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ESSAYS IN PERSUASION

PART

accustomed lenders to expect much higher ratesthan before the war. Second, the existence ofpolitical borrowers to meet Treaty obligations,of banking borrowers to support newly restoredgold standards, of speculative borrowers to takepart in Stock Exchange booms, and, latterly, ofdistress borrowers to meet the losses which theyhave incurred through the fall of prices, all ofwhom were ready if necessary to pay almost anyterms, have hitherto enabled lenders to securefrom these various classes of borrowers higherrates than it is possible for genuine new enter-prise to support. Third, the unsettled state ofthe world and national investment habits haverestricted the countries in which many lendersare prepared to invest on any reasonable termsat all. A large proportion of the globe is, forone reason or another, distrusted by lenders, sothat they exact a premium for risk so great asto strangle new enterprise altogether. For thelast two years, two out of the three principalcreditor nations of the world, namely, France and the United States , have largely withdrawntheir resources from the international market forlong-term loans.

Meanwhile, the reluctant attitude of lendershas become matched by a hardly less reluctantattitude on the part of borrowers. For the fallof prices has been disastrous to those who haveborrowed, and any one who has postponed newenterprise has gained by his delay. Moreover,the risks that frighten lenders frighten bor-rowers too. Finally, in the United States , the