172 REPORT ON COOPERATION IN AMERICAN EXPORT TRADE,

rates. This would go far to relieve the difficulties now encountered
in delivering American goods.
On the other hand, other informants, usually British, stated that
the imperative need of the entente allies for supplies from South
America and from the United States, together with the shortage of
ships, made it necessary that every ship, as far as possible, should be
used in carrying supplies direct to Europe, and then should return by
the quickest route to get more. They pointed out that a number of
ships available for the carrying trade had been sunk and others withdrawn
 for military purposes by requisition of the British Government.
 They also stated that the high rates paid for carrying cargoes
to Europe (much higher than from Europe to South America and
even higher than from the United States to South America) made
it more profitable for most ships under neutral flags to carry such
freight, instead of carrying goods between the United States and
South America. The discrimination in freight rates in favor of shipments
 of British merchandise to South America was explained as
being the result of the relatively small amount of merchandise offered
for shipment, compared with the large amount of carrying capacity
available on steamers going to South America for the return cargoes
of foodstuffs, meats, hides, etc.
Whether the present difficulties atfending the shipment of American
 goods to South America are wholly due to exigencies of the
situation confronting the British Government, which is now controlling
the operations of the British mercantile marine, or whether there is
an attempt to use this power incidentally to restrict American trade
is not of primary importance. The outstanding fact is that, because
of insufficient shipping facilities, American trade in South America is
being blocked and hindered on everv hand.

SECTION 4. THE INFLUENCE OF FOREIGN INVESTMENTS ON
THE DEMAND FOR FOREIGN GOODS.

The South American countries possess vast natural resources,
yielding products which are in great demand. They lack, however,
the store of accumulated capital needed for the development of these
resources. ‘This must be borrowed in foreign countries and invested
in enterprises which will make this great potential wealth available,
and, at the same time, build up permanent industries. Much of the
habitable area of the countries is sparsely settled, and, as has been
the case in western United States and Canada, in many regions
railroads must be built to open up the country for economic development.
 Large-scale enterprises of other kinds are often necessary
before the resources can be developed to the point of profitable
returns.