to move than the quotation for foreign exchange, the larger number of francs obtained is likely, for the time being, to mean added net profit for the exporter, because his wages bill and everything that he wants to buy at home are still on the old basis of prices. And so the French exporter is able to cut the prices of his goods in foreign market and still make a profit at the expense of his countrymen, who have not yet found out that they are taking depreciated money for their commodities and services. This artificially produced bonus to exporters made European trade into a speculative nightmare and all business men agreed that as long as what was called "valuta dumping" continued, the policy of fiscal restrictions and prohibitions, which has been carried to such disastrous lengths in Europe, could not be seriously modified.

Stable currencies are thus seen to be a first requisite for Europe's economic health, and it is highly unfortunate that in this most important respect, progress has been backward since Mr. Leaf spoke in March. Far from France being the only country with an unstabilized currency, the list has since then been swollen by Poland and Greece; and this dismal reaction only shows how difficult it is, when once countries have let go their hold of the gold link which formerly united all the currencies of the leading nations of the world, to make and maintain the sacrifices that are necessary in order to regain it. It is so easy to make everybody, with the exception of a small and usually inarticulate class, believe themselves to be prosperous by pouring out a flood of bad money. Prices go up, every one who holds, or is making, goods is certain of a profit in and on paper, the factories are busy and full of orders, unemployment is forgotten and only the small class with fixed money incomes suffers. The fact that in the meantime the country is being drained of goods which it is selling too cheap to foreigners, at the expense of its own citizens who are being swindled, is easily ignored, because most of its victims are unconscious; and the further fact that the end of the process is ruin or disaster, as shown by the examples of Russia, Germany and Austria, is a consideration that can always be postponed by those who are making hay in this artificial sunshine. "Why should we stabilize and spoil

good trade?" is a question that can only be answered by considerations that are more or less remote and do not convince those who are revelling in the cakes and ale of today. Human nature being what it is, one can thus account for what the New York correspondent of The London Economist, in a letter published on October 16, describes as "a curious French tendency to regard debt ratification and franc stabilization as measures that in some way constitute a favor to America for which France should have compensation."

Nevertheless, in spite of the weapons which have been put in the hands of the opponents of Continental stabilization by eminent British bankers and economists, who foretold dire results for England from her return to the gold standard and whose followers point now to the coal strike and say "I told you so❞—in spite of all this, it is safe to say that the recent backward movement is only a receding wave of a tide that is really flowing, and that the day of disordered currencies in Europe is slowly drawing to its close. France and Italy are busy on the necessary measures for making their monetary arrangements worthy of the position and history of these distinguished peoples, and when once that ill-favored bogey of "valuta dumping" has been laid to rest, it may be possible to hope for a modification of that nationalistic spirit in trade matters which has worked so hard to strangle the recovery of Europe in its infancy.

This economic nationalism is a very natural instinct, and even its extreme development is only a perversion of a highly respectable prejudice. It is quite reasonable and proper that we should all of us, in spite of any facts to the contrary that may be put before us, regard our own country as the best and only country in the world, and from this premise it is easy, by a simple process of false but specious reasoning, to proceed to the conclusion that it is unpatriotic to buy any but home-made goods, and that if there are any goods which the country does not produce it ought to be made to produce them if it possibly can, so that its citizens can be saved from the undignified necessity of buying those made abroad. It is only in countries that are far advanced in wealth and intelligence, such as the United States, that public custom can be attracted by the offer of imported articles. A

committee which is inquiring into the conditions and prospects of British industry issued not long ago a preliminary report in which it dealt, among many other things, with the effect on British industry of the tendency shown by all progressive nations to set up manufacturing industries of their own, and found that the process brings certain compensations with it. It says:

New industries create new wants for plant and materials and . . . we have also to take into account the demand resulting from the increased purchasing power of those for whom the local industries provide employment. Part of this purchasing power will almost inevitably be expended directly or indirectly on foreign goods. . . For example, concurrently with the development of a huge manufacturing power in the United States, the growth of export of wheat and meat from that country has been checked owing to the increased home demand and the faster growth of the industrial than of the agricultural population. The effects of the whole development on international trade have, of course, been very complex, but there are two outstanding features. First, the great increase of wealth derived from industry has given rise to a luxury demand almost irrespective of price, which enables certain classes of high grade British goods to surmount even the present high tariff wall. Secondly, the slowing down of U. S. A. exports of wheat and meat has stimulated the growth of export of these foodstuffs from British Dominions and South America, and thus helped to maintain, or to increase, the demand of those countries for manufactures in which British goods predominate.

