The Dominion. MONDAY, JANUARY 10, 1910. BRITISH MONEY POWER.

Dominion, Volume 3, Issue 711, 10 January 1910, Page 4

The Dominion. MONDAY, JANUARY 10, 1910. BRITISH MONEY POWER.

The demands for British capital to finance undertakings all ovor the world are steady and continuous, and annually largo suras of money, or rather oxtonsive credits, are granted. , It o is being noted, however, that whilo Great Britain supplies the capital for foreign undertakings, sho does not always receive a'sharo of the oiders for plant or material on which tho money is largely to be spont For instance, last year Britain supplied the money for an'extensive tramway System in Moscow, and the Germans carried off all the oi dors for the plant Other Euiopoan countries almost invariably insist upon the loan being spent with them Thus, Germany supplied tho money for a huge power plant'at Victoria Falls to a British concern, but upon the express condition thatithe material required should be obtained from German firms. French capitalists impose similar conditions, and it is seriously asked why England should not do the same. No conditions are imposed in England, and this "free trade in ifinahce" has helped to make London the financial centre of the world and Great Britain the bankor for tho nations of the earth. Dr. Armitage-Smith, Principal of Birbeck College, 'is of opinion that such conditions are unnecessary. A loan has both a financial and a material aspect; tho former is very obvious, the latter, which is its complement, is less clearly visible; and the connection between tho, two is ofteD complex, devious, and slow in its development. But one thing is certain, and it is the all-important fact, a loan is contracted and the debt incurred witli the very definite aim of obtaining command over material resources, whether the objebt be industrial development or public service.

■ To '-.emphasise 'this'.'point, .Db. AEMiTAaE-SMiTH;; writes ':'; ,: '/To ■ appreciate 'the : ,moaning and effect 'of, a loan; it iß_ necessary to penetrate .beyond the ideas of; money and credit (which, aro only the, forms 'in which ;the:loan;presents itself in'.the.fiharicial oporation), and realise the fun- : damontal facts, rcalitios, consumable goods (. and services .which are the wealth really loaned. .Nothing else will .serve, tho; purpose; securities and other: documentary promises in ■themselves'"db/.not' feed, clothe, and house "men, ,'make bridges, railways, docks, .and steamers; they are: but credit instruments representative, of wealth and'.a means of;getting possession of ■ wealth, in some material form: they themselves are evidences of. dobt which can bb. sold and transferred; arid, constitute a claim upon wealth. They only exist to enable a country, by means of its credit,' ; tb obtain the material aid it requires for the development of its reHo maintains that:a loan to. a foreign country is a means of stimulating British industry, for a loan creates an ■ export of "goods from the. leading country,_ which . may be direct to the borrowing country, of indirect as a: payment for its pur-. chases : elsewhere. : Such .exports create activity! in. the'industries of the lending .country to the amount of the capital which the. loan represents, allowing of course..,for .the : various expenses contingent upon tho issuo of ■ the loan. ■ This ovei 1 - flow of. capital is a relief to the country; in which it. cannot find full employment just: in the same manner as the emigration of superfluous labour. By such loan aids Great: Britain 'has ;6btained her abundant supplies :of,materials—cotton, wool, timber,. .Iriibbbr, '.wheat, butter, meat, etc.,: all of- which''arepaid for by her own manufactures, in so far asthc imports are not interest on British capital.' The writer quoted thinks it would ,be 'suicidal to fetter British capital In its in.vestment abroad, Tha rcsulta 'would.

bo injurious to British industry and commerce. "In the first place, the field of operation for financial institutions would be restricted; loaning would be discouraged and checked; landers would obtain a lower rate of interest owing to the contracted/markets and. tho restraints placed.,upon the borrowers; and it might be confidently expected that the door would be opened to'_ influences which tend, to corruption, evasion, and ' a genoral lowering of financial and commercial morality, The simple play of economic forces is more in tho interest of all concerned, including both industrial and commercial classes." :'■■