104 SECTIONAL ADDRESSES 
But the case against bilateral trading rests firmly on the fundamental 
economic facts upon which every international exchange of goods is built. 
Difference in climate, in natural resources, skill of peoples, efficiency and 
standards of life in the different countries of the world determine the 
type and amount of product which any selected country can export, and 
at the same time they prescribe the special character of the imports it 
requires. Inequalities in the amounts passing to and fro between each 
pair of countries are in the normal course of events. Anything else 
could scarcely be expected. But these inequalities usually balance off 
in the aggregate transactions of world trade and finance in consequence 
of triangular or multilateral movements of services, trade and capital. 
Moreover, multilateral trade is the means by which younger countries 
develop their productive resources ; for they obtain capital from one group 
of countries which may not desire to be paid the interest due to them in 
the form of the borrowers’ goods, but, instead, may be willing to receive 
it in the form of products of a third group of countries which, in turn, 
find it convenient or imperative to have the commodities that are produced 
with the aid of the borrowed capital. In this way countries other than 
the borrowers and lenders share in the increase of wealth that attends the 
use of the additional capital. ‘The many-sided trade occasioned by trans- 
actions of this kind has largely determined present economic structure 
and the distribution of economic activities among the peoples of the world. 
Reference has already been made to the fact that the inequalities in trade 
between all the separate pairs of countries in the world are cancelled and 
disappear when they are consolidated, and that this process of adding up 
the sums on each side of the general world balance sheet of international 
economic relations is accomplished through triangular or many-sided 
movements of services, trade and capital. It is obvious, therefore, that 
anything which interferes with the freedom of movement of one of these 
factors may damage an essential part of a very delicate machine which it 
may be exceedingly difficult to repair. Unfortunately, the general control 
and practical cessation of foreign investment in every country is an out- 
standing example of such interference. But alarmist movements and 
withdrawals during the depression of short-term funds held abroad by 
certain creditor nations have wrought even greater havoc ; for the countries 
suffering the withdrawals met them largely by their normal commodity 
exports to the creditor countries at a considerably reduced level of prices. 
They then had nothing left with which to buy anything from the countries 
which had been the other sharers in the triangular or multilateral trade. 
Thus a short circuit occurred, cutting out intermediate links in the chain. 
Even when the withdrawals took the form of exports of gold from the 
debtor countries the exhaustion of the liquid resources of the latter led 
to similar results. 
If trade had been comparatively free when the change took place in the 
capital item in the balance, a readjustment would have been possible and 
the intermediate links could have been restored. The withdrawals 
(coupled with the cessation of capital exports by the creditor nations 
which preceded the withdrawals) tended to affect the price levels of the 
countries involved. This, in the absence of trade restrictions, would 
