the amount of land belonging to Americans that might be expropriated on the basis of payment in bonds and that all claims of Americans resulting from the carrying out of the agrarian program of the Mexican government should be adjudicated, as is now being done by the General Claims Commission at Washington. A Special Claims Commission has also been created to pass upon claims resulting from damages incurred by Americans in Mexico as a result of revolutionary conditions between 1910 and 1920.

Nationalization of subsoil deposits was not one of the primary aims of the Mexican revolution in 1910. Provisions authorizing such action, however, were incorporated in the Constitution of 1917, and executive action taken by Carranza to put them into operation before his death in 1920 resulted in a concerted but futile effort in the United States to bring about intervention in Mexico. Carranza's death relieved the diplomatic friction, but the inability of the United States government to secure from Obregón, as a condition for his recognition, what it regarded as essential guarantees for the protection of American property rights in Mexico against the enforcement of the constitutional provisions authorizing both agrarian reforms and the nationalization of subsoil deposits, made complete the diplomatic deadlock of 1921-1923. In the joint conference of 1923 the Mexican commissioners agreed, with respect to the petroleum controversy, that their government would recognize the right to the subsoil deposits of all owners of the surface who before the promulgation of the Constitution had performed a positive act indicative of their intention to exploit the subsoil. With respect to owners who, before the promulgation of the Constitution, had not performed such a positive act, the Mexican commissioners, without repudiating their contention that in principle such owners had forfeited. their rights to the subsoil, recognized the right of the United States to make "any reservation of or in behalf

of the rights" of such nationals before an arbitral claims. commission.

After the recognition of Obregón, accorded on the basis of the understandings reached by the joint conference of 1923, and after the creation of the General and Special claims commissions, relations between the United States and Mexico were very cordial until November, 1925. As proof of this, mention may be made of the very generous material and moral support which the government of the United States lent to the Obregón government during the de la Huerta revolution of 1923-1924, and its very positive acts of hostility toward the revolutionists.

Serious friction again developed between the two governments in the latter part of 1925 when the Mexican Congress passed legislation putting into operation the provisions of the Constitution relating to the nationalization of subsoil deposits-which provisions thereto had been put into operation only by executive decree-and also passed legislation putting into operation the constitutional provisions limiting the amount of agricultural land which foreigners may own in Mexico. It is the contention of the United States government that both laws are retroactive and confiscatory in character and in violation of the understandings reached with the Obregón government before its recognition by that of the United States. In a final note terminating a voluminous correspondence on the probable effect of these laws, Secretary of State Kellogg, on October 30, 1926, notified the Mexican government that the United States did not expect it to take any action that would deprive Americans in Mexico of their property rights.

Meanwhile the land law, as a result of its having been accepted by many aliens, including Americans, offers some prospect of provoking no further serious diplomatic friction between the two governments. As regards the controversy over the petroleum law, a lull has developed since

the aggrieved petroleum companies have appealed to the Mexican Supreme Court against its alleged retroactive and confiscatory features. Should the Supreme Court rule against the petroleum companies, and should the Mexican government take steps to enforce the law as it is now regulated by executive decree, the diplomatic relations between the United States and Mexico would probably again become very strained.

BILLIONS OF OUR CAPITAL INVESTED IN LATIN AMERICA 2

American investments in Latin America are a product of the twentieth century. Before 1900 American capitalists and industrialists had penetrated into Mexico, Cuba, Central America and even into South America, but the movement was a sporadic one and of little moment. The domestic demand for funds and the consequent high rate of interest here made the export of capital unprofitable. But in the last twenty-five years we have become the Latin-American investors par excellence in the Caribbean area, and even in South America. These financial ventures have both an economic and a political phase which deserves attention.

We turn first to the economic side of the matter. At the outset it should be made clear that we have not invested money in Latin America because we wanted to control Latin-American politics or economics. Money is not so magnanimous as to serve political interests first. Capitalists demand interest rather than intervention. We have invested in Latin America since 1900 because it was a better place to invest than in the United States. Capitalists are greedy-like everybody else. Since 1900 the United States has produced more capital than could be employed here at high rates of interest, hence some of it -the most daring part-sought lucrative investment abroad. Secondly, we reached a point long before the

2 By Harry T. Collings. Current History. 26:848-53. September, 1927.

World war where our 100,000,000 people could not consume all we made. Production outran population. We needed foreign markets for our factories if they were to run at capacity. To secure foreign markets we had to invest in them. Consumption of goods, services and capital tend to lag behind production. The capitalist class, therefore, which is in control of modern business, constantly demands new markets and new opportunities for investment. Formerly it may have been true that “trade follows the flag"; the twentieth century motto is, "trade follows investment." We invested in Latin America extensively since 1898, because it was the best and most logical place for surplus funds and products.

At the beginning of the present century our holdings abroad totaled approximately $455,000,000, distributed as follows:

Our investments abroad had risen to $1,500,000,000 some time before the World war, but we owed to foreign nations $6,500,000,000. We have now become a creditor nation to the extent of $22,000,000,000. The Controller of the United States Treasury summarized "our contributions to financing the outside world" from August, 1914, to August, 1922, as follows:

American securities repurchased abroad..$ 3,000,000,000

Some $10,000,000,000 of the above consist of government loans to Europe for war and postwar purposes. This may therefore be dropped from consideration; more than one-half of it has already been canceled. Of the remaining $12,000,000,000, more than one-third is invested in Latin America. On December 31, 1925, the Department of Commerce estimated that the total investments of the United States in Latin America amounted to $4,240,000,000. Of this amount, $910,000,000 was in government securities or in government-guaranteed obligations and $3,330,000,000 in industrial and other private securities. During 1926, about $1,000,000,000 additional foreign investments were bought by United States citizens, and of this amount $354,989,700 went to Latin America. About $70,000,000 of the 1926 investments went to private industrial and commercial corporations. The remainder was borrowed by national governments, states or municipalities, and was largely destined for the construction of railways, highways or other public works. A more recent estimate by the Department of Commerce (June 30, 1927) placed our Latin-American investments at $4,800,000,000.

INTERESTS ÎN CUBA

Among the Latin-American republics, Cuba now leads. in the amount of American investment, with more than a quarter of the total. The Department of Commerce in 1924 estimated that $1,360,000,000 of money was invested in that island. Of this sum $110,000,000 was in Cuban government bonds and the remainder in the following: