Page 297 - clra62_0019-(GIPE)

ARE WE LIVING ON CAPITAL?
aggregate funds of the Short Loan Market or in the
ag~~gate share of those funds held by foreigners,
whi<Xt does not exceed, probably, a total of £50,000,000
sterling, is a comparative trifle. Such changes may be
very important in connection with the conditions of the
money market at certain times, but they are not im-
portant in connection with a question like this as to
a nation living on its capital. Were we, as a nation,
to be living on our capital, the signs of it would be
very different, and of a much more portentous char-
acter.
A different question seems to be raised by the in-
vestments on behalf of foreigners in the war loans lately
issued, which would appear to indicate, especially in
connection with the re-purchases of their own securi-
ties by foreigners, especially re-purchases of this sort
lately made by Americans, that, in certain directions,
English investment abroad is partly diminishing, and
partly being set off by foreign investment in England.
To the extent that such a process is going on,'England
would, of course, be diminishing its foreign invest-
ments on balance, though not its capital as a whole,
and this would, pro tanto, be an explanation of an ex-
cess of imports. The amounts parted with in this way
must, however, be very small in proportion to our
whole capital, and looking at the ordinary processes of
the Stock Exchange and the money market, I am of
opinion that. on balance. we are still year by year in-
creasing. and not diminishing, our investments abroad.
We must not be guided in such matters by one or two
symptoms only, or the phenomena of one or two years
only. as there are great fluctuations to be noted.
\Vhether there would be any means of giving a strict
account seems. to me, very doubtful. There has lately
appeared a remarkable and interesting statement by
an American economist. Mr. Bacon, as to the posi-
tion of America in recent years, during which its in-
debtedness abroad has been diminishing. and some
of our younger economists would do well, perhaps,
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