability Goldsmith's figures are used throughout the table. c. Excludes only holdings of securities issued by U.S. federal, state, or local governments. d. Includes stocks (for 1900 only). e. Author's estimates. f. Figures are for 1934, from Foreign Bondholders Protective Council, Annual Report for 1934 (Washington, D.C.: FBPC, 1935), p. 224. This includes only bonds being serviced; a more reasonable measure would include the market value of bonds in default. If this av- eraged 30% of par value, figures for 1933-34 would be $5,954 million and 15.8% for rows 4 and 6, respectively. g. Figures for 1939 holdings of foreign bonds are from Goldsmith and are probably under- stated. Sources. Foreign investment: Raymond Goldsmith, A Study of Saving in the United States, vol. 1 (Princeton, N.J.: Princeton University Press, 1955), p. 1093. Domestic data: Raymond Goldsmith, Robert Lipsey, and Morris Mendelson, Studies in the National Balance Sheet of the United States, vol. 2 (Princeton, N.J.: Princeton University Press, 1963), pp. 72-83. economy. Tables 2 and 3 illustrate that, while overseas investment was extremely important for the financial community and some industrial sec￾tors, most other sectors' foreign assets were insignificant. American foreign investments in mining and petroleum were considerable, both absolutely and relative to capital invested in corresponding activities within the United States. Foreign investment was also of great relative importance to corpora￾tions in machinery and equipment (especially electrical appliances), motor vehicles, rubber products, and chemicals. Yet these sectors, which ac￾counted for well over half of all overseas investment in manufacturing, repre￾sented barely one-fifth of the country's manufacturing plant; far more American industries were quite uninvolved in overseas production\ Although only a few industries had major foreign operations, foreign lend￾ing was a favorite activity on Wall Street. As Table 3 shows, between 1919 and 1929 new foreign capital issues in New York averaged over a billion

Sectoral conflict 65 TABLE 2.Foreign direct investment and book value of fixed capital of selected U.S.industries,1929(in millions of dollars and percent) y Foreign direct Book value of A/B in Sector investment fixed capital percent Mining and petroleuma.b s2,278 s12,886 17.7% Public utilities,transport 1,625 41,728 3.9% and communications Manufacturing 1,534 23,672 6.5% Machinery and equipment 444 1,907 23.3% Motor vehicles 184 1,232 14.9% Rubber products 60 434 13.8% Chemicals 130 1,497 8.7% Foodstuffs 222 4,001 5.5% Lumber and products 69 2,001 3.4% Metals and products 150 4,788 3.1% Textiles and products 71 2,932 2.4% Stone,clay and glass products 23 1,451 1.6% Leather and products 4 269 1.3% Agricultured 875 51,033 1.5% a.Figures for total manufacturing do not include petroleum refining,which is included under s“Mining and petroleum.” b.Figures for domestic mining and petroleum invested capital are for the book value of cap- ital including land but excluding working capital. c.Value of plant and equipment. d.Domestic invested capital is reproducible tangible assets of agricultural sector. Sources.Foreign direct investment:U.S.Departent of Commerce,American Direct Invest- ments in Foreign Countries (Washington,D.C.:GPO,1930),pp.29-36. Domestic fixed capital:Daniel Creamer,Sergei Dobrovolsky and Israel Borenstein,Capital in Manufacturing and Mining (Princeton,N.J.:Princeton University Press,1960),pp.248-51, 317-18;Melville J.Ulmer,Capital in Transportation,Communications and Public Utilities (Princeton,N.J.:Princeton University Press,1960),pp.235-37;Raymond Goldsmith, Robert Lipsey and Morris Mendelson,Studies in the National Balance Sheet of the United States vol.2(Princeton,N.J.:Princeton University Press,1963),pp.78-79. dollars a year,over one-sixth of all issues (excluding federal,state,and local securities);in a couple of years the proportion approached one-third.The United States was the world's principal long-term lender,and foreign lend- ing was very important to American finance. The reasons for the uneven pattern of overseas investment are fairly straightforward.It is not surprising that a capital-starved world would turn for loans to the capital-rich United States,especially to the Northeastern financial powerhouses.Foreign direct investment,on the other hand,re- sponded to more specific incentives.Tariff barriers,which proliferated after World War I,forced former or prospective exporters to locate production facilities in overseas markets;often the advantages of local production were great even in the absence of tariffs.Foreign direct investment was thus largely confined to firms with specific technological,managerial,or market-

