168 SECTIONAL ADDRESSES. 
Alexander Hamilton as early as 1790 showed a more statesmanlike 
prevision of the future trend of affairs: ‘ Notwithstanding there are 
weighty inducements to prefer the employment of capital at home, even 
at less profit . . . yet these inducements are overruled either by a 
deficiency of employment or by a very material difference in profit... . 
The aid of foreign capital may safely and with considerable latitude be 
taken into calculation’ *’ by a country in the then position of the United 
States. 
The history of Foreign Investment and its relation to Production is so 
far an almost untrodden field for the economic enquirer. Some sort of 
impression of the magnitude of the forces set at work may be given by 
the calculation that, before the war, British investments in other lands 
amounted to some 3,500 millions of pounds sterling, almost one-fourth of 
the total wealth of the United Kingdom,®® or by the ‘ common belief in 
the City (of London) prior to the war that the annual savings of the 
United Kingdom were than about 400/. millions, and were devoted half 
to foreign and half to home investment.’ °° 
No one, I hope, will jump to the conclusion that what I am maintaining 
or even desirous of suggesting is that investment in other countries is 
necessarily injurious to the industry of the country wherein the capital 
has been created. I must not be supposed to be unaware of the contention 
that British investments abroad may help to provide Britain more cheaply 
with food or materials, or in other ways make foreign lands better customers 
for English goods. All I desire to make clear is that the proposition that 
all a Government can do by its legislation is to affect the application within 
the country of a predetermined quantum of capital is not tenable. It can 
indubitably, in some measure, influence, whether wisely or not, the 
quantum either of home-created or of foreign capital, or of both, devoted 
to production in a particular country. 
In cases where there is no hint of protection by means of tariffs or 
subsidies to suggest alarm, this fact that Government can affect the 
quantity of capital employed is generally recognised. Thus, the 
desirability of encouraging an influx of foreign capital to England was 
one of the avowed motives of the Patent Act of 1907. Four years later 
it was asserted, apparently on official authority, that ‘some fifty firms 
had commenced, or were about to commence, work under the Act, and 
that the new factories involved a total outlay of some 800,000/. It was 
hoped that employment would, in this connection, be found for 7,000 
additional men, and that the wages paid to them would total something 
hike 8,000/. per week.’ 7° It may well be that these estimates were over- 
sanguine ; but it does not seem to have occurred to anyone to deny that 
some attraction of foreign capital to England might reasonably be 
expected to take place, and that, so far as it did occur, it would be bene- 
ficial to England. 
87 Report, pp. 38, 39. 
68 This results from a comparison of Sir George Paish’s caleulation of ‘Great 
Britain’s Capital Investments,’ in Jour. Roy. Stat. Soc., LXXIV., p. 187 (1911), 
with the Economist's calculation of national wealth in Hirst’s chapter added to 
Porter’s Progress of the Nations (1912). 
69 Lavington, The English Capital Market (1921), p. 205. 
70 Times, March 23, 1911. 
Abe 
