American capital may come to the rescue by advances upon good security through local banks. It can establish banks or buy controlling interests in existing banks, many of which pay their stockholders 15 per cent. or more. It can relieve the stagnation and make profitable investment by an active campaign for public and private contracts and for sound and fair concessions, not visionary or get-rich-too-quick schemes.
Supposably, the repairing of the destruction brought by the war will make European capital scarce for some years, but an effort will doubtless be made to retain for it its former preponderance in these countries; and so it is important that, whatever the war's effects upon our own money markets, use should be made of such an opportunity as does not come more than once.
To be sure, the scarcity of money in the United States makes this difficult, but the same worldwide money scarcity will secure an especially high rate of interest in Latin America, where even in normal times money can often be placed on excellent security in some of the countries, and at a rate very high indeed compared to that prevailing now in the United States. For safe investments with such a margin of profit, it is to be hoped that money, even if dear at home, will be forthcoming.
Undoubtedly the purchasing power of these republics has been hard hit by the cutting off of credits and markets by the war, as their Governments have been hard hit through the falling off of revenues from import duties. Some of the Governments will require foreign loans. Capital, I repeat—and I mean really American capital—is the urgent need. We are not asked to make them a present of capital to buy our goods with, but if we do not help finance them and buy their products they will have nothing with which to buy our goods.
The situation invites us to give capital and credit to take the place of the European supply which has failed. One need not fear that the returns will be uninviting, for Europe would hardly have been supplying credit and capital to Latin America as a mere matter of amiability. Thus our capital must regenerate Latin-American prosperity, while our bankers, merchants, and manufacturers are engaged in making solid, permanent arrangements, not opportunistic ones, to take possession of a great share in the present and still more in the growing future development and commerce of these countries. Capital, then, and credit are the first requisites.
The war has had the effect of making the Latin-American countries realize for once the economic importance to them of the United States. The products of some, like the tin of Bolivia and the nitrates of Chile, have been going almost entirely to Europe. Several republics suffer the more acutely in proportion to their previous failure to cultivate financial and commercial relations with the United States.
They now feel this and are compelled to a mood receptive to our advances. More, they are forced to seek new markets for their goods just as they are forced to buy some of ours. In this way there should come about new exports to the United States, and there should spring up there the corresponding new industries and habits of consumption, to the ultimate benefit of all the countries concerned.
Meanwhile, the United States is the only present economic hope of a number of the republics. It is to be hoped that our capitalists and business men will realize the responsibilities as well as the opportunities of profit in the rôle they are asked to play, and that their response to their new opportunities will be one of courage, thoroughness and intelligence, and one also of quiet patriotism.