CO129-520-7 Public Utility companies- acquisition by foreign groups 4-12-1929 - 26-1-1930 — Page 37

Copy.

71817/30 General

CIRCULAR.

SECRET.

on 71817/30

Yul

to are Colonies and

Protectorates (except Malta)

To Malta in separate despatch

To Tomfanyika in separate despatch.

To Palestine. Sarawak and B.N.B.C. Downing Street,

9th December, 1930.

Sir,

I have the honour to inform you that reference is made from time to time in the public Press and elsewhere to the dangers of foreign commercial penetration in the Empire, and there are certain aspects of this subject to which I desire to call your attention.

2. I do not wish to suggest that such penetration is necessarily an evil, and if it has the effect of bringing into a territory capital which would not otherwise become available for its development, it is obviously advantageous; but it may bring attendant disadvantages which invite consideration.

3. In the first place, it may be disadvantageous economically if foreign concerns start business in a territory or if foreign interests purchase a controlling interest in a going British concern, since it may be assumed that those concerns will have a tendency to import goods from their own country with the effect, in the first instance, that British trade will have no opportunity of competing for the new business, and, in the second instance, that existing openings for British trade may be closed.

4. For this evil it is unfortunately impossible to devise any remedy. British subjects and companies hold controlling interests in businesses scattered all over the world, and any action of an aggressive nature within the Empire might provoke retaliation which would inflict far more injury on British trade as a whole than the injury which it was designed to prevent.

5. One particular aspect of foreign penetration for commercial purposes which may be particularly objectionable is the acquisition by foreign interests of rights for the exploitation of mineral resources or some form of primary production, either directly or by obtaining control of existing British companies possessing such rights, when there may be reason to believe that the object of such acquisition is not to exploit those rights but to prevent their exploitation to the detriment of other interests in the same hands. It is, for instance, often stated that certain oil companies obtain concessions over large undeveloped areas not for the purpose of developing them but for the purpose of preventing their development by competing interests.

Whether such allegations are correct or not, it is obvious that a territory may suffer considerable prejudice, if its development is hindered in this way, whether by foreign or by British “locking up" of resources that might otherwise be utilized.

The Officer Administering

the Government of

37

M..