American Investments in Europe
The incredible profits of the American economy since the War have enabled the United States to invest capital in the countries which Europe used to finance and in the same Europe which fifteen years ago still financed American enterprises.
-- Charles Pomaret, 1931
The European debt to the United States after World War I was comprised of a number of elements. The most visible portion was the money loaned by the American government to the Allies during and after the war. As an intergovernmental matter, the loan was funded through diplomatic channels and became a public issue. The less obvious portions of the debt were the direct and indirect investments of private American sources. Indirect investments, usually in the form of loans to European governments, were not regarded by French critics as essentially different from intergovernmental credits such as war loans. Direct investments, which financed subsidiaries of American firms in Europe, were another matter. The growth of American-controlled multinational corporations was considered a serious threat to the independence of France and Europe.
Not all Frenchmen were opposed to American investment. In the period after World War I, when credit was not readily available in France, American loans and investments were welcomed. In 1920, Louis Thomas, a French businessman, regarded the United States as the best source of credit for France.1 As late as 1924, Senator Louis Dausset, addressing the American Club in Paris, argued that