Sectoral conflict 65 TABLE 2. Foreign direct investment and book value ofjixed capital of selected U.S. industries, 1929 (in millions of dollars and percent) Sector A Foreign direct investment B Book value of $xed capital AIB in percent Mining and petr~leum".~ Public utilities, transport and communications Manufacturing Machinery and equipment Motor vehicles Rubber products Chemicals Foodstuffs Lumber and products Metals and products Textiles and products Stone, clay and glass products Leather and products a. Figures for total manufacturing do not include petroleum refining, which is included under "Mining and petroleum." b. Figures for domestic mining and petroleum invested capital are for the book value of cap- ital including land but excluding working capital. c. Value of plant and equipment. d. Domestic invested capital is reproducible tangible assets of agricultural sector. Sources. Foreign direct investment: U.S. Departent of Commerce, American Direct Invest- ments in Foreign Countries (Washington, D.C.: GPO, 1930), pp. 29-36. Domestic fixed capital: Daniel Creamer, Sergei Dobrovolsky and Israel Borenstein, Capital in Manufacturing and Mining (Princeton, N.J.: Princeton University Press, 1960), pp. 248-51, 317-18; Melville J. Ulmer, Capital in Transportation, Communications and Public Utilities (Princeton, N.J.: Princeton University Press, 1960), pp. 235-37; Raymond Goldsmith, Robert Lipsey and Moms Mendelson, Studies in the National Balance Sheet of the United States vol. 2 (Princeton, N.J.: Princeton University Press, 1963), pp. 78-79. dollars a year, over one-sixth of all issues (excluding federal, state, and local securities); in a couple of years the proportion approached one-third. The United States was the world's principal long-term lender, and foreign lend￾ing was very important to American finance. The reasons for the uneven vattern of overseas investment are fairly straightforward. It is not surprising that a capital-starved world would turn for loans to the capital-rich United States, especially to the Northeastern financial Foreign direct investment, on the other hand, re￾sponded to more specific incentives. Tariff barriers, which proliferated after World War I, forced former or prospective exporters to locate production facilities in overseas markets; often the advantages of local production were great even in the absence of tariffs. Foreign direct investment was thus largely confined to firms with specific technological, managerial, or market-

66 International Organization TABLE 3.New corporate and foreign capital issues in New York, 1919-1929 (in millions of dollars and percent) A B All corporate Foreign B/A issues issues in percent 1919 52,742 $771 28.1% 1920 2,967 603 20.3% 1921 2,391 692 28.9% 1922 2,775 863 31.1% 1923 2,853 498 17.5% 1924 3,831 1,217 31.8% 1925 6,219 1,316 21.2% 1926 8,628 1,288 14.9% 1927 9.936 1,577 15.9% 1928 9,894 1,489 15.0% 1929 11,604 706 6.1% Total,1919-1929 63,840 11,020 17.3% Annual average,1919-1929 5,804 1,002 17.3% Source.United States Department of Commerce,Handbook of American Underwriting of Foreign Securities (Washington,D.C.:GPO,1930),pp.32-37. ing advantages,such as motor vehicles,electric appliances and utilities,and petroleum,as well as in the extraction of resources available more readily abroad.There was little overseas investment by industries producing such relatively standardized goods as steel,clothing,and footwear;they generally had little exporting experience,and few advantages over firms in their lines of business abroad.Thus the major money-center investment and commer- cial banks were highly international,as were the more technologically ad- vanced manufacturing and extractive industries;traditional labor-intensive industries,which were by far the majority,were little involved in foreign investment. American industrial export interests were similar to its foreign invest- ments.The major industrial sectors with overseas investments were also the country's leading industrial exporters,as product-cycle theory would pre- dict.6 Refiners of copper and petroleum,and producers of machinery and equipment,motor vehicles,chemicals,and processed food were all major exporters as well as major foreign investors.The only important exceptions to the general congruence of trade and asset diversification were the steel industry and some agricultural interests,especially in the South.Neither steel producers nor,of course,cotton and tobacco farmers had many over- seas investments.To a large extent,then,the trade and foreign investment line-ups were complementary. 6.The classical explanation of the process is Raymond Vernon,"International Investment and International Trade in the Product Cycle,'Ouarterly Journal of Economics 80 (May 1966), pp,190-207. 7.On agricultural and industrial trade preferences in the 1920s,see Barry Eichengreen,"The

