outside of their own country, but as our investment surplus has
increased in size, it _has_ come about that American investors have
been going in more and more extensively for foreign bonds. There have
been times, indeed, as when the Japanese loans were being floated, when
very large amounts of foreign exchange were required to pay for the
bonds taken by American individuals and syndicates.

Security operations involving a demand for foreign exchange are,
however, by no means confined to American participation in foreign bond
issues. Accumulated during the course of the past half century, there
is a perfectly immense amount of American securities held all over
Europe. The greater part of this investment is in bonds and remains
untouched for years at a stretch. But then there come times when, for
one reason or another, waves of selling pass over the European holdings
of "Americans," and we are required to take back millions of dollars'
worth of our stocks and bonds. Such selling movements do not really get
very far below the surface--they do not, for instance, disturb the
great blocks of American bonds in which so large a proportion of many
of the big foreign fortunes are invested, but they are apt to be,
nevertheless, on a scale which requires large amounts of exchange to
pay for what we have had to buy back.

The same thing is true with stocks, though in that case the selling
movements are more frequent and less important. Europe is always
interested heavily in American stocks, there being, as in the case of
bonds, a big fixed investment of capital, beside a continually
fluctuating "floating-investment." In other words, aside from their
fixed investments in our stocks, the foreigners are continually
speculating in them and continually changing their position as buyers
and sellers. Selling movements such as these do not materially affect
Europe's set position on our stocks, but they do result at times in
very large amounts of our stocks being dumped back upon us--sometimes
when we are ready for them, sometimes when the operation is decidedly
painful, as in the Fall of 1907. In any case, when Europe sells, we
buy. And when we buy, and at the rate of millions of dollars' worth a
day, there is a big demand for exchange with which to pay for what we
have bought.

3. So great is the foreign investment of capital in this country that
the necessity of remitting the interest and dividends alone means
another continuous dema