INTERNATIONAL FINANCE BY HARTLEY WITHERS _BY THE SAME AUTHOR_. OUR MONEY AND THE STATE, SECOND IMPRESSION. 3s. net. STOCKS AND SHARES. FIFTH IMPRESSION. 6s. net. MONEY CHANGING: an Introduction to Foreign Exchange, THIRD EDITION. 6s. net. THE MEANING OF MONEY. FIFTEENTH IMPRESSION. 6s. net. POVERTY AND WASTE. 6s. net. WAR AND LOMBARD STREET. THIRD EDITION. 3s. 6d. net. INTERNATIONAL FINANCE. 6s, net. INTERNATIONAL FINANCE BY HARTLEY WITHERS "While man cannot live by bread alone. he cannot go on living, even a good life if he really falls short of bread." PROF. J.L. MYERS. _First Edition_ _May_, 1916. _Reprinted_ _June_, 1918. PREFACE Responsibility for the appearance of this book--but not for its contents--lies with the Council for the Study of International Relations, which asked me to write one "explaining what the City really does, why it is the centre of the world's Money Market," etc. In trying to do so, I had to go over a good deal of ground that I had covered in earlier efforts to throw light on the machinery of money and the Stock Exchange; and the task was done amid many distractions, for which readers must make as kindly allowance as they can. HARTLEY WITHERS. 6, LINDEN GARDENS, W. _March_, 1916. CONTENTS CHAPTER I CAPITAL AND ITS REWARD Finance the machinery of money-dealing--Lenders and borrowers--Capital and its claim to reward--Stored-up work--Inherited wealth--The reward of services--Questionable services--Charles the Second's dukedoms--Modern equivalents--Workers and Savers CHAPTER II BANKING MACHINERY Money at a bank--Bills of exchange--Finance and industry--Supremacy of bill on London--London's freedom--The Bank of England--The great joint stock banks--The discount market--Bills and trade CHAPTER III INVESTMENTS AND SECURITIES Stock Exchange securities--Government and municipal loans--Machinery of loan issue--Underwriting--The Prospectus--Sinking fund--Bonds and coupons--Registered stocks--Companies' securities--Stock Exchange dealings CHAPTER IV FINANCE AND TRADE Why money goes abroad--Trade before finance--Prejudice in favour of home investments--Prejudice against them--The reaction--Mexico and Brazil--Neutral moneylenders and the war--Goods and services lent and borrowed--The trade balance CHAPTER V THE BENEFITS OF INTERNATIONAL FINANCE International finance and trade--Opening up the world--Exchange of products--Finance as peacemaker--Popular delusions concerning financiers--Financiers and the present war--The cases of Egypt and the Transvaal--Diplomacy and finance CHAPTER VI THE EVILS OF INTERNATIONAL FINANCE Anti-Semitic prejudice--The story of the Honduras loans--The problem to be faced by issuing houses--Their moral obligations, responsibilities, and difficulties--Bad finance and big profits--The public's responsibility CHAPTER VII NATIONALISM AND FINANCE