ESSAYS IN PERSUASION

PART

254

The first remedy is to put obstacles in the wayof our usual lending abroad by means of an em-bargo on foreign loans and, recently, on Colonialloans also; and the second remedy is to en-courage the United States to lend us money bymaintaining the unprecedented situation of abill rate 1 per cent higher in London than inNew York .

The efficacy of these two methods for balan-cing our account is beyond doubt—I believe thatthey might remain efficacious for a considerablelength of time. For we start with a widemargin of strength. Before the war our capacityto lend abroad was, according to the Board ofTrade, about £181,000,000, equivalent to£280,000,000 at the present price level; andeven in 1923 the Board of Trade estimatedour net surplus at £102,000,000. Since newforeign investments bring in no immediatereturn, it follows that we can reduce our exportsby £100,000,000 a year, without any risk ofinsolvency, provided we reduce our foreign in-vestments by the same amount. So far as themaintenance of the gold standard is concerned,it is a matter of indifference whether we have£100,000,000 worth of foreign investment or£100,000,000 worth of unemployment. Ifthose who used to produce exports lose their job,nevertheless, our financial equilibrium remainsperfect, and the Governor of the Bank ofEngland runs no risk of losing gold, providedthat the loans, which were formerly paid overin the shape of those exports, are curtailed to