Английский язык в экономике, бухучете и банковско-финансовой деятельности

borrow v.

direct investments

debtor nation

assets

creditor country

intermediary

to fund national and state debts

moneys

company’s stock

intergovernmental credits

securities

in default on loans

holdings

OPEC

default on securities

funds

added moneys

capital surplus

raise money

encourage foreign investment

inflow of capital

liquid assets

portfolio investments

Exercise 2. Answer the following questions.

1. In the 19

and 20

century was the United States a debtor or a creditor country? 2. What American securities were most popular in Europe in the 19

century? 3. Why has the US become the world’s greatest debtor nation in the 20

century? 4. How can you describe portfolio investments and direct investments? 5. What was the aim of the Johnson Act in 1934? 6. Did WW II help to restore American economy? 7. How can you describe foreign investment before and after WW II? 8. How did high oil prices and OPEC countries in 1970s influence the caracter of American investment abroad? 9. Why did Americans encourage foreign investment in 1960s? 10. What is the feeling of Americans toward foreign investments? What was the attitude of state governments to foreign investments?

Exercise 3. Translate into English.

1. США брали кредиты в Европе для финансирования революции и консолидирования национального и государственного долга. 2. Большая часть акций крупнейшей американской компании принадлежала иностранцам-нерезидентам. 3. В середине 19 в. Крупнейшие дефолты в отношении этих ценных бумаг больно ударили по европейским инвесторам. 4. Когда США начали строительство железных дорог, возникла необходимость в получении дополнительных кредитов за границей. 5. До 1970 г. прямые инвестиции США за рубежом всегда превышали портфельные инвестиции. 6. В 1930-х г.г. американские кредиторы столкнулись с крупными дефолтами. 7. Закон Джонсона 1934 г. запрещал американским банкам кредитовать страны, невыполняющие обязательства по выплате займов, предоставленным правительством США. 8. Пока Америка оставалась страной-кредитором, доля иностранного капитала оставалась в тени. 9. Из преимущественно инвестиций многонациональных корпораций американские инвестиции за рубежом все больше принимали форму банковских кредитов.

Text 6. Dollar diplomacy

Dollar diplomacy is the term used to describe America’s efforts – particularly under President William Howard Taft – to further its foreign policy aims in Latin America and the Far East through the use of economic power. President Theodore Roosevelt laid the groundwork for this approach in 1905 with his Roosevelt Corollary to the Monroe Doctrine, maintaining that if any nation in the Western Hemisphere appeared politically or fiscally so unstable as to be vulnerable to European control, the United States had the right and obligation to intervene.

Taft continued and expanded this policy, starting in Central America, where he justified it as a means of protecting the Panama Canal. In 1909 he attempted unsuccessfully to establish control over Honduras by buying up its debt to British bankers. In Nicaragua, American intervention included funding the country’s debts to European bankers. In addition, the State Department persuaded four American banks to refinance Haiti’s national debt, setting the stage for further intervention in the future.

Dollar diplomacy was also pursued in China, where Taft’s secretary of state, Philander C. Knox, became convinced in 1910 that America’s free access to trade there was threatened by European financing of the new Hukuang Railroad. With some difficulty, the Taft administration arranged for American bankers to be included in the project and then prevailed on J. Pierpont Morgan to create an American syndicate for the purpose. Taft was also concerned about Russian and Japanese railroad activities in Manchuria and managed to persuade American bankers to join a six-power consortium that would give China the money instead.

This approach to foreign policy was repudiated by President Woodrow Wilson within a few weeks of his inauguration in 1913. Although he did not abstain from Caribbean intervention, dollar diplomacy was no longer an explicit national policy.

EXERCISES

Exercise 1. Answer the following questions.

1. What does the term «dollar diplomacy’ mean?

2. How did U.S. Administrations pursue «dollar policy’ in the 20

century?

3. Does the U.S. adhere to «dollar diplomacy’ now?

Text 7. Banking

Not banks but merchants were the sources of money and credit in the colonial period of American history (1607–1783). It was only after independence that the first commercial bank received a charter of incorporation – the Bank of North America, in 1781. British merchant banking houses stood at one end of a long chain of credit that stretched to the American frontier. They gave short-term (less than a year) credits to American merchants who then extended them to wholesalers of their imports, and the wholesalers passed them on to both urban and rural retailers – country stores and wandering peddlers.

When the Constitution went into effect in 1789 the nation boasted three commercial banks, the Bank of North America, chartered by Congress at the behest of Robert Morris, the superintendent of finance, and two state banks, those of Massachusetts and New York. The primary function of these and later commercial banks was the making of short-term loans, which they did either by issuing their own bank notes or by creating a deposit in the name of the borrower (opening an account to the person’s credit) and dispersing checks to draw against it. Since the bank notes were promises to pay specie to the bearer on demand, banks had to maintain adequate reserves in order to do so. Defining adequacy, however, was no easy task, and numerous banks were forced into bankruptcy because they had overexpanded their loans and discounts.

Conservatism was the hallmark of the earliest commercial banks. The thinking of the time favored the establishment of a single quasi-governmental bank in each state that would operate in the public interest under private management. The overriding fear of political leaders was that excessive numbers of banks or loans too much in excess of specie reserves would hobble the taxing and spending functions of government by swamping the economy in depreciated paper. Political leaders also recalled very well the wild inflation resulting from unrestrained governmental issues of continental and state bills of credit (paper money) during the Revolution, and in the Constitution they barred the states from issuing them.

The management of the first Bank of the United States (bus), chartered by Congress in 1791, reflected these concerns. Although the bus was a large commercial bank providing loans to the private sector as well as to government, its board of directors managed the institution in a highly conservative manner. Balance sheets for the years 1792–1800 reveal a generally high degree of success in maintaining the Bank’s specie reserves. The ratio between bank notes in circulation and specie holdings was quite small.

Growing population and trade, however, created a need for comparable growth in the volume of money and credit – for a policy of accommodation rather than restraint. Sharp increases in the number of state banks and in their authorized capital stock represented a response to this need. During the life of the first bus (1791–1811) banks chartered by the states increased in number from 5 to 117, and their combined capital stock went from $4.6 million to almost $66.3 million.

The British raid on Washington in 1814 induced banks throughout the country (except in New England) to suspend specie payments. The bank note currency circulated at a variety of discounts from place to place, and since the government was compelled to accept it for taxes and imposts, the public finances became so disordered as to threaten the operations of the federal government. It was in this context of nationwide inflation and governmental derangement that Congress decided to charter a second bus (1816–1836). The expectation was that the institution would be able to force the state banks to resume specie payments and restore soundness to the currency.

The Bank’s success in achieving those objectives is mainly attributable to its president Nicholas Biddle (1823–1836). The mechanism was simple. The nation’s currency was largely made up of bank notes, most of it placed in circulation by state banks, so payments made to the federal government were likely to be in that form. And far more payments were made to that government than to any other transactor of business in the nation. In consequence, the government deposited large quantities of state bank notes in the bus and its branches, which therefore were creditors of the state banks and as such could insist on payment in specie. This threat, or its implementation, induced the state banks to keep their loans and discounts within bounds, which in turn enabled them to redeem their notes in specie at par.