Foreign Capital in the United States

May 19, 1939

Report Outline
Estimated Foreign Investment in the United States
The United States as Debtor and Creditor
Gold Imports into the United States
Foreign Investments in Case of War

Estimated Foreign Investment in the United States

A Study of the balance of international payments for. 1938, containing a new estimate of total foreign investments in the United States, will be published during the next few weeks by the Bureau of Foreign and Domestic Commerce. A more complete analysis of foreign investments is also in preparation. While no figures are as yet available, it is believed that total foreign holdings of American securities at market value, foreign direct investment in the United States, and foreign short-term credits in American banks amounted to about $5,500,000,000 at the end of 1938. Part of this amount is tied up in long-term investments which would not be easily subject to sudden shifts even in case of war or international crisis, but the volume of “hot money” in cash balances or readily negotiable securities is sufficient to have caused concern to administration officials at Washington.

The transfer of funds to New York is also causing worry in Europe. On May 17 English stockbrokers, at the request of the Bank of England, agreed to cease quoting or recommending dollar investments, in an effort to discourage British investors from exporting their capital. On April 20 Sir John Simon, Chancellor of the Exchequer, had stated that the flight of British capital was “deleterious to the national interests.”

President Roosevelt conferred, on April 18, with Secretaries Morgenthau and Wallace, Chairman Jesse Jones of the Reconstruction Finance Corporation, Governor Marriner Eccles of the Federal Reserve Board, and Jerome Frank of the Securities and Exchange Commission on measures to protect United States markets in the event of a European crisis. No specific proposal has yet been announced except that the President has strongly urged extension of the stabilization fund and of his power to alter the gold content of the dollar to serve as “emergency brakes” in case of a world economic emergency.

ISSUE TRACKER for Related Reports
Foreign Investment in the United States
Mar. 31, 1989  Foreign Investment in the U.S.
Oct. 12, 1979  Foreign Investments in the United States
Jul. 26, 1974  Foreign Investments in America
May 19, 1939  Foreign Capital in the United States
Bilateral and Regional Trade
Investment and the Stock Market