66 International Organization TABLE 3. New corporate and foreign capital issues in New York, 1919-1929 (in millions of dollars and percent) A B All corporate Foreign BIA issues issues in percent 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 Total, 1919-1929 Annual average, 1919-1929 Source. United States Department of Commerce, Handbook of American Underwriting of Foreign Securities (Washington, D.C. : GPO, 1930), pp. 32-37. ing advantages, such as motor vehicles, electric appliances and utilities, and petroleum, as well as in the extraction of resources available more readily abroad. There was little overseas investment by industries producing such relatively standardized goods as steel, clothing, and footwear; they generally had little exporting experience, and few advantages over firms in their lines of business abroad. Thus the major money-center investment and commer￾cial banks were highly international, as were the more technologically ad￾vanced manufacturing and extractive industries; traditional labor-intensive industries, which were by far the majority, were little involved in foreign investment. American industrial export interests were similar to its foreign invest￾ments. The major industrial sectors with overseas investments were also the country's leading industrial exporters, as product-cycle theory would pre￾di~t.~ Refiners of copper and petroleum, and producers of machinery and equipment, motor vehicles, chemicals, and processed food were all major exporters as well as major foreign investors. The only important exceptions to the general congruence of trade and asset diversification were the steel industry and some agricultural interests, especially in the South. Neither steel producers nor, of course, cotton and tobacco farmers had many over￾seas investments. To a large extent, then, the trade and foreign investment line-ups were c~m~lementary.~ 6. The classical explanation of the process is Raymond Vernon, "International Investment and International Trade in the Product Cycle," Quarterly - Journal ofEconomics 80 (May 1966), pp. 190-207. 7. On agricultural and industrial trade preferences in the 1920s, see Barry Eichengreen, "The

Sectoral conflict 67 Sectors with major overseas investment interests would be expected to have a different foreign economic and political outlook than sectors with little or no international production or sales.Internationally oriented banks and corporations would be generally favorable to freer trade,the former to allow debtors to earn foreign exchange and the latter both because intra-firm trade was important to them and because they tended to fear retaliation. Internationally oriented sectors could also be expected to support an exten- sion of American diplomatic commitments abroad,both specifically to safe- guard their investments and more generally to provide an international environment conducive to foreign economic growth.Those sectors that sold but did not invest abroad would be sympathetic to American attempts to stabilize foreign markets,but might oppose international initiatives that rein- forced competing producers overseas.Economic sectors with few foreign assets or sales could be anticipated to support protectionist policies in their industries,because they were not importing from overseas subsidiaries, tended to be less competitive,and had few worries about retaliation.Such sectors would be unsupportive of major American international involvement that might strengthen real or potential competitors of U.S.industry. Two broad blocs on foreign economic policy did indeed emerge after World War I,and their preferences were more or less as might have been predicted.One group of economic interests was"internationalist'':it sup- ported American entry into the League of Nations,U.S.financing of Euro- pean reconstruction,commercial liberalization,and international monetary and financial cooperation.The other cluster of economic interests was the "isolationists":it opposed the League and American financing of Europe, called for renewed trade protection,and was indifferent or hostile to global financial and monetary accords.8 The two sets of policy preferences were competing rather than complementary,and although there were some actors in a middle ground,the extreme unevenness of American overseas economic expansion