Apart from this "luxury demand" which insists on having the best goods that it can get, no matter whence they may come, it is certainly the tendency of the average man to prefer home-made goods and to think himself rather mean if he chooses those of foreign origin. And this tendency is fostered both by the home manufacturers who profit from it and are helped by it to secure a comfortable tariff wall to work behind, and also by Governments which find customs duties an easy and popular form of raising revenue. "Taxing the foreigner" is always a popular cry. In Mr. Winston Churchill's brilliant biography of his father, Lord Randolph Churchill, a letter from the latter is quoted in which he describes the great success of a political meeting, composed largely of working men, which he had addressed in the north of England. "Fair Trade," he says, "and taxing the foreigner went down like butter. How the latter is to be done, I don't know."

Economic nationalism, which thus had the soil already dug and topdressed for it by natural tendencies and stupidities, made a portentous growth in the unhealthy heat of the feverish after-war atmosphere. New States that had come into being at the bidding of the wizards of Versailles, thought it essential to their youthful dignity to keep out the goods of their neighbors; and at the same time the necessities of the war, which had obliged countries that had formerly bought goods from the belligerents to make them for themselves, had created powerful vested interests, which could claim that national loss would be suffered if the capital put into their factories and plants were scrapped under the pressure of revived foreign competition.

And so the amazing fallacy, which makes people think that nations can flourish by selling shiploads of goods abroad and taking nothing in return, has grown into an article of almost religious belief. Even in England, with a century behind her of prosperity largely based on international trade, our most earnest and intelligent statesmen are always shouting at us to "buy British goods" in order to cure unemployment. What would have happened to England's export industries (already sorely cramped by the lack of solvent foreign customers) and to her shipping and shipbuilding trades, if the advice of these sage counsellors had been taken, they do not seem to have reflected.

But fortunately England also contains many people who want the best wherever it may come from, and many others who recognize that nations cannot sell unless they buy, so that whenever one buys foreign goods one is, in effect, giving an order to British exporters of goods and services.

Behind all this welter of economic nationalism in Europe and England, there is a quiet but irresistible force which is turning men's minds to saner counsels and this is the force of experience and the pressure of hard times. When one travels on the Continent in these days one is continually being surprised by the number of thoughtful business men who draw an instructive contrast between the amazing prosperity of America and the impoverishment of Europe, and proceed to argue that it is by no means merely a case of war wealth and war poverty, but that an important reason for the different conditions in these two areas

is the wide space, free from all trade obstructions, in the one and the chessboard of tariff barriers in the other. In one, massproduction based on the freest division of labor among the districts in which it can be most successfully applied brings well distributed prosperity on a scale that the world has never yet witnessed. In the other, administrative barriers of every kind assist the work of tariffs in promoting self sufficiency in penury. With this example before them it is hardly surprising to find that leading European financiers-for the horizon of financiers is almost inevitably wider than that of manufacturers should be looking ahead to a day when Europe may be united in a single customs union, with no trade barriers within its area. It is a very far off dream, which can only take shape as a fact, after a number of conferences and circumlocutions which the imagination shudders to contemplate.

But in the mean time we see the interesting and most important development by which business men are cutting clean across nationalistic barriers and making international trade agreements under which production and markets are parcelled out among the producers of different countries. In the matter of potash, and again of steel, French and German organizers have found means to mend breaches that were made by the Treaty of Versailles in the economic machinery of Europe, and American energy has succeeded in uniting the interests of an overwhelming proportion of the world's copper producers.

These great combinations, with their possibilities of restricted output and exploitation of the consumer, will need careful and suspicious watching. But in the present state of the world's temper it is a great advantage that men of different races should come together and coöperate and so do something to moderate the hostility to foreign goods which is so carefully fostered by the interests which benefit by it and by the Governments which need their support.

As to the danger to the consumer, America has found out, and is teaching other peoples, that mass production requires mass consumption, which is only possible if goods are delivered at a price which the mass can pay.

As I end this article there comes the publication of the "Plea for