enough to dispel this delusion. Although England and France
immediately voted immense credits they were not long in finding out that
they must back up their unprecedented mobilisation of resources with
outside help. They came to us.

When the great Anglo-French loan of $500,000,000 was first discussed as
a possible American financial feat, people over here began to wonder why
Great Britain and France, whose combined wealth exceeds that of all the
other nations at war, should want overseas assistance. Since the reason
for this loan as well as the disposition of proceeds are practically the
same as that of most of the other Allied issues in this country in which
thousands of our investors have participated, it is well worth
explaining because it also carries with it a lesson in international
barter. Here it is:

Before the war our foreign trade was growing fast. England and France,
in particular, were good customers for our wheat and other foodstuffs,
iron and cotton manufactures, oil and automobiles. In exchange we
imported the product of many European factories.

Business relations between nations are not settled like transactions
between individuals and firms, that is, with checks or cash. They are
settled by balances. England's imports from the United States, for
example, are paid by her exports to us. Usually exports and imports so
nearly balance that the difference is paid by gold or with the temporary
use of bank credit. Therefore it is not a question of actual money but
of exchange and this foreign exchange is a commodity whose value
fluctuates with supply and demand.

Along came the war. Millions of artisans in France and England were
withdrawn from lathe and loom to fight in the battle line. What workers
remained at their posts had to produce war supplies. Yet civilian and
soldier needed food, clothing and arms. The demand for our products
increased and the United States suddenly became the work-shop and the
granary of the world.

The Allies, in control of the seas, became our principal foreign
customers. American exports soared: those of France and England declined
correspondingly. A huge balance of trade--the biggest in our
history--swung to our favour.

This balance of trade had to be settled, but on an abnormal basis. What
was ordinarily a comparatively trivial matter of a few millions
suddenly became an item of many millions and it was all owed on one
side. The demand for exchange on New York greatl