that the enormous increase of our importations of raw material, made necessary by the vast expansion of industry in this country since 1914, has been an indirect but invaluable contribution to the recovery of European export trade. If we consider our purchases from ten typical countries in Latin America and the Far East, which are the producers of such staples as rubber, tin, wool, tea, hides and so on, it is revealed that our importations from them have increased some 362 per cent since 1913 as compared with an eighty-five per cent increase in the sales of those same countries to the rest of the world. In view of the fact that these economically new lands are drawing heavily upon the Old World for manufactured commodities, it is evident that the stimulation of their buying power through the large expansion of our purchases from them has been a potent contribution to European commercial recovery. Furthermore, there are still very heavy European investments in all of these new lands, and consequently the increases in American purchases there, immediately react in the dividends of European-owned corporations. Every ton of wool hauled across the pampas of the Argentine on its way to the United States pays its quota of dividends to the British stockowners who hold a billion dollars' worth of railways in that great commonwealth.

European countries to the United States have increased seventy-five per cent since 1913, but their sales to the rest of the world have grown only twenty-seven per cent in that time; and when these figures are properly evaluated because of increasing prices, it is evident that the "growth" of European exports to non-American markets actually represents a decrease in volume and that only the growing sales in the United States have recorded volume as well as value increases.

Let us examine for a moment that widely accepted impression regarding the "mortal combat" of American and European merchants for highly prized markets. Has our trade really been built up on illgotten wartime gains and on the ruins of the old trade edifices of European commerce? Nothing is more seriously misleading than the conception of any given competitive market as a rigid series of pigeonholes, each allocated to a given trading nation and each incapable of expansion without some loss to its neighbors. As a matter of fact, nothing was more clearly revealed during the world-wide upheaval after 1914 than the amazing elasticity of demand, the profound alterations in living standards, the variability of the trade capacity of any given foreign market. These changes offer unlimited possibilities for the expansion of that part of trade falling to any given nation, without in the least impairing or affecting that of its supposed rivals.

And so it is, if we examine the growth of American exports during these recent years, it is revealed that they consist very largely of conspic

uous American specialties, the demand for which has grown at an unprecedented rate, with these alterations and improvements in standards of living. Our exports to the Far East, for example, have increased four and one half times since 1913, but that increase was in almost no particular gained at the expense of Europe. The items that entered therein were such American specialties as automobiles, tobacco, motionpicture films, ready-made clothing, road-building machinery and the like. Our sales of tobacco and its products in the trans-Pacific countries approximated $156,000,000 in 1927, which was nearly three times the 1913 figure. Australia is by far our leading market for automotive products, having purchased over $41,000,000 worth in 1927. This trade was almost unknown before the war and was in no respect built up at the expense of Europe.

When our British friends express alarm over the fact that we are today supplying twenty-two per cent of Australia's total imports as against eleven per cent before the war, their fears can be immediately calmed by pointing out the fact that item by item this new trade is made up almost entirely of these American specialties and that British trade has scarcely been restrained thereby in any respect. In fact, England's total sales in Australasia exceeded $413,000,000 in 1926 as against $227,000,000 in 1913. Even with liberal deductions on account of price changes, this leaves a substantial margin of actual volume increase. Even more significant is the fact that this represents a larger proportion of England's total trade

than ever before, namely 13.36 per cent, as compared with 8.7 per cent in 1913. In other words, Britain's trade with Australasia will grow with the continued expansion of Australasia's rapidly growing buying power and with the increasing ability of British industries to meet its demands. American exports can develop side by side with this trade between the mother country and the sturdy new commonwealth of the South Pacific without ominous consequences to either.

To take a Latin-American illustration of the same phenomenon, our sales to Venezuela and Colombia have risen from about ten millions before the war to more than eightythree millions in 1927. European alarmists and Latin-American agitators have pointed to this as a clear indication of "economic hegemony" on the part of the "great colossus of the north," the ruthless absorption and monopolization of lucrative southern markets at the expense of the sorely tried business men of the Old World. But on closer scrutiny, it is revealed that Europe's exports have also shown substantial increases in these same markets-that Germany's sales to Colombia, for example, are now three times what they were in 1913 and those of England more than double their pre-war value. Once again it is evident that the cause of our advancement has been the impressive growth of the oil industry, the fruit and coffee plantations, and the other undertakings to tap the vast resources of those republics; and in the resultant improvement in buying power, the trading nations of the Old World have had a liberal share of profit.

An interesting phase of this whole situation and one which is materially contributing toward an even further lessening of any possible dangers from these economic rivalries, is the international character of business itself. The export trade of the United States is not necessarily the export trade of American merchants. European capital still has a most substantial stake in this country; in certain fundamental export staples, notably petroleum, a substantial part of our total exports come from European properties within this country. The same is true of some of the exports of European nations. Our investments in the Old World have risen from less than $500,000,000 to about $4,500,000,000 since 1913, and a substantial proportion of this is represented in American ownership of factories whose products find lucrative markets beyond the countries where they are domiciled. Canada is beginning to figure as an exporter of automobiles, particularly to other parts of the British Empire, where she enjoys imperial preference under the tariffs; but the bulk of the Canadian automobile factories are owned by and operated with American capital and are heavy consumers of supplies and parts imported from the United States.

