Sectoral conflict 63 national borrower and host of foreign direct investment before 1900,by 1920 the United States was the world's leading new lender and foreign direct investar.The development of American overseas investments was in itself unsurprising,and in this the United States simply repeated the experience of other developed countries.Yet the rapidity of the country's shift from a major capital importer and raw-materials exporter to the leading exporter of capital,largely because of the peculiarities of the international economy in the ten years after 1914,was quite extraordinary.Even as a few major American economic actors were catapulted into global economic leadership, most of the economy remained as inward-looking as ever.This division in American economic orientation was at the root of the foreign-policy prob- lems of the 1920s and 1930s. As American industry and finance matured and the country became richer in capital,many large American corporations and banks looked abroad for markets and investment opportunities.United States overseas investment thus grew gradually from the 1890s until the eve of World War I.As Table 1 indicates,American foreign direct investment was appreciable by 1900;it was concentrated in raw materials extraction and agriculture in the Caribbean basin.By 1912,foreign direct investment was quite substantial and overseas lending had become of some importance;the focus was still the Caribbean area. The gradual expansion of American overseas investment,especially over- seas lending,was given a tremendous shove by World War I.The war forced several belligerent countries to borrow heavily from the United States,and previous borrowers from European capital markets now turned to the United States to satisfy their needs for capital.As Table 1 shows,American holdings of foreign bonds soared from less than 5 percent of total American holdings of non-government bonds in 1912 to nearly 17 percent in 1922. Foreign direct investment also grew rapidly,as European preoccupation with war and reconstruction cleared the way for many American corpora- tions to expand further into the Third World and,after the war ended,in Europe itself.The 1920s saw a continuation of the wartime increase in overseas American lending and investment.American overseas investment in industrial production-especially manufacturing and utilities-and petro- leum grew particularly rapidly. By 1929 American overseas private assets-direct and portfolio invest- ments,along with other assorted long-and short-term assets-were twenty- one billion dollars.Overseas investments in 1929 were equivalent to over one-fifth of the country's gross national product,a level that was reached again only in 1981.5 Although America's overseas investments were substantial by the 1920s, they were very unevenly distributed among important sectors of the U.S. 5.For figures on U.S.foreign private assets,see Raymond Goldsmith,A Study of Savings in the United States,vol.1 (Princeton,N.J.:Princeton University Press,1955),p.1093.Sectoral conflict 63 national borrower and host of foreign direct investment before 1900, by 1920 the United States was the world's leading new lender and foreign direct investar. The development of American overseas investments was in itself unsurprising, and in this the United States simply repeated the experience of other developed countries. Yet the rapidity of the country's shift from a major capital importer and raw-materials exporter to the leading exporter of capital, largely because of the peculiarities of the international economy in the ten years after 1914, was quite extraordinary. Even as a few major American economic actors were catapulted into global economic leadership, most of the economy remained as inward-looking as ever. This division in American economic orientation was at the root of the foreign-policy prob￾lems of the 1920s and 1930s. As American industry and finance matured and the country became richer in capital, many large American corporations and banks looked abroad for markets and investment opportunities. United States overseas investment thus grew gradually from the 1890s until the eve of World War I. As Table 1 indicates, American foreign direct investment was appreciable by 1900; it was concentrated in raw materials extraction and agriculture in the Caribbean basin. By 1912, foreign direct investment was quite substantial and overseas lending had become of some importance; the focus was still the Caribbean area. The gradual expansion of American overseas investment, especially over￾seas lending, was given a tremendous shove by World War I. The war forced several belligerent countries to borrow heavily from the United States, and previous borrowers from European capital markets now turned to the United States to satisfy their needs for capital. As Table 1 shows, American holdings of foreign bonds soared from less than 5 percent of total American holdings of non-government bonds in 1912 to nearly 17 percent in 1922. Foreign direct investment also grew rapidly, as European preoccupation with war and reconstruction cleared the way for many American corpora￾tions to expand further into the Third World and, after the war ended, in Europe itself. The 1920s saw a continuation of the wartime increase in overseas American lending and investment. American overseas investment in industrial production-especially manufacturing and utilities-and petro￾leum grew particularly rapidly. By 1929 American overseas private assets-direct and portfolio invest￾ments, along with other assorted long- and short-term assets-were twenty￾one billion dollars. Overseas investments in 1929 were equivalent to over one-fifth of the country's gross national product, a level that was reached again only in 1981 .5 Although America's overseas investments were substantial by the 1920s, they were very unevenly distributed among important sectors of the U.S. 5. For figures on U.S. foreign private assets, see Raymond Goldsmith, A Study of Savings in the United States, vol. 1 (Princeton, N.J.: Princeton University Press, 1955), p. 1093