went to my banker and asked
for a loan and gave him security that he thought good enough, it would
not occur to him to ask what I was going to do with the money--whether I
was going to use it in a way that would increase my earning capacity, or
on building myself a billiard room and a conservatory, or on a visit to
Monte Carlo. He would only be concerned with making sure that any of his
depositors' money that he lent to me would be repaid in due course, and
the manner in which I used or abused the funds lent to me would be a
question in which I only was concerned. If it is the business of an
international finance house to be more careful about the use to which
money that it lends on behalf of clients is put, why should this be so?

There are several reasons. First, because if the borrower does not see
fit to pay interest on the loan or repay it when it falls due, there is
no process of law by which the lender can recover. If I borrow from my
banker and then default on my debt, he can put me in the bankruptcy
court, and sell me up. Probably he will have protected himself by
making me pledge securities that he can seize if I do not pay, a
safeguard which cannot be had in the case of international borrowing;
but if these securities are found to be of too little value to make the
debt good, everything else that I own can be attached by him. The
international moneylender, on the other hand, if his debtor defaults
may, if he is lucky, induce his Government to bring diplomatic pressure
to bear, for whatever that may be worth. If there is a political purpose
to be served, as in Egypt, he may even find himself used as an excuse
for armed intervention, in the course of which his claims will be
supported, and made good. In many cases, however, he and the bondholders
who subscribed to his issue simply have to say goodbye to their money,
with the best grace that they can muster, in the absence of any law by
which a lender can recover moneys advanced to a sovereign State. With
this essential difference in the conditions under which a banker lends
his depositors' money to a local customer, and those under which an
international house lends its clients' money to a borrowing country, it
follows that the responsible party in the latter case ought to exercise
very much more care to see that the money is well spent.

In the second place, the customers to whom bankers, in economically
civilized lands, lend the money entrusted to them, may f