few years before the war it is estimated that England was placing some 200 millions a year in her colonies and dependencies and in foreign countries.  Old-fashioned folk who still believed in the industrial strength and financial stability of their native land waited for the reaction which was bound to follow when some of the countries into which we poured capital so freely, began to find a difficulty in paying the interest; and just before the war this reaction began to happen, in consequence of the default in Mexico and the financial embarrassments of Brazil.  Mexico had shown that the political stability which investors had believed it to have achieved was a very thin veneer and a series of revolutions had plunged that hapless land into anarchy.  Brazil was suffering from a heavy fall in the price of one of her chief staple products, rubber, owing to the competition of plantations in Ceylon, Straits Settlements and elsewhere, and was finding difficulty in meeting the interest on the big load of debt that the free facilities given by English and French investors had encouraged her to pile up.  She had promised retrenchment at home, and another big loan was being hatched to tide her over her difficulties—­or perhaps increase them—­when the war cloud began to gather and she has had to resort for the second time in her history to the indignity of a funding scheme.  By this “new way of paying old debts” she does not pay interest to her bondholders in cash, but gives them promises to pay instead, and so increases the burden of her debt, which she hopes some day to be able to shoulder again, by resuming payments in cash.

Mexico and Brazil were not the only countries that were showing signs, in 1914, of having indulged too freely in the opportunities given them by the eagerness of English and French investors to place money abroad.  It looked as if in many parts of the earth a time of financial disillusionment was dawning, the probable result of which would have been a strong reaction in favour of investment at home.  Then came the war with a short sharp spell of financial chaos followed by a halcyon period for young countries, which enabled them to sell their products at greatly increased prices to the warring powers and so to meet their debt charges with an ease that they had never dreamt of, and even to find themselves lending, out of the abundance of their war profits, money to their creditors.  America has led the way with a loan of L100 millions to France and England, and Canada has placed 10 millions of credit at the disposal of the Mother Country.  There can be little doubt that if the war goes on, and the neutral countries continue to pile up profits by selling food and war materials to the belligerents, many of them will find it convenient to lend some of their gains to their customers.  America has also been taking the place of France and England as international moneylenders by financing Argentina; and a great company has been formed in New York to