a wholesome effect on international relations. Today the ships of "all nations" receive equal treatment. Thus our treaty obligations and our present commercial policy are at one in this matter. A further aspect in which vital developments relating both to finance and diplomatic policy are involved is foreign loans. It is estimated that today over nine billion dollars of American money is invested in this way by private banks. Government debts are in another category. This shows that American bankers and investors did not accept the dictum of Congressman Fordney, the reputed sponsor of our present tariff, when he said: "An American dollar invested abroad is an American dollar lost." Such ignorance of the elements of international economics does not mean per contra that every dollar so invested is absolutely safe. The charge is frequently made that American armed forces "have been used for the collection of American debts, that loans by American bankers involve somehow the commitment of this Government to use force if necessary in collecting them, and that the Government of the United States follows a policy of financial imperialism. . . ."

Whatever may have been our national policy in time past with respect to such matters, it is quite clear today that, as President Coolidge said last October: "American investors receive no assurances that their loans or agreements will be supported by American arms. It is not, and has not been, the policy of this Government to collect debts by force of arms." Secretary Hughes repeatedly made it clear that the aim of the Department of State was "not to exploit but to aid.”

"Dollar diplomacy" is no longer in vogue at Washington and attempts to charge that the Department of State is consciously trying to promote certain financial interests fall to the ground. The Department cannot, of course, control the ways in which investments are made. But the flotation of foreign loans in the United States is a matter of public concern and may be of national interest. President Roosevelt used to say that the Nobel Peace Prize which he received for his services in promoting the Portsmouth Peace Treaty between Russia and Japan should have gone to the banking house for their refusal to loan Japan any more money. Ambassador Houghton speaking in London has

recently suggested that American financial aid to Europe might cease unless European nations composed their differences and refrained from further expenditures for warlike preparations. The Department of State has also clearly indicated that it wants to know all about any contemplated loans, though the Department "will not pass upon the merits of foreign loans as business propositions, nor assume any responsibility whatever in connection with loan transactions."

The Department wishes, however, to have the opportunity of saying whether "there is or is not objection to any particular issue." Such objection might arise from the purposes of the loan or it might arise should the American capitalist ask unfair terms. More than once the Government has intervened to protect the borrowing country from the terms of a concession or of a loan which seemed to be unfair to the borrowing country. Of a kindred nature are the proposals for the financial reconstruction of given countries. Frequent requests come to the Department for advice as to the choice of experts to assist in the financial restoration of a State. Such advice is freely given to assist in the economic rehabilitation of a less fortunate nation. These experts, however, are private citizens who are employed by foreign nations and are not in any way in the employ of the United States.

We all recognize the value of the work done by the Dawes Commission; but the question still remains as to how it came into being and how the relationship between business experts and official diplomats was maintained. All sorts of people are now claiming the credit of having proposed such a solution. Indeed a distinguished European statesman wrote to Washington to congratulate the Secretary of State on his achievement in taking up the proposal which our European friend alleged that he had originally made. Far-reaching proposals of this sort generally have a mixed origin. Certainly this was true of the Dawes Commission. In June, 1922, an international bankers' committee reported to the Reparations Commission on the question of a German loan. Generally speaking, the findings of the committee were negative in character.

However, as a body of technical experts they presented an

authority which could be applied to the solution of other and larger questions. Mr. J. P. Morgan sat on this committee, representing American financial interests. Later, Secretary Hughes formulated the proposal which finally led to the organization of the Dawes Commission. Informal intimations were made to several governments regarding the plan. At last in December, 1922, at New Haven, Secretary Hughes made public announcement of his scheme, stressing its importance as a possible remedy for the economic ills of the world.

