When a country is shipping more goods in the form of commodities than she is receiving, it is said that the _balance of trade is favorable_. The term “balance of trade” is apt to be misleading. It is a convenient phrase relating to commodity shipments alone as they appear on the record of outgoing and incoming ships, which are always subject to Government inspection and from which a definite and accurate compilation can be made and is made. If such “balance of trade” runs against a country the actual balance of commodity _indebtedness_ must be made up by shipments of gold, securities or transfer of credits. Outside of commodities which appear in making up the balance of trade there are a number of invisible factors, not of statistical public record, which go to determine the extent to which the citizens of one country may be indebted to those of another, and by which the international debts are actually settled. These elements are not absolutely available in the form of statistics and can be only roughly estimated. Taking the United States as an example, there are certain factors not tabulated by the Bureau of Statistics at Washington because their proportions are unknown to the officials. These are the elements which comprise the invisible factors in determining the settlement of international debts. The transfer of money or credit from the United States to other countries (outside of commodities) is accomplished in the following ways: FACTORS AFFECTING INTERNATIONAL EXCHANGE 1st. The purchase by citizens or corporations in the United States of securities or properties of any kind (outside of commodities actually shipped, otherwise accounted for) in other countries; 2nd. The payment of interest or dividends on American securities and properties owned by foreigners; 3rd. The payment of loans due foreigners; 4th. The payment of passenger and freight rates to foreigners owning foreign vessels; 5th. Money expended by Americans touring abroad; 6th. Remittances by foreigners in the United States to their friends or dependants abroad; 7th. Loans by the United States to foreign countries, which during this war are reaching gigantic proportions, or loans by U. S. banks or citizens to foreigners; 8th. Remittances from the United States to pay for foreign securities marketed in the United States, which have reached very large proportions during this war. In like manner all of these unrecorded factors or any of them may apply to any of the foreign countries and transfer money or credits to the United States. For instance: 1st. The purchase by foreign banking corporations or individuals of American securities or properties; 2nd. The payment of interest or dividends on foreign securities or properties held by American capitalists;