The editors have great pleasure in presenting the second volume of papers submitted to the section ‘Debates and controversies’ at the Ninth International Economic History Congress which was held in Berne, Switzerland, in August 1986 on the theme ‘Multinational enterprise: international finance, markets and governments in the twentieth century’. It complements the first volume, Multinational enterprise in historical perspective (Cambridge, 1986); by raising further theoretical questions, by inquiring into aspects of international corporate business such as research and development, financial operations, common and diverging policies of business and governments, by comparing multinational activities in different industries (e.g. mass-produced consumer goods) and by extending the geographical area to China, Japan and Latin America.

The editors wish to thank all authors of contributions and the many discussants who took part in the meetings at Berne. The assistance of Valerie Striker of the University of East Anglia in assembling the papers is gratefully acknowledged. Warm thanks are due to William Davies and his staff at the Cambridge University Press for getting the first volume out in time for the Congress and for supporting the preparation of this volume for publication. It is hoped that the present book will prove to engender the same wide interest which the first volume enjoyed.

The General Argument

Until quite recently, studies of capital formation in France were few in number and relatively cursory. This lacuna was of little importance: it seemed that the findings to be expected of such research were already well known. It was thought that the level of economic growth and of investment had remained below the level which technical advance made it possible to reach – or so it seemed from a comparison with the relevant figures for other countries or even with those for France during the earlier part of the nineteenth century. For of all the countries that underwent industrialization France was one of the few to experience an early and lasting break in development. François Perroux was the first to identify the problem. ‘About 1860’, he writes, ‘there appeared the first signs of a slowing-down of the economy; from 1880, this became a pronounced trend.’ The rate of growth fell, and this falling-off had long-lasting effects on the economy, for during its early stages – the period 1892–1914 – the second phase of industrialization was ‘much less vigorous than the first’. Various arguments have been put forward to explain this deceleration. Two of them, related to the state of the economy, have gained general acceptance in the past.

Underinvestment, runs the argument, was connected, in the first place, to the shortness of the periods during which long-term planning was possible. At the very beginning of the nineteenth century, France already laboured under this disadvantage: the stagnation of agricultural productivity and the decline in international trade had paralysed industry throughout the thirty years of insecurity and of war which lasted until 1820.