SOME ILLUSTRATIVE FACTS

have also been in evidence. Thus, the country has beenconspicuously a borrowing country, in debt to other coun-tries. The proceeds of such loans from Europe have shownthemselves in increased imports into the United States and diminished exports, creating a so-called unfavorablebalance of trade. These phenomena have usually been ex-pressed as a demand for capital, but, while it is quite truethat the exploitation of our natural resources requiredthe construction of railways and other forms of capital,this fact is better and more fully expressed in terms of in-come. We wanted, not the railways and machinery them-selves, but the future enjoyable products to which thisapparatus led. The labor of constructing these instru-ments necessarily tended to diminish the immediate en-joyable income of the country, but added to that of theexpected future. It was to even up this disparity of im-mediate and remote income that loans were contracted.It does not matter whether the loans from the foreignerwere received in the form of machinery and other in-struments of production, or in the form of the comfortsof life to support us while we ourselves constructed theinstruments. In either case the essential fact is the trans-formation of the income stream rather than the need ofcapital, which is merely one of the means thereto.

Not only have we witnessed the phenomena of highrates of interest and of borrowing during this period ofAmerican development, but it is also true that the char-acter of the instruments created was for the most partof the unsubstantial and quickly returning kinds. Ourhighways, as John Rae pointed out, were little more thanthe natural surface of the earth after the removal oftrees and rocks; our railways were lightly ballasted,sometimes even narrow gauge, and crooked to avoid the

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