Puslapio vaizdai



THE LITTLE BAT-LIKE BEAST: "I hear there is to be a grand procession to-morrow. Are you going?" DIPLODOCUS: "Am I going? Why, I am the procession."


THE STEGOSAURUS, to his friends, who have been complimenting him on his striking appearance: "Despite all you say, I am not to be envied. Alas! I find it almost impossible to lead that life of obscurity and peaceful retirement which I have always ardently desired."

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The Foreign Loans



HERE might have been no war if European governments and diplomats could have foreseen how great and permanent would be the material gains in America from the waste in Europe.

The new conditions have transferred across the Atlantic an enormous amount of wealth, and rapidly created in the United States enough surplus capital to place its bankers in the forefront of the world's international money-lenders.

Since the autumn of 1914 loans aggregating nearly seventeen hundred million dollars have been negotiated here by European governments, syndicates of bankers, Latin-American countries, the Dominion of Canada, and a number of its provinces and municipalities. These loans were made in various forms; on secured and unsecured bonds, special credits, and short-term notes. A few were current less than one year, but the usual terms were from one to five years, excepting several issues of municipal bonds.

The largest debtor is the United Kingdom, with France a close second, followed, in the order of indebtedness, by Canada, Russia, Argentina, Italy, Germany, Switzerland, Yucatan, Norway, Greece, Chile, Sweden, Panama, Bolivia, and Uruguay.

A broad public market for foreign securities has not yet developed here, but a certain volume of trading is carried on, and prices of the leading issues are published daily. It is probable that in time the flotation of foreign loans will become a matter of course, and then underwriters will reach a larger market among private investors. Great blocks of Anglo-French bonds were taken by two industrial corporations engaged in the manufacture of war-supplies. One of these companies originated an able policy by distributing the bonds to shareholders in lieu of cash dividends.

Probably not more than two thirds of the whole seventeen hundred millions was outstanding at any one time, as a number of the shorter loans have already been liquidated. Ninety per cent. of the amount current will mature and likely require long-term refunding within the next five years.

In nearly every case where loans were
granted to neutral borrowers they had
turned to this market for the reason that
old connections in Europe were no longer
in a position to supply the need. The
time was most opportune for America;
with its new banking system, greatly in-
creased fluid capital, and expanding in-
dustries, at least temporary leadership in
exports and foreign loans was easily as-
sumed. These terms are almost synony-
mous, for it is the common experience of
all creditor nations that borrowers coming
from other countries want goods, not
money. If the goods are not produced in
the country to which the borrower applies,
but must be purchased in a third country,
the problem is the same, with an additional
angle. The source of foreign loans is al-
ways traceable to exports of goods, no
matter how indirect and unrelated trans-
actions may appear. This elementary fact
is very clearly illustrated by statistics of
American banking and exports for the last
two years. A glance at these will show a
great foreign loan account built up with-
out sending money abroad. Late in 1914,
before any of the seventeen hundred mil-
lions had been loaned, the gold holdings
in the United States amounted to $1,835,-
000,000. Now, after making the loans,
besides paying several billions for things.
imported and buying back American se-
curities, the gold stock stands at $2,548,-
000,000, or an increase of more than seven
hundred million dollars. Had the loans
been made in money, virtually no gold
would be left in the country. On the

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other hand, had gold been brought in for the value of all goods exported since the war began, no coin or bars would be left in the outside world.

Any great excess balance of exports over imports must take the form of foreign loans, as the surplus capital of a creditor nation invested abroad on interest. England has enjoyed a great income of this kind for two generations, but it is a new item in the American balance-sheet, grown rapidly under conditions which made the accumulations of two years greater than might have been expected in one or two decades of normal growth. The tangible evidences of this prosperity and the power they represent in international financial affairs will increase or decrease in close ratio to the rise or fall of foreign trade.

The varieties and distribution of exported goods are broadening every day, but the Allies are still the principal buyers. Last year they bought a large percentage of the total exports in the form of a comparatively few articles, a narrow and abnormal demand that will cease when the war is over. Manufacturers and exporters will strive to replace that loss of business by trade in other goods.

Individual mercantile or banking enterprises are more substantial and permanent if dealing with many customers of moderate size rather than with a few of large size; so it is with a nation's export trade. A few years ago it was estimated that England's exports were well distributed among fifty countries, only one of which, India, received over ten per cent. of the whole.

People in all the great exporting countries are planning ways and means to extend trade, frankly proposing combines, special banks, and tariffs, and considering all methods likely to help themselves and hurt competitors in a trade war. The quickly won surplus capital in the United States will have a powerful influence in such a competition. A less sordid view, perhaps more appropriate for expression in a Christmas magazine, is that, when used

internationally, the capital may do much to mend the war-crippled finances of other countries. The United States has greatly enlarged its industrial equipment and shipping facilities; its workmen were never so prosperous and independent. This very condition, however, may fail to produce the kind of effort that will be put forth by the workmen of Europe striving under the spur of poverty. On the other hand, none of the war-worn countries can mobilize such an industrial army as there is in America, where nearly eleven million people are engaged in mechanical and industrial occupations, creating labor values estimated at ten billion dollars per annum. England began to win her position as a creditor nation on a great scale in the decades of hard work and retrenchment which were forced upon her by the Napoleonic Wars. All Europe may be moved to similar efforts by the sharper trials and discipline endured in this war. Nevertheless, the United States has advantages which cannot be gainsaid, being virtually free from debt, with great natural resources in mines and soil, possessing the control of raw cotton and the world's largest stores of fixed and fluid wealth and twice as much gold as any other country. Depleted gold holdings in Europe must be applied as reserves against enormous issues of paper currency, while excess stocks of the metal here may be used to upbuild the system of production for the domestic and foreign markets.

The strong financial position of this country has attracted deposits from foreigners to American banks-deposits which will probably grow larger when the great losses and inflation in Europe are more generally realized. A year or so ago some enthusiasts were predicting that New York would become the new moneycenter of the world. Leaders of opinion deprecated such ideas, but, as things keep going in the world, if Americans themselves could agree that New York should be a dominant money-center, those predictions might not be far from the truth.


that attic, and a pillow-fight of unusual proportions immediately developed. As is usual on such occasions, sides were soon formed, and one side quickly demonstrated its superiority over the other, the defeated. party being driven gradually down three flights of stairs, and up the village street from end to end. Finally, overcome with laughter and with the unwontedly early exercise, the combatants called a truce, and returned amicably to their night's quarters in search of more ample raiment, for the early morning air from the forest was chill, and nightgowns and pajamas afforded but meager protection. Having clothed ourselves at leisure we strolled across the street to the common salle à manger for the matutinal rolls and coffee. The first man whom I met in the courtyard was Stevenson, who, I thought, looked rather hollow-eyed and weary. It appeared that he and Mrs. Stevenson had passed the night in the chamber directly

beneath the one occupied by our hilarious band. The early morning bombardment to which they had been subjected can therefore be readily imagined.

"I had forgotten, Harrison," he said, with a wan smile, "that we were ever such reptiles."

With the unfailing instinct of the true artist Stevenson made a mental note of this incident, and he used it later in one of the most interesting chapters of "The Wrecker."

The duration of the Stevensons' stay in France during this, their last visit to the Old World, was comparatively short, and before many weeks they had returned once more to San Francisco, and thence to the South Seas and Samoa. Some years later chance sent me also to the South Pacific, but several attempts to arrange a meeting were unsuccessful. The Fates were against me, and I never saw Stevenson again.

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