Evening star., 1949-04-03

Need More
RiskCapital
u. S. Investm e n [
Far Ahead of
the British
ls Martin Ross

Canada. like al under developed
countries. needs more risk capital
Iron ore deposits. oil wells. min
erals Of al kinds lie waiting for
exploitation. New industries offer
great possibilities In many lines.
The eountry's natural resources
cry out for development. But the
United States is becoming the only
available source Of adequate
capital.
American investment In Canada
reached . new peak at the end Of
lo<7. according 10 oficiAl figures
tuse rslsAsed. The evidence Is
that tbs tncreass continued In
1913. Ths ngurs for the end Of
lo<7 was ss .3oo. .ooo, 900. This is
nearly twice ~ much as British
investment amounted TO even OF
its peak In 1880. and more than
four times the present British In
vestment In Canada. The amount
Of British investment here was
80. .766 .o0o. 900 at the end OF 1890.
BY the end Of 1899 II was down
to s2.476. 900 900. At the end OF
1945 (after the war. II was down
TO si.750 ,o0o. 900 and IL went on
dropping till the end Of i947 when
it stood at 81 ,642 900 900.
Plenty of Investment
The United States has some
times been accused. since the war.
Of failing to export capital TO the
extent required by her position as
creditor to all the world. So far
as Canada Is concerned. there has
been no lack Of ready investment.
The actual cash inflow Of United
States investment funds since the
war has increased steadily. II was
SIT .000. 900 in l945. al, 900 900 In
1s46 and $6s. .000. 900 In is47.
Even these cash figures seem
small compared with the overall
totals which include the reinvest-
ment In Canada Of the earnings
Of Canadian companies. The post
war trend has been for American
investors to reduce their holdings
Of Canadian government and mu-
nicipal securities. but to increase
their direct investment in produc-
tive enterprises.
Nearly half the United States
investment in Canada Is in
branch plants" lie. the Canadian
subsidiaries Of United States con-
Germs. There are some 5000
branch plants Of United States
companies. They include forest
camps, pulp factories and saw
mills. motor car factories. oil
developments, mines and all kinds
OF small manufacturing. By con-
trast United Kingdom companies
control about $50 branch plants.
The value of the investment In
United States branch plants here
has climbed steadily since the
l920s. At the end Of 1947 1t stood
as $2,544.000.000 and 1t is esti-
mated to have been nearly $2.-
TOO, 100000 at the beginning Of
this year.
Oil Wells Attract
Canadians sometimes express
uneasiness at this increasing
American control of the means Of
production. but the more orthodox
economists meet them with the
undeniable fact that Canada
needs the development which can
come only with fresh capital.
The recently discovered oil wells
Of Alberta have involved heavy
capital outlays and more will be
needed before they are fully de-
veloped. The most prominent
company in the field is Imperial
Oil Limited. which is a subsidiary
of Standard Oil of New Jersey.
The iron ore deposits Of Ungava.
on the Quebec Labrador boundary.
promise even greater returns. II
has cost 100000 to prove
an assured supply Of 300. 900. 900
tons OF high grade ore. To get
it out will mean building a rail-
way and docks. a new town in the
bleak hinterland Of Ungava. and
taking In expensive mining equip
ment. The estimated capital re-
quirement is about 5000. 900 .o0o
Development % far has been
under the control Of the Hol-
linger Canadian gold mining
syndicate, with United States
steel interests holding a minority
interest.
The United States is the obvious
place to look for the risk capital
Canadian developments demand.
but the Government has tried to
encourage investment from any
source. It has allowed the United
Kingdom Treasury to make avail
able for investment In British
branch plants" the dollars due
for repayments on the wartime
interest free loan. Some few
small subsidiaries have been
established since the war but the
element Of risking has been kept
to a = minimum and the British
investment has been q tiny trickle
compared with the United States
stream.
tccpyrisist, 1919 Observer Fcrsisn News
Service