How much of this investment will be made with purely American money? The Yankees are certainly becoming more and more enthusiastic, and at the same time more and more reckless, in their foreign investments, and especially in regard to Latin-American countries. Nevertheless they have a long way to go before, in actual figures, they can in any way approach the value and extent of British foreign investments. In regard to the return which their investments bring them also, they have, on the whole, proved far less fortunate. In all probability, British foreign holdings in South and Central America to-day approach the sum of £500,000,000 (=$2,500,000,000), and upon this gigantic amount of capital they earn a fair average of 51⁄8 per cent. per annum, allowing for the higher and the lower rates of interest paid, and which amounts to anything between 25 per cent. and 35 per cent. on some land shares, and the modest 41⁄2 per cent. and 43⁄8 per cent. earned upon railway debentures. I also include in this return some "bad eggs" among a very diversified list of investments.
I should say, on the other hand, that American foreign investments would not amount in the aggregate to more than £200,000,000 ($1,000,000,000), and of this at least seven-tenths are invested in the Republic of Mexico, and probably two-tenths in enterprises in Canada. American foreign investments are, in a large measure, tributary to great concerns located in the United States, which have their agents in foreign countries looking after their local interests. From this considerable invested amount it would be impossible to estimate a higher return than 23⁄4 or 3 per cent.; for while many of the investments—such as the Standard Oil interests in Mexico and the many banking interests in Cuba, Panama and other countries—yield often a sensational amount of profit, so much capital has been lost through rank speculation and dishonest management, and so little sound judgment has been displayed in the matter of sound original selection, that a considerable portion has been irretrievably lost. This has been the case in the Sonora district of Mexico (especially in the Cananea Copper-Mines); in the gold and silver mines of Guanajuato; and in connection with some of the railways of Costa Rica, Guatemala and Ecuador, so that what has been made on the one hand has, to an appreciable extent, been lost on the other.
Thus I do not anticipate any very pronounced rush of American capital into Central America merely because the Canal will have become un fait accompli. On the other hand, the United States trade and commerce must feel benefit from the speedier means of transport. Already the United States control 60.8 per cent. of the importations into Mexico, and 89 per cent. into Panama; something over 70 per cent. into Costa Rica, and about 60 per cent. (increasing year by year) into Guatemala. With the active assistance of the Washington Government, in conjunction with the compulsory financial "assistance" forced upon them by the J. Pierpont Morgan Syndicate, Honduras will also shortly be taking about 80 per cent. of the United States goods as well as accepting nolens volens the loan of United States capital.
It is, however, the Republics of Ecuador, Peru, Bolivia and Chile which will become better markets for the United States through the medium of the Panama Canal; and while I was travelling recently upon the west coast, I particularly remarked the arrangements which were being organized to handle this anticipated additional trade with all efficiency and despatch. American agents were busy opening-up new branches or appointing local representatives to handle the goods destined to be consigned in increased quantities; German houses, already established, were also arranging their houses and remodelling their order-books to deal with the expected reorganization of North American trade, all of which proves that a very substantial belief exists in the approaching trade "boom" consequent upon the opening, in 1915, of the Panama Canal.
What attention are British manufacturers and British agents paying to this all-important question? This is very easily answered—None!
The first place in the Imports from European countries into Salvador is given to cotton-manufactured goods, nearly the whole of which, I may again point out, come from Great Britain. In 1906, out of a total of $4,000,000, which represented the value of the imports, cotton goods figured for $1,500,000, or 30 per cent. of the total. Of this $1,500,000, Great Britain was responsible for $974,964, which represented woven goods, in addition to $141,328 representing the value of thread. The United States came second on the list, with textiles valued at $409,072, and thread $2,885, although in the list of this classification America was outranked by both Germany and France, which sold thread to Salvador to the value of $8,349 and $4,160 respectively. These two countries exported textiles to Salvador to the amount of $32,199 and $71,890 respectively, while Italy figured for $54,952.
El Parque Barríos.
One of the most beautiful public resorts in Central America.
In this class of goods, practically the same relative status of countries has been maintained on the Import list of the Republic since the year 1876; but it is noteworthy that the position of cotton imports has, in the intervening period, declined no less than 50 per cent. of the total; on the other hand, the value of cotton thread destined for use in the mills of the country has increased fivefold since 1901, while mixtures of woollens, linens and silks have also advanced in value. This is to be explained by the fact that more woollen and cotton mills are gradually being erected in the Republic, and that a great amount of encouraging success is attending their operations. The skill of the native weavers, the improvement of the quality of the cottons, and the industrious lives of the inhabitants, are all factors which have led the Government to consider the advisability of encouraging the growth of the required supply upon a more comprehensive scale. Already, indeed, the Government have commenced, offering export bounties for the surplus stock, with a view to stimulating the culture.
In this connection it is difficult to understand how any intelligent writer, who claims to have visited Salvador with his eyes open, could have published such an utterly misleading and untruthful statement of fact as that which appears in a book entitled "Central America," from the pen of Mr. Frederick Palmer, F.R.G.S., who upon p. 112 of that volume declares that "the only manufactures are from an occasional hand-loom." Mr. Palmer does not inform his readers how many days or hours he remained in Salvador, but apparently they were insufficient to enable him to make himself even superficially acquainted with the industrial conditions of the Republics. He devotes exactly eleven and a half pages out of a total of 340 to this country, and upon nearly each one of these pages he indulges in either an exaggeration or in a misstatement, sometimes in both.