surely
evident that a financial supremacy which was based merely on a jobbing
business, gathering in capital from one nation and lending it to
another, would be an extremely precarious and artificial structure,
the continuance of which could not be relied on for many decades.
Finance can only flourish healthily and wholesomely in a country which
produces a considerable surplus of goods and services which it
is prepared to place at the disposal of the world. Owing to the
possession of this surplus it becomes a market in capital, and so gets
a considerable jobbing business, but the backbone and foundation of
its position must be, in the end, industrial activity in the widest
sense of the word. It therefore seems that the Committee's argument
that the free flow of capital is essential to the maintenance of
London's finance might have been reinforced by the very much stronger
one that it is essential to the recuperative power of British
industry, which will need every assistance it can get in order to
re-establish itself after the war.

The Committee points out that "any legislation which would tend
to impede or restrict the free flow of capital here by imposing
restrictions or creating impediments ought to be jealously watched,
lest in the endeavour to prevent what has come to be called 'peaceful
penetration' the normal course of commercial development should be
arrested," and it goes on to observe that at the end of the war, "if
it should be concluded upon such terms as we hope and anticipate,"
it is not likely that our present enemies will be in possession of
capital looking for employment abroad. This is certainly very true. By
the time the Germans have made the reparations, which will involve so
much rebuilding in Belgium and in the parts of France that they
have overrun and swept clean of industrial plant, and have in other
respects made good the damage which their ruthless and uncivilised
methods of warfare have inflicted, not only on their enemies, but on
neutrals, it does not seem likely that they will have much to spare
for capital expansion in foreign countries, especially when we
consider how many problems of reconstruction they will themselves have
to face at home. "To impose restrictions upon the influx of capital,"
the Report continues, "aimed at our present enemies, with the result
of deterring the flow of capital from (say) America, would be a policy
highly injurious to the economic recovery and renewed p