Going back to our doctor, who lends railway material to an Australian colony, we see that every year for each L100 lent the colony has to send him L4.  This it can only do if its mines and fields and factories can turn out metals or wheat or wool, or other goods which can be shipped to England or elsewhere and be sold, so that the doctor’s L4 is provided.  And so though on both sides the transaction is expressed in money it is in fact carried out in goods, both when the loan is made and the interest is paid.  And finally when the loan is paid back again, the colony must have sold goods to provide repayment, unless it meets its debts by raising another.  But when a loan is well spent on a railway that is needed for the development of a fertile or productive district, it justifies itself by cheapening transport and quickening the output of wealth in such a manner, that the increased volume of goods that it has helped to create easily meets the interest due to lenders, provides a fund for its redemption at maturity, and leaves the borrower better off, with a more fully equipped productive system.

Since, then, there is this close and obvious connection between finance and trade, it is inevitable that all who partake in the activities of international finance should find their trade quickened by it.  England has lent money abroad because she is a great producer, and certain classes of Englishmen are savers, so that there was a balance of goods available for export, to be lent to other countries.  In the early years of the nineteenth century, when our industrial power was first beginning to gather strength, we used regularly to export goods to a greater value than we imported.  These were the goods that we were lending abroad, clearly showing themselves in our trade ledger.  Since then the account has been complicated by the growth of the amount that our debtors owe us every year for interest, and by the huge earnings of our merchant navy, which other countries pay by shipping goods to us, so that, by the growth of these items, the trade balance sheet has been turned in the other direction, and in spite of our lending larger and larger amounts all over the world we now have a balance of goods coming in.  Interest due to us and shipping freights and the commissions earned by our bankers and insurance companies were estimated before the war to amount to something like 350 millions a year, so that we were able to lend other countries some 200 millions or more in a year and still take from them a very large balance in goods.  After the war this comfortable state of affairs will have been modified by the sales that we are making now in New York of the American Railroad bonds and shares that represented the savings that we had put into America in former years, and by the extent of our war borrowings in America, and elsewhere, if we widen the circle of our creditors.  The effect of this will be that we shall owe America for interest on the money that