meant that preferences tended to harden in their opposition. The central dilemma of U.S.foreign economic policy for fifteen years after World War I was the great economic strength of two opposing sets of economic and political actors,neither of which was powerful enough to vanquish the other.Among the consequences of interest to the analyst of international relations is that the state did not undertake to impose a foreign policy derived from America's international position upon recalcitrant do- mestic actors;instead,the central state apparatus found itself torn between Political Economy of the Smoot-Hawley Tariff,"Discussion Paper No.1244,Harvard Institute for Economic Research,May 1986. 8.Opposition to the League was indeed led by a prominent nationalist Massachusetts senator whose adamant insistence on protecting manufactured goods while allowing the free import of inputs was ably captured by"'Mr.Dooley,who noted that"Hinnery Cabin Lodge pleaded f'r freedom f'r th'skins iv cows"in ways that"wud melt th'heart iv th'coldest mannyfacthrer iv button shoes."Cited in John A.Garraty,Henry Cabot Lodge (New York:Knopf,1953),p.268; the book contains ample,and somewhat weightier,evidence of Lodge's economic nationalism

Sectoral conflict 67 Sectors with major overseas investment interests would be expected to have a different foreign economic and political outlook than sectors with little or no international production or sales. Internationally oriented banks and corporations would be generally favorable to freer trade, the former to allow debtors to earn foreign exchange and the latter both because intra-firm trade was important to them and because they tended to fear retaliation. Internationally oriented sectors could also be expected to support an exten￾sion of American diplomatic commitments abroad, both specifically to safe￾guard their investments and more generally to provide an international environment conducive to foreign economic growth. Those sectors that sold but did not invest abroad would be sympathetic to American attempts to stabilize foreign markets, but might oppose international initiatives that rein￾forced competing producers overseas. Economic sectors with few foreign assets or sales could be anticipated to support protectionist policies in their industries, because they were not importing from overseas subsidiaries, tended to be less competitive, and had few worries about retaliation. Such sectors would be unsupportive of major American international involvement that might strengthen real or potential competitors of U.S. industry. Two broad blocs on foreign economic policy did indeed emerge after World War I, and their preferences were more or less as might have been predicted. One group of economic interests was "internationalist": it sup￾ported American entry into the League of Nations, U.S. financing of Euro￾pean reconstruction, commercial liberalization, and international monetary and financial cooperation. The other cluster of economic interests was the "isolationists": it opposed the League and American financing of Europe, called for renewed trade protection, and was indifferent or hostile to global financial and monetary accords.' The two sets of policy preferences were competing rather than complementary, and although there were some actors in a middle ground, the extreme unevenness of American overseas economic expansion meant that preferences tended to harden in their opposition. The central dilemma of U.S. foreign economic policy for fifteen years after World War I was the great economic strength of two opposing sets of economic and political actors, neither of which was powerful enough to vanquish the other. Among the consequences of interest to the analyst of international relations is that the state did not undertake to impose a foreign policy derived from America's international position upon recalcitrant do￾mestic actors; instead, the central state apparatus found itself torn between Political Economy of the Smoot-Hawley Tariff," Discussion Paper No. 1244, Harvard Institute for Economic Research, May 1986. 8. Opposition to the League was indeed led by a prominent nationalist Massachusetts senator whose adamant insistence on protecting manufactured goods while allowing the free import of inputs was ably captured by "Mr. Dooley," who noted that "Hinnery Cabin Lodge pleaded f'r freedom f'r th' skins iv cows" in ways that "wud melt th' heart iv th' coldest mannyfacthrer iv button shoes." Cited in John A. Garraty, Henry Cabot Lodge (New York: Knopf, 1953), p. 268; the book contains ample, and somewhat weightier, evidence of Lodge's economic nationalism