16 REPORT ON COOPERATION IN AMERICAN EXPORT TRADE,

Germany. For instance, Prof. Riesser, of Berlin, in his work on
the German Great Banks and Their Concentration, lays down as one
of the “ fundamental requirements for a sound policy ” in handling
foreign securities: “International commercial dealings as well as
international flotations ought to be but the means for attaining national
 ends and must be placed in the service of national labor; ” and
again: “ Furthermore, in cases where the purpose of the loan permits
 it, such, pressure as we are able to exert should be brought to
bear in order to provide in the loan contract that any orders for
works and contracts, the expense of which is to be defrayed by the
loan, be placed in Germany, in the interest of our industry.”? .
A recent writer says:

In France an express stipulation is often inserted in loan contracts
between the banks and foreign Governments that the latter shall
order part of the equipment which they require in France. It was
recently proposed to render the insertion of such a provision compulsory.
 The following paragraph in the Manchester Guardian also
indicates that the practice of specifying where the capital goods
shall be purchased 1s not confined to France:
“The Lower Austrian Discount Company Has granted the Chinese
Government a loan of £300,000 ($1,500,000), China undertaking to
give the Poldihiitte Cast Steel Works during the next 10 years an
order for tool steel, rifle barrels, and gun parts for an amount equal
to that of the loan. The Poldihiitte works will establish a branch at
Pekin.” 2

The French ministry of finance, by an order of 1880, assumed the
right to forbid the quoting of foreign loans on French bourses and
to exclude transactions in any foreign security. This regulation was
nominally intended to give French investors some protection against
fraud, but it is also used to get advantages for French industry.
In 1908, in a competition between the Krupps, and the Schneider
works at Le Creusot, France, the Argentine Government gave a preference
 to the Krupps which the French company thought unfair.
As a result the French Government, about the beginning of 1909,
forbade the listing on the Paris Bourse of the Argentine internal
loan of 1895, and also of an Argentine loan which was to be placed
on the Paris market through the Barings. Another example is the
refusal of the French Government in 1909 to admit a Bulgarian
loan, because no orders were to be placed out of it in France. This
loan, a hundred million franes ($20,000,000), was taken up in 1910
by a German-Austrian syndicate, but was only admitted to the
German exchanges in 1911, after Bulgaria had consented to a series
of commercial agreements.®

1 J, Riesser, op. cit, pp. 384, 386.
3C. EK. Hobson, The Export of Capital, London, 1914, p. 16, note 2.
I Sigmund Schilder, Entwickelungstendenzen der Weltwirtschaft, 1912, pp. 343, 844.