American Industry Abroad

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ONE of the statements most commonly made in discussions of our present economic position is that the war changed us from a debtor to a creditor nation. The statement usually is taken to refer to finance, and the man in the street understands it as meaning that whereas before the war we had to borrow money from Europe to develop the country, handle our crops and build up our transportation system, since the war we have been lending to other countries -- either to the underdeveloped parts of the world for the exploitation of their natural resources, or to the older countries of Europe for the restoration of their war-shattered economic structures.

In a general way this is a correct statement of the case, but it fails to bring out one of the most interesting and somewhat disturbing phases of our economic position. For we have not only assumed a creditor position as regards capital in its broad sense, but we have also attained a creditor status in the industrial field, so that at present our position in industrial technique, management, labor policy and certain forms of transportation and communication is decidedly that of a creditor -- we give much more than we receive. It is true that this phase, as distinguished from the purely financial phase, cannot be traced entirely to the war: our industries had begun to gravitate towards Canada, Latin America and even Europe, some time before 1914. But the war undoubtedly accelerated the movement and rapidly furnished our industries with capital for expansion and with opportunities to improve their technique and acquire the experience which has given them a tremendous lead in some of the most essential fields.

This accelerated development has a very important bearing on our international relations. Even under normal conditions of development, the impact of a new industrial power of the magnitude and capacity of the United States naturally would arouse a certain amount of disturbance among the more settled and seemingly secure industrial countries of Europe. The pre-war rise of Germany as an industrial power furnishes a case in point. When such a power, by force of circumstances beyond its control, suddenly accelerates its rate of progress, spreads beyond its national boundaries, and is thrown into competition with its former mentors and financial backers -- who, moreover, are weakened by war -- the disturbance may reach considerable proportions...