There followed an uneasy and disappointing time during which nothing happened. In March, 1923, there came the meeting at Rome of the International Chamber of Commerce. This congress passed a resolution dealing with the various outstanding economic questions of the day, thus supporting the thesis that technical business experts might assist in an economic way to promote peace and to secure the political restoration of the world. Thanks to the arduous work of the American delegation, the idea of an expert commission on reparations was also laid before the leading business men of Europe. This missionary work of propaganda was followed by a suggestion in August of that year by Lord Curzon that such a commission might be organized. Finally in October, 1923, the British inquired whether the offer proposed by Secretary Hughes in the preceding December was still open. The answer was in the affirmative. So at the start of 1924 this committee of three American business men, who held no political office, was appointed to sit with European experts and to formulate a plan to deal with reparations and the financial rehabilitation of Germany.

The report of this Commission was finally officially adopted by the European Governments concerned at the London Conference in August, 1924. The United States was in attendance through the presence of Ambassador Kellogg. Thus this full coöperation of business and diplomacy presented a result of inestimable value to the peace and financial security of the world.

The settlement of debts owed by foreign governments to the United States is now a matter of discussion. Though it is a subject falling well within the limits of this paper, I think it is wiser to omit any comments regarding it in order that we may turn

finally to the development of what the press has popularly termed the entente cordiale between American and English banking circles. This has received special notice through the reëstablishment of the gold standard by Great Britain.

The attempt has been made to declare that for a considerable period British and American financial policy has marched together. This is not exactly true, for each of these countries has been affected by varied elements in the international financial situation. The effect of the damage done by the war and by strikes to the export of coal from Great Britain has dislocated British foreign trade. In the case of the United States the fear that France was returning to a period of renewed militarism has affected our financial opinion. Both of these examples acted in much the same way to make it appear that there was a joint understanding as to finance. The reasons were separate, but the results were similar. Certainly this alleged entente cordiale does not prevent friendly competition between the two countries.

Nevertheless there is no question today that an understanding exists between the two official or semi-official banking agencies of Great Britain and the United States. The Department of State is on the contrary justified in denying that an entente officially exists. It is not a diplomatic understanding. But on the other hand, neither is the Department of State the entire Government of the United States. The Federal Reserve Board and more particularly the Federal Reserve Bank of New York is a governmental agency acting under Secretary Mellon. The Bank of England is distinct from the British Foreign Office, but who can question its importance or its functions as a financial agency of the British Government?

The British Prime Minister, Mr. Baldwin, said some time ago that he would trust Secretary Mellon and J. P. Morgan and Company as he would the Governors of the Bank of England. Morgan's is, of course, acting as the fiscal and financial agent in this country for the British Government. It is under the arrangements made by the Bank of England through Morgan and Company with the Federal Reserve Bank of New York that the reëstablishment of the gold standard in England has been made possible. These negotiations have been going on for some time. They

culminated with the announcement by Mr. Winston Churchill, the British Chancellor of the Exchequer, of the removal of the embargo on the exportation of gold and of the reëstablishment of a free gold market in London. A revolving credit of two hundred million dollars was set up in the Federal Reserve Bank of New York and one hundred million dollars with J. P. Morgan and Company to assist in maintaining the gold standard in case it were necessary. It is probable that the fact that such a credit is available will prevent any large demand for its use.

The Advisory Council of the Federal Reserve Board has heartily endorsed this assistance, saying:

This event marks an epoch in the financial history of the post-war period. It means that the time has definitely come to an end when the world seemed to waver between monetary systems frankly bottomed upon gold on the one hand and fluctuating exchanges and so-called "managed currencies" on the other. . . . For the United States this development is of the vastest importance.

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The international air has been cleared by this step. Economics and diplomacy have gone hand in hand; and the result is a fresh bond making for peace and for national security. The British Ambassador at Washington recently expressed the thought, that in addition to "hands across the sea" our AngloAmerican relations are now based on "goods across the water." Thus we see that amidst the intricacies of international relations the hard common sense of business has its place.

We must, however, remember that "man does not live by bread alone." There are the spiritual values as well. "Without a vision the people perish." If economics or diplomacy fail to realize the eternal verities which guide nations along paths of honor and honesty, they both become as tinkling cymbals for the dance of death. The power which they represent today may be swept aside. The ancient sacrifice of an humble and a contrite heart remains.

ALFRED L. P. DENNIS.