CONTROL). After the close of hostilities there was a flood of projects for the rationing among nations of the available stocks of raw materials, and for the working out of a permanent policy of international control. All these projects fell to the ground because of the inherent difficulties of the problem. The world's trade in raw materials returned for the most part to the system of automatic distribution under the principle of relative economic attractive power.
Decline of Monopolistic Control.—The idea of controlling raw materials in the nationalistic interest persisted after the war, but under a different form and with different objectives. The general impoverishment resulting from the war threw into the foreground policies designed to increase the wealth of govern ments and their nationals. Possession of the sole or principal source of an important raw material appeared to offer an oppor tunity for price fixing which should draw to the controlling nation an increased share of the world's wealth. The pre-war control of nitrates by the Chilean Government and the German potash monopoly offered precedents for this policy of price control. For a time it was generally feared that a new regime of nationalistic raw material monopolies might be inaugurated, since it was technically feasible for single governments . or two governments acting together to control over twenty important raw materials.
This apprehension proved groundless. Most of the attempted controls failed of their object through increased competition (rubber, Chile nitrates) or through threatened shrinkage of de mand (potash). While it is true that most governments to-day are more sensitive to over-production and price depression in raw materials than before the war, the faith in the possibilities of important nationalistic gains through monopolistic methods of price control has greatly weakened.
Restriction of Capital.—A more subtle, and at first glance more justifiable, method of extracting a nationalistic gain from the possession of sources of raw materials consists in reserving their exploitation to national capital. This method has never been employed by the United States. Foreign and native capital have been admitted on equal terms to the development of raw material sources. The policy of most countries of Europe even before the war restricted the operations of foreign capitalists and companies in the raw material field. Since the war this policy has been stiffened rather than relaxed.
So far as concerns the raw materials found within the bound aries of the nation proper, no one questions the morals of a policy of restriction, although there remains a very serious ques tion as to its expediency. A mine opened by foreign capital
affords the same employment to domestic labour, gives the same stimulus to trade and transportation as a mine opened by native capital. The only difference consists in the fact that the profits must be remitted abroad, ultimately, however, in the form of commodity exports. If a country is sufficiently supplied with native capital to open up all its raw material resources, the problem of foreign capital will not arise. If it does not have adequate capital, its rate of progress may be greatly accelerated by the active participation of foreign capital in the work of development. The fear that the free admission of foreign capital to the actual work of development may produce a permanent tributary relation is groundless. If the interests of national labour and trade are properly safeguarded, the national enrichment following development will in the end make possible the buying out of foreign interests. Much of the financial power which has enabled the United States to change from the role of a debtor to a creditor nation is due in the last instance to the work of foreign capital in developing its resources. There can be no doubt that freedom and security for foreign investment in Russia and Siberia would raise the whole level of national prosperity and in the end produce so great an accumulation of Russian capital as to make foreign capital superfluous.
Exploitation of Colonials.—In the case of colonies and de pendencies restrictions upon foreign capital are not only inex pedient, but of doubtful morality. It is an accepted principle of contemporary international ethics that colonies should be ad ministered in the interest of their own inhabitants and of the world at large, not in the particular interest of the imperial nation. The principle of mandate, as elaborated by President Wilson, is ethically applicable to all colonies. To reserve the exploitation of colonial raw materials to the imperial country, or, if the imperial country has inadequate capital, to hold such resources undeveloped, is injurious to the colony and to the world.
It was the prevalence of the conception of the colony as an exclusive field for imperial capital that led to the nineteenth century scramble for colonies and spheres of influence which, as is now universally admitted, was one of the ulterior causes of the World War. The same policy to-day not only holds back the progress of economic recovery from the war, but is generating throughout the world economic friction which seriously impairs the prospect of a peaceful and harmonious world order.