74 



purchases of silver had reached 7,000,000, and for the whole of the fiscal year ending 

 March 31, 1913, they were expected to reach 10,000,000. These purchases of silver 

 were operating already to reduce the amount of gold imported into the country, and if 

 as anticipated India were to buy foreign goods in 1913 as freely as was indicated by the 

 orders in existence at the end of 1912 the quantity of gold that would be sent to that 

 country in 1913 might well fall to more moderate proportions, a factor which would 

 tend to prevent monetary stringency in the world's money markets. 



The activity of trade throughout the world in recent years did not extend to the 

 United States in any marked degree until 1912. This was due to consumption in- 

 creasing and trade improving after the 1907 banking crisis faster than 

 la "America. t ^ ie economic conditions warranted; to an excessive speculation in Western 

 farm lands in 1009-10 which caused a temporary lock-up of banking 

 resources; and to relatively poor crops. In 1912, however, the American crops of every 

 kind and description proved superabundant, and far more than sufficient to meet the 

 needs of the American people; and as the world's consumption is on a great scale no 

 difficulty has been experienced in disposing of the surplus production to other lands. 

 At the close of 1912 conditions in the United States appeared to be unusually sound. 

 Indeed confidence regarding the continuance of international prosperity was in some 

 measure due to the excellent position on the American side of the Atlantic. The con- 

 sequences of the lock-up of American banking funds in farm mortgages in 1910 would 

 have been much more serious than they were but for the activity of international trade 

 and the ability of the American people to sell manufactured goods freely in the world's 

 markets. The course of trade in recent years in the United States has been, extreme 

 depression in 1908 following upon the banking crisis of 1907, a great recovery in 1909, 

 a halting tendency in 1910 and 1911, and another great expansion in 1912 after it 

 became evident that the crops would be unusually abundant. In brief, the United 

 States had not up to 1912 played any great part in bringing about the activity in 

 international trade (apart from an increased demand for foodstuffs in consequence of 

 short crops), but it was expected to be a factor of real importance in the crop season 

 of 1912-13, both in supplying other countries with food and raw material and in pur- 

 chasing manufactured goods in return. 



The great flow of capital in recent years to the borrowing states has stimulated 

 production and consumption from one end of the world to the other. All countries 

 Effects of produce commodities needed directly or indirectly by all other states; 

 credit on and when credit is good everyone can produce the things required in what- 

 commerce. ever p ar j. o f .fa e WO rld they are produced. Hence in the period of good 

 credit under consideration the volume of international trade has grown by leaps and 

 bounds. To deal with the foreign trade of the whole world would be beyond the 

 limits possible to the present survey. But the figures for Great Britain will indicate 

 the remarkable expansion in international trade in recent years, the immense effect 

 which periods of good and bad credit have upon international commerce, and the 

 influence of the period of good credit upon foreign trade so far as that country is con- 

 cerned. The values of British trade in typical years in which the credit of the younger 

 or borrowing nations was good or bad are set out in Table VII. 



In considering the growth of British imports and of the trade balance, account has 

 to be taken of the rapidly increasing income of Great Britain from interest on capital 

 Foreign trade p' ace d abroad, from shipping, and from services rendered to other nations, 

 of Orcat by British bankers, brokers, insurance offices and others. It is computed 

 Britain. t ^ a t tne j ncome f rom these sources is now upwards of 300,000,000 per 

 annum. An excess of imports over exports of 146,000,000 for 1912 confirms the 

 of silver, led to the contract being placed by the Indian Council with Messrs. Samuel Mon- 

 tagu & Co., and one result was a curious parliamentary incident. Sir Stuart Samuel, the 

 Liberal M.P., was a partner in the firm, and it was contended that he had vacated his seat 

 by making a profit out of a government contract. The question was investigated by a 

 select committee, which was unable to decide it and recommended its reference to the Privy 

 Council; and no conclusion had been arrived at when 1912 ended. 



