ernational financier is in quite a different position. If he arranges
a loan for Barataria, he takes his profit on the transaction, sells the
bonds to investors, or to the underwriters if investors do not apply,
and is, from the purely business point of view, quit of the whole
operation. He still remains responsible for receiving from the State,
and paying to the bondholders, the sum due each half year in interest,
and for seeing to the redemption of the bonds by the operation of the
Sinking Fund, if any. But if anything goes wrong with the interest or
Sinking Fund he is not liable to the bondholders, as the bank is liable
to its depositors. They have got their bonds, and if the bonds are in
default they have made a bad debt and not the issuing house, unless, as
is unlikely, it has kept any of them in its own hands.

But this absence of any legal liability on the part of the issuing house
imposes on it a very strong moral obligation, which is fully recognized
by the best of them. Just because the bondholders have no right of
action against it, unless it can be shown that it issued a prospectus
containing incorrect statements, it is all the more bound to see that
their money shall not be imperilled by any action of its own. It knows
that a firm with a good reputation as an international finance house has
only to put its name to an issue, and a large number of investors, who
have neither the education nor the knowledge required to form a judgment
on its merits, will send in subscriptions for the bonds on the strength
of the name of the issuing house. This fact makes it an obvious duty on
the part of the latter to see that this trust is deserved. Moreover, it
would obviously be bad business on their part to neglect this duty. For
a good reputation as an issuing house takes years to build up, and is
very easily shaken by any mistake, or even by any accident, which could
not have been foreseen but yet brings a loan that it has handled into
the list of doubtful payers. Mr. Brailsford, indeed, asserts that it may
be to the advantage of bondholders to be faced by default on the part of
their debtors. It may be so in those rare cases in which they can get
reparation and increased security, as in the case of our seizure of
Egypt. But in nine cases out of ten, as is shown by the plaintive story
told by the yearly reports of the Council of Foreign Bondholders,
default means loss and a shock to confidence, even if only temporary,
and