ABSTRACT
International lending on a large scale ceased in 1930. Since that date there have been developments of tremendous importance in this, no less than in other, branches of economic activity. The flow of new funds for external investment from the countries had fallen by 1929 to about three-quarters of its volume in the years 1925–1928, and later shrank (if measured on a gold basis) to one-tenth of that amount. That the debtor’s ability to transfer service payments is partly dependent upon the volume of the foreign investment, relatively to the standard of living and taxable capacity of the population and to the wealth of the country, is obvious. ‘Direct investments’ are defined as representing foreign holdings of bonde or shares of ‘American corporations, exclusive of financial institutions, in which foreign corporations or foreign shareholders have the controlling voice in management as a result of their stock interest’.
