70 



INTERNATIONAL FINANCE 



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given the manufacturing countries a fair participation in the general prosperity. It is 

 apparent, however, that the prosperity of the last four years has been felt mainly by 

 the agricultural countries and districts, which have gained advantage from 

 the recovery in prices of foodstuffs and of raw material, and which suffered 

 so seriously in the nineties from the low prices which then prevailed. The 

 influence exercised upon the economic welfare of the wage earners of Great Britain 

 by the movements in prices and in wages and by the variations in the volume of em- 

 ployment is apparent from a contrast of the Board of Trade index-numbers of prices, 

 wages and employment respectively, first, in the four years of good credit throughout 

 the world which culminated in 1891, next, in the four years of bad credit from 1893 

 to 1896, and finally, in the past four years. This is shown in Table I. 



Table I. British Board of Trade Index Numbers. 



It would take us too far here to describe in any detail the various causes of the 



greatly increased activity of trade, the relatively high cost of living, the labour unrest, 



and the advances in wages throughout the world in the last four years. 



ofcapitaf" Ce ^ u ^ m *- ne rnain these things, as well as the great volume of emigration 



from Europe to the New World, result from a single cause, viz., the high 



condition of credit in the young and food-producing countries, and the great sums of 



capital which the lending countries have consequently supplied to them. This high 



condition of credit has partly arisen from the world's great output of gold, from the ac- 



cumulation of gold, and from the encouragement which large stocks of gold have given 



to the free investment of capital wherever it could be profitably employed. 



To realise the importance of these things it is again necessary to recollect the adverse 

 conditions in the nineties, when the credit of the young countries was at a low ebb, and 

 the borrowing states could not secure the capital needed for their develop- 

 ment. At that time, with bad credit and very low prices of foodstuffs 

 and raw material, gold accumulated in the Banks of England, France 

 and Germany notwithstanding the world's small production of gold; in the past four 

 years of good credit gold has accumulated in the young or borrowing countries, and 

 not in the old 01 lending states, and this has materially assisted the movement of capital 

 from the old to the young countries. This will be apparent from a contrast, first, of the 

 stocks of gold in the Banks of England, of France and of Germany in 1896 in comparison 

 with 1 892, .and second, of the stocks of gold in these three institutions in 1912 in com- 

 parison with 1908. This is shown in Table II. 





