174 REPORT ON COOPERATION IN AMERICAN EXPORT TRADE.
into Argentina in 1913) had to be sold in the face of European competition
 in the same lines. It is the demand for such classes of goods
which is chiefly influenced by the investment of foreign capital in
Argentine enterprises. .
In the making of their foreign investments the European capitalists
 possess a marked advantage over their American competitors,
through being allowed a much greater liberty of combination. In
many-of the public-service investments the equipment and supplies
are purchased from companies which are closely connected through
ownership of stock, common stockholders, and similar mutual
interest with the financing and operation of the enterprise. In fact
the evidence collected in many specific instances indicates that one
of the principal objects of investing foreign capital in such enterprises
is to create a market for the goods of the investing company, or of
certain important stockholders therein. The direct return, through
lividends from the operation of the property, appears to be of
secondary importance, at least for the early years, before the enterprise
 is well established on a paying basis. Specific examples of the
type of investment which creates a market for its principal stockbolders
 are the numerous British-owned railroads in Latin America,
which have as their consulting engineers the firm of Livesay Son &amp;
Henderson. The purchase of equipment and supplies for the roads
is dictated by this firm, who are supported in their action by the
boards of directors of the different roads. This firm, as well as many
of the directors, is closely connected with the interests which control
supply companies, such as the Birmingham Railway Carriage &amp;
Wagon Works, Metropolitan Amalgamated Railway Carriage &amp;
Wagon Co., and Beyer, Peacock &amp; Co. Almost invariably orders for
material on the controlled roads have to be placed with such companies.
 According to information gathered in a number of special
instances in Brazil, Uruguay, Argentina, and Chile, the railroads
were forced, not merely to give their business to the British firms,
but to pay a much higher price for their equipment and supplies than
if there had been no restriction as to the origin of the goods.
This condition is not confined to the British roads whose purchases
are controlled by Livesay Son &amp; Henderson. One informant, an
agent for equipment not of British origin, stated that he was solicited
by the manager of a British-owned railroad, not controlled by the
interests above described, who requested him to submit a bid for
equipment needed by the railroad. At the same time the manager
explained to him that unless the bid was at least 10 per cent lower
than the lowest British competitor the contract would have to go fo
the British firm. The reason for this was stated to be that certain
prominent stockholders were interested in railroad-supply firms,
Since the road had paid small dividends, the manager felt it necessary