l towards London will fall off, for those who
cannot borrow there will no longer send deposits. The surplus shown
in her balance-sheet will contract. Foreign trade will also decrease.
Hand in hand with this fall, free trade, that mighty agent in the
development of England's supremacy, will, in all probability, give
place to protection. Stock Exchange business will grow less. Rates of
interest will be permanently higher."

How much truth is there in all this? Has our reputation for honest
dealing and for trustworthy administration suffered? Surely not in the
eyes of any reasonable and unprejudiced observer. In the course of the
greatest war in history, fought by Germany with weapons which have
involved the violation of the most sacred laws of humanity and
civilisation, England has acted with a respect for the interests of
neutrals which has been severely criticised by impatient observers at
home. As for our "insular inviolability" having been put in question,
it certainly has not, so far, suffered any serious damage. Our Fleet
has defended us from invasion with complete success, and the damage
done by marine and aerial raiders to our property on shore is
negligible. Our free gold market is said to have broken down. The
proof of the pudding is in the eating. Germany, when the war began,
immediately relieved the Reichsbank from any obligation of meeting
its notes in gold, and frankly went on to a paper basis. England has
already shipped well over 200 millions in gold to America to finance
her purchases there and those of her Allies.

It may be true that capital will not flow to London if London is not
in a position to lend, but we see no reason why London should not be
able to resume her position as an international money lender, not
perhaps immediately on the declaration of peace, but as soon as the
aftermath of war has been cleared away and the first few months of
difficulty and danger have been passed. The prophecy that foreign
trade will decrease may also be true for a time owing to the
destruction of merchant shipping that the war is causing. This
possibility, however, may be remedied between now and the end of the
war if the great programmes of merchant shipbuilding which have been
undertaken by the British and American Governments are duly carried
out. In any case, even if foreign trade decreases, there is no reason
whatever to expect that England's will decrease faster than that of
other nations.

In all these