This gold is now part of our basis of credit.  When the war ends Europe will make every effort that ingenuity, backed up by trade resource, can devise to get that gold back.  One way is through loans from us; the other is by exports to us.  Now you see why we must maintain our foreign commerce.

Our huge gold reserve hides another menace:  The war demands for our commodities, paid for with the yellow metal, have increased the cost of production; and it will stay up.  This will lead to an unequal competition with the cheap labour markets of Europe when the war is over.  Both groups of Allies will be able to undersell us.

Turn to the raw materials and you encounter a further danger in the economic pact.  If the Allies develop their own sources, it will cut down our export of cotton, copper and oil.  If they cannot develop sufficient sources for self-supply they may, through co-operative buying outside their dominions, satisfy their needs.  In the third place, they may stimulate, through tariff or shipping concessions, or by subsidies—­which are much talked of in Europe to-day—­a preference for their own manufactures over American products in both allied and neutral markets.

Take navigation:  England controls an immense shipping.  As a matter of fact, outside the three-mile limit, she practically owns the waters of the world.  If she makes lower rates for her allies, or others to whom she gives preference, where shall we be in our chronic and unpardonable dependence upon foreign bottoms?  Here is where we shall pay the price for neglecting our merchant marine.

Still another menace to our trade lies in preferential alliances between Mother Countries and their colonies, which is part of the projected programme.  Our next-door neighbour, Canada, has just given an illuminating instance of what may be in store for us.  A Co-operative Export Association has been formed in the Dominion to get business throughout the British Empire and the other allied nations.  In the circular announcing its organisation it declares that “the products of Canada will be preferred against the products of her great neutral competitor, the United States, who has stayed outside of the war and has borne no sacrifice of life and money made by the allied countries.”

Return to the economic pact again and you find that it continues to bristle with dangerous possibilities for us.  You will recall that one of the clauses forbids the resumption of a favoured-nation arrangement with enemy countries for a period “to be fixed by mutual agreement.”  This may be for an indefinite time.

Now the danger here lies in the European interpretation of the favoured-nation idea.  To quote an authority:  “Most of these countries have treaties under which each must grant most-favoured-nation treatment to the other; and this means that a reduction in duties granted to one country is automatically extended to all other countries with whom such treaties exist.  The result is that the lowest rate in any treaty becomes, with exception, the rate extended to all countries.”