her shores are more accessible. Germany is more
isolated. Unless she possesses a larger food stock than commercial
statistics indicate she will be pressing for our food supplies, which
may reach her indirectly, we selling to Holland and Holland to Germany;
also reversely, via Holland or via Austria and Italy, Germany may sell a
stream of securities the other end of which we receive. Whether directly
or by devious routes there will inevitably be, so far as I can see, a
vast exchange of commodities passing to Europe for securities coming
from Europe. In this interchange will be found the dominant economic
effect of the war on the United States.

Foreign nations will get their much-needed loans on better terms, even
if less promptly, by the circuitous process mentioned than if they
could borrow directly in our markets; for their own citizens will pay
higher prices than we would, even if, to get the money, they have to
sell their other investment securities to us at a considerable
sacrifice. England has sold Treasury bills for seventy-five millions of
dollars on as low a "basis" as 3-3/4 per cent.

In this virtual trade of this year's crops for titles to future years'
crops we shall get a high price for the former and pay a low price (in
present valuation) for the latter. Investment securities are, and will
be, a drug on the market. In other words, the rate of return to the
investor will be high; the rate of interest on long-time loans will be
high and stay high, that on short-time loans may fluctuate greatly. The
rise in the rate of interest on long-time investments is one of the most
vital and far-reaching effects of the war. At bottom, interest always
arises from the exchange of present and future goods. The rate of
interest, as I have tried to show in my book of that title, is simply
the crystallization, in a market rate, of the impatience of the human
race for its bread and butter. War has now produced such impatience in
populations of hundreds of millions. It is this impatience which dumps
the securities upon us, sends down their price, and sends up the rate of
interest. As Byron W. Holt has said, there is no moratorium for hunger.
The fall of securities in Europe produces the like fall in this and
other countries.

One of the consequences to America of being forced to play the role of
money lender and one of the consequences of the rise in the rate of
interest here, or what amounts to the same thing, the fall in th