302 MODERN ECONOMICS 



But, apart from such reasons, any measures 

 which would raise the prices of imports should 

 apparently be deprecated, whatever be the cus- 

 toms policy of other nations. 



By investing money in other countries a 

 community alienates a means of increasing its 

 own productiveness ; but, by the interest that it 

 exacts, it levies a tax upon the resources of the 

 borrowing country which, if spent within its 

 own limits, may add very greatly to its wealth. 

 Moreover, if the loan is remitted in the form of 

 goods, its grant will at least benefit the lending 

 country by the single turnover of its amount. 

 And if the borrowing country is undeveloped, 

 and yields very liberally to the outlay of capital, 

 not only may the lending country make larger 

 profits than it could obtain from a home invest- 

 ment, but the riches of the world as a whole will 

 be increased. By her enormous foreign invest- 

 ments England levies a percentage upon the 

 produce of many countries. The Canadian farmer, 

 the Italian metayer of Argentina, the Indian ryot, 

 all render her a share of their crops. 



The receipt of a loan by one country from 

 another increases its wealth-stream, and stimu- 

 lates the demand for local manufactures. If 

 received in the form of goods it is of course a 

 direct accession to resources. On the other hand, 

 there is interest to be paid, which involves a 

 transfer of resources to the lending country. 

 But borrowed money is exceedingly profitable 

 to lands that are undeveloped. Canada and 

 South America owe their astonishing progress 

 very largely to the assistance of English and 

 American capital, and it is not surprising that 

 they should leave nothing untried to advertise 

 their advantages to the investing public. 



A war indemnity is in effect a loan without 



