396 THE POPULAR SCIENCE MONTHLY 



ness of $2,800,000,000 to London, has brought home to us the extent to whicli 

 the London money market and the British investor have been our friends, 

 indeed, our partners in what might be termed this colossal Canadian enterprise. 



Continuing, he throws an interesting but thus far little-noticed side 

 light upon the effect of this sudden change upon the foreign trade of 

 Canada and in fact of South America and all relatively undeveloped 

 countries. He well states that 



The trade situation we are now facing is that, owing to our present inability 

 to borrow by public process in the London market, we seemingly must limit our 

 imports to the approximate volume we are able to pay for in exports, or we must 

 borrow elsewhere; that is, in the natural assumption that we wish to avoid 

 reducing our cash capital. There is an alternative, for it will be obvious to the 

 most uninitiated that if our good neighbors in the United States desire us to 

 purchase from them in anything approaching the volume of the past, they must, 

 at least during the war, while the London market for public flotations is closed, 

 provide us with the wherewithal in the shape of loans to our principal public 

 borrowers. If they adopt this course, and a commencement has already been 

 made, it will be clearly advantageous to them and to Canada. 



Thus it would appear that, at a time when we ourselves are fearful 

 of having to repurchase securities from England, our Canadian, and 

 perhaps also our South American neighbors, are looking to us to main- 

 tain our foregn trade with them, in a measure taking the place which 

 England has heretofore held, by investing money in their enterprises. 



It would be well for economists and bankers to read at this time 

 Sir Robert Giffen's celebrated essay on "The Liquidations of 1873-76." 

 This advice is especially apropos for those who see such rosy prospects 

 for advantageous trade in South America and the other relatively un- 

 developed areas of the world. If history repeats itself the greatest 

 danger, in a financial sense, will occur after the close of the European 

 War and will be particularly great in the countries of South America, 

 Central America, Canada, in fact all of the relatively undeveloped 

 areas of the world. I do not want to be understood as discouraging the 

 development of South American trade, but American manufacturers and 

 exporters must proceed with great caution. They must look carefully 

 to their credits ; they must not manufacture goods without understand- 

 ing the conditions of these markets; they must not overstock, nor put 

 too large a portion of their capital into this field: they must be pre- 

 pared to take losses and look for a larger proportion of losses than in 

 the territory with which they are already familiar. Crusading for busi- 

 ness of this character is expensive. It means no immediate profit. It 

 is an investment which will yield dividends in the distant future. In 

 short, it is the sort of business which can only be handled by rich, well- 

 established, prosperous concerns, which take it on as a side line, and 

 which go into it upon the assumption that it is not an El Dorado, but 

 that it involves a long and perhaps expensive campaign, the profits of 

 which may be delayed for years. 



