American Manufacturing in Foreign Countries

Report Outline
The Branch Plant Movement and the Imperial Conference
Extent of American Manufacturing Abroad
Tariffs and the Migration of American Industry
Domestic Effects of Foreign Migration of Industry
Special Focus

One of the most significant developments in connection with the expansion of American foreign trade during the first postwar decade was the increasing export of American industry itself—through the establishment of branch plants in foreign countries by American manufacturing corporations. The attention of Congress was first attracted to the branch-plant movement during consideration of the Hawley-Smoot tariff in 1929. In response to a Senate resolution calling for the “essential facts” with regard to the movement, the Department of Commerce submitted a report, January 20, 1931, which set out the main factors involved in the migration of American industry to foreign lands, but failed to disclose the identity of the corporations which had established branch plants abroad or the volume of their foreign production. A new resolution, to which no response has yet been made, was adopted by the Senate, January 15, 1932, calling for a list of concerns engaged in manufacturing in the United States which have established foreign factories, the location of such factories, the amount of capital invested in each, the volume of their output, and the number of workers employed.

In the report submitted in response to the Senate's first resolution, the Department of Commerce estimated the total investment of American corporations in manufacturing enterprises in foreign countries at the end of 1929 at $1,535,000,000, or 10 per cent of the total foreign investments of the United States. The “number of manufacturing investments,” closely corresponding to the number of branch plants, was given as 1,236. In a covering letter summarizing the conclusions of the report, Secretary of Commerce Lamont said:

There are definite economic reasons for the expansion of our industries beyond the boundaries of the country, chief among them being the tariff policies of foreign countries, which, together with the other factors involved in carrying an American product to a foreign market, serve to enhance its price beyond the purchasing capacity of the foreign consumer.