4 o G. S. CALLENDER 



Regarding foreign capital the situation was somewhat dif- 

 ferent. There were many people in England ready to risk 

 their capital in all sorts of uncertain undertakings rather than 

 accept the inevitable fall in the rate of interest, as the wild 

 speculations which preceded the crisis of 1825 abundantly 

 proves ; but, from the nature of the case, before modern means 

 of communicating came into existence a foreigner could have 

 but an imperfect knowledge of the character of the enterprise 

 for which his capital was sought. He could not acquire the 

 knowledge necessary to judge the merits of the project he was 

 asked to support. Consequently, it was necessary, in order to 

 secure his capital, to offer him a pledge of the faith and credit 

 of some individual or combination of individuals who were able 

 to command his confidence, as well as to present a promising 

 enterprise. Accordingly, we find that English foreign invest- 

 ments in the early part of the nineteenth century were made 

 chiefly in public securities. The stock and bonds of private 

 corporations formed in foreign countries, unless indorsed by 

 the government, played but a very small part on the London 

 stock market until after the middle of the century. It was the 

 public securities of the European countries, the Spanish- Ameri- 

 can republics, and the American states, which were chiefly pur- 

 chased by the English capitalists. The only American corpo- 

 ration whose securities were well known in Europe before 1830 

 was the United States bank, and even ten years later only 

 about a dozen American corporations had sold any of their 

 securities there. 



Such were the conditions regarding the demand for capi- 

 tal, the available supply of it, and the ability of corporations 

 to secure control of large masses of it, during the first thirty 

 years of the century. With these facts before us, the chief 

 reason for making use of the powers of the state in industrial 

 affairs, which was noted at the beginning, becomes clear. The 

 opening of the west gave rise to an enormous increase in the 

 demand for capital, chiefly to provide works of internal im- 

 provement. To construct any of the more important of these 

 works required several millions of capital — an amount far 

 greater than had been brought together in any industry in this 

 country up to that time. For corporations to secure so much 



