THE purpose of this article is to show how International Finance operates in economically backward countries, and what political implications its operations entail. The importance of the bearing of International Finance upon the economic and political development of non-industrialised countries, upon the progress of peace and goodwill between nations, cannot be overrated. It is, therefore, of the greatest importance that the problem of foreign investments should be considered in the right spirit, with a view to benefiting humanity-if we are to avoid a second experiment after the fashion of the Russian Revolution. Whether this will be possible in the light of the present state of affairs is a question difficult to answer: this depends greatly on the attitude of Western statesmen and financiers towards public morality. So far, international loans have been concluded largely on account of political considerations, since the economic motives in the background usually yield to the political ambitions of the moment of statesmen and financiers. This is particularly true with regard to politically backward countries, such as China, where political matters include commerce, finance and industry,' 2 and where the financial agents of foreign banks are regarded as semi-public representatives of their countries of origin. On the other hand, the development of foreign investment in this direction is a purely natural process. The ascendancy of Industrialism in the West, making for a capitalistic system of society, resulted in the increased importance of Finance and Transport, which required joint-stock capital. New opportunities for the employment of private savings thus came into existence. As investing power is greatest in advanced in-
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Mar 1, 2002
Augusto Lopez‐Claros + 1
Open Access