International trade is, then, no longer capable of simple classification according to countries of origin; the actual ownership of the business involved and a substantial proportion of the profits accruing therein may have a very different nationality. The British, whose total foreign investments exceed twenty billion dollars, as compared with about thirteen billions of our own, have

long appreciated this factor of the dual or multiple nationality of any given transaction in international commerce. Indeed, it was one of the foundation stones of England's international economic edifice. With such large and rapidly growing interests in foreign lands, the appreciation of the value of orderly relations and general tranquillity becomes steadily stronger among the world's business leaders. Far-flung enterprises of such vast proportions could view with nothing but gravest alarm a possible disruption of peaceful traffic and of international good-will.

There are other phases of this new internationalization of business that evidence the longing for mutually beneficial understanding and the elimination of hostility. The development of the international cartel movement arises from the appreciation of a community of interest among a dozen or more old-world industries and of the disasters coming in the wake of excessive trade rivalries. Although there were instances of such international combines before the war, the movement has taken on a decidedly new form and vigor since 1921. It is still very much in the experimental stage and has by no means come up to the expectations of its promoters in contributing toward commercial peace in Europe. Nevertheless, there can be no question that the cartel is at least a moderate improvement over its possible alternative, ruthless competition, especially with reference to intra-European trade, which, after all, represents by far the bulk of the commerce of the nations involved. Germany, for example, which has been the leader in this development,

depends on her European neighbors for at least seventy-five per cent of her trade, just as she did in pre-war days. It has, therefore, been of vital importance to her to put an end to the excessive nationalistic commercial warfare which followed the armistice, and to obliterate or modify at least a part of the trade barriers that rose not only along the older frontiers but along the five thousand miles of new national boundaries erected by the Treaty of Versailles. There are many dubious aspects to the cartel movement, especially from the American point of view, but from the European, it can at least be recognized as having made a contribution to the cure of post-war economic hysteria. And, incidentally, as long as our exports to Europe are so very largely of non-manufactured staples, notably cotton, petroleum, copper, tobacco and cereals, these efforts toward industrial understandings will not curtail the bulk of our exports to the Old World, even though they may impair some operations of our moderate but gradually growing sales of manufactured goods across the Atlantic. It is in their repercussions upon our domestic trade and our heavy fabricated exports to Latin America and the Far East that the cartels are likely to present serious problems to our merchants and manufacturers.

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Another phase of these international trade rivalries is the inevitable tendency toward preferment within colonial and imperial groups, for the products of their various members. This is a universal policy and one to which the United States can, of course, take no exception, since we

follow it ourselves. Nevertheless, the continued vigor with which it is being pressed has in some instances involved discriminatory practices which, to say the least, are not likely to make for international good-will.

In the last analysis, international trade under these newer and vastly changed conditions has become an invaluable contributor to good-will and sobriety in world relations. There will obviously be continued rivalry for preferred markets, but the resultant struggles need by no means involve mortal combats.

In his vivid description of the critical period of American history during the dark days of the Confederation, 1783–89, John Fiske has epitomized a situation among the thirteen States of the new republic which was not unlike that in the world at large immediately after the World War. He dismisses the usual sordid post-war bickerings as the "unspeakably stupid and contemptible local antipathies" which are the perennial sequences of every period of warfare; "but the only thing which can finally destroy them is the widespread and unrestricted intercourse of different groups of people in peaceful social and commercial relations. The rapidity with which this process is now going on is the most encouraging of all the symptoms of our modern civilization."

The frictions of the world's marketplaces may strike some sparks but thereby are being forged the links of those lasting bonds which evidence the economic interdependence of nations and are the solid assurances of mutual esteem and good-will. They are among the most invaluable stabilizers of modern civilization.

M

ANY thousands of years ago— so this story runs-Jesus and John the Baptist were on a journey together. And it came about that as they journeyed they passed through a desert place, and in the heat of the day rested under the shadow of a great rock.

All around them was nothing but desert, and so they waited, talking of the things of God till the sun went down, and then went their way.

Five thousand years later, Jesus and John the Baptist were passing that way again; and behold now, instead of the desert was a great city with gates on four sides of it and towers that reached to heaven.

Being greatly astonished, they spoke to one of the citizens who stood near the gate at which they entered.

"Sir," said they, "we pray you tell us where is the great desert that once was here?"

Whereat the man laughed, both he and his companions who stood by.

"A desert," said he, "why friends, there has never been any desert hereabouts. Do you not know that this is The City, the great City, the days of which no man can tell so many are they?"

"And there is the great lake, and there the great rock in the midst of the lake, and, on top of the rock, you may see the great temple which the gods, they say, builded before the world was."

And he laughed again and his friends also.

Five thousand years later, Jesus and John the Baptist were passing that way again, and, behold, now, the great city was gone, and, in its place, was a great forest.

Only the lake was there, and, in the midst of the lake, a great rock on the top of which the birds of the air made their nests.

As they entered the forest, they met a woodman, and thus addressed him:

"Sir," said they, "tell us what has become of the great city that once was here."

"A great city?" said the woodman. "Now, what a strange question is that. that. For indeed, sirs, hereabouts has never been a great city, but only this great forest."

"Here have I labored and my father and his father before him; in the great forest, by the great lake, with the great rock in the midst of the lake, on which the birds of the air have always made their

nests."

And he went his way.

And so it came about that another five thousand years went by, and, once again, Jesus and John the Baptist were passing that way.

And, behold, now the forest was gone, and all around them was nothing but desert, as it had been in the beginning, and, in the midst of the desert, a great rock.

And there was no man to ask concerning the matter, and so they rested under the shadow of the rock and talked of the things of God.