vi REPARATION, INTER-ALLY DEBT, ETC. 163

England, France, and (on a small scale) Germany in providing capital for those new parts of the worldless developed than herself—the British Dominionsand South America . The Kussian Empire, too, inEurope and Asia, is to be regarded as virgin soil,which may at a later date provide a suitable outletfor foreign capital. The American investor willlend more wisely to these countries, on the lines onwhich British and French investors used to lend tothem, than direct to the old countries of Europe .But it is not likely that the whole gap can be bridgedthus. Ultimately, and probably soon, there mustbe a readjustment of the balance of exports andimports. America must buy more and sell less.This is the only alternative to her making to Europe an annual present. Either American prices mustrise faster than European (which will be the case ifthe Federal Reserve Board allows the gold influxto produce its natural consequences), or, failing this,the same result must be brought about by a furtherdepreciation of the European exchanges, until Europe ,by inability to buy, has reduced her purchases toarticles of necessity. At first the American exporter,unable to scrap all at once the processes of produc-tion for export, may meet the situation by loweringhis prices ; but when these have continued, say fortwo years, below his cost of production, he will bedriven inevitably to curtail or abandon his business.It is useless for the United States to suppose that