sh
state of mind produced by war. The war has shown us that our wealth was
a sure and trusty weapon, and much of the strength of this weapon we owe
to our activity in International Finance.

FOOTNOTES:

[Footnote 7: "England's Foreign Trade in the Nineteenth Century," p, 16,
by Dr. A.L. Bowley.]

[Footnote 8: "Paper against Gold," Letter III.]

CHAPTER VIII

REMEDIES AND REGULATIONS

Apart from the political measures which may be found necessary for the
regulation, after the war, of International Finance, it remains to
consider what can be done to amend the evils from which it suffers, and
likewise what, if anything, can be done to strengthen our financial
weapon, and sharpen its edge to help us in the difficult fight that will
follow the present war, however it may end.

It has been shown in a previous chapter that the real weaknesses in the
system of International Finance arise from the bad use made of its
facilities by improvident and corrupt borrowers, and from the bigger
profits attached, in the case of success, to the more questionable kinds
of issues. With regard to the latter point it was also shown that these
bigger profits may be, to a great extent, justified by the fact that
the risk involved is much greater; since in the case of failure a weak
security is much more difficult to finance and find a home for than a
good one. It may further be asked why weak securities should be brought
out at all and whether it is not the business of financial experts to
see that nothing but the most water-tight issues are offered to the
public. Such a question evidently answers itself, for if only those
borrowers were allowed to come into the market whose credit was beyond
doubt, the growth of young communities and of budding enterprises would
be strangled and the forward movement of material progress would be
seriously checked.

It is sometimes contended that much more might be done by the Stock
Exchange Committee in taking measures to see that the securities to
which it grants quotations and settlements are soundly based. If this
view is to prevail, its victory has been greatly helped by the events of
the war, during which the Stock Exchange has seen itself regulated and
controlled by outside authority to such an extent that it would be much
readier than it was two years ago to submit to regulations imposed on
it by its own Committee at the bidding of the Government. Nevertheless,
there is this great diffi