THE

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 increased fluid capital, and expanding industries, at least temporary leadership in exports and foreign loans was easily assumed. These terms are almost synonymous, 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 always traceable to exports of goods, no matter how indirect and unrelated transactions 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 without sending money abroad. Late in 1914, before any of the seventeen hundred millions 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 securities, 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

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 buy

ers.

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.

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.

Vol. 93

No. 3

H

EDDA GABLER sat just across the table from me at supper after the play. It was all very well for Grant Allen, in his day, to say that Hedda was "nothing more or less than the girl we take down to dinner in London nineteen times out of twenty." Certainly she was something more this time, for Tess of the D'Urbervilles-not Hardy's Tess, perhaps, but ours-sat there, too. I was at supper with Hedda and Tess and Becky Sharp, for surely that was Becky's red hair that could be glimpsed in the shadow of the big hat and voluminous veil. That erect figure, vital, alert, indefatigable, eloquently animate, surely that was Becky. There was something of Becky, also, in the mutinous, gleaming humor, and a little something of Cynthia Karslake, stepping forth briskly from the pages of Langdon Mitchell's glittering comedy. Then there was my dear friend Mrs. BumpsteadLeigh, or at least her unmistakable lorgnette, not wielded now for the abashed discomfiture of others, but flirted and brandished, like the fan and the morsel of a handkerchief, just to enforce a few of the more fervent gestures-those vivid, arresting gestures which so emphasize and underscore a speech that, when you wish to repeat it in black and white, you must

needs out-Brisbane Brisbane in your desperate recourse to capitals or italics. In the utter self-effacement of these enthusiasms of opinion, as we talked of the theater, there were the accents of great Lona Hessel, and in the deep conviction, the allpersuasive conviction, something of Rebecca West and Salvation Nell, sweet Nell of old Cherry Hill. It was not merely that you could not choose but hear you could not choose but believe. She could say "Bosh!" for instance, with simply devastating effect. In fact, she did.

"Bosh!" said Mrs. Fiske, for of course it was Mrs. Fiske, "do not talk to me about the repertory idea. It is an outworn, needless, impossible, harmful scheme."

"I gather," I answered brightly, "that you are opposed to repertory."