culty, that as soon as the Stock Exchange
begins to impose other than merely formal rules upon the issue of
securities under its authority, the public very naturally comes to the
conclusion that all securities brought out under its sanction may be
relied on as absolutely secure; and since it is wholly impossible that
the Committee's regulations could be so strict as to ensure this result
without imposing limits that would have the effect of smothering
enterprise, the effect of any such attempt would be to encourage the
public to pursue a happy-go-lucky system of investing, and then to blame
the Stock Exchange if ever it found that it had made a mistake and had
indulged in speculation when it flattered itself that it was investing.
The whole question bristles with difficulties, but it seems hardly
likely that after the war the Stock Exchange and the business of dealing
in securities will ever be quite on the old basis again.

In any attempt that is made to regulate them, however, it will be very
necessary to remember that capital is an extremely elusive thing, and
that if too strict rules are laid down for it, it very easily evades
them by transferring itself to other centres. If the authorities decide
that only such and such issues are to be made, or such and such
securities are to be dealt in in London, they will be inviting those who
consider such regulations unfair or unwise to buy a draft on Paris or
New York, and invest their money in a foreign centre. Capital is easily
scared, and is very difficult to bottle up and control, and if any
guidance of it in a certain direction is needed, the object would
probably be much more easily achieved by suggestion than by any attempt
at hard and fast restriction, such as worked well enough under the
stress of war.

Any real improvement to be achieved in the system by which we have
hitherto supplied other nations with capital will ultimately have to be
brought about by a keener appreciation, both by issuing houses and
investors, of the kind of business that is truly legitimate and
profitable. It does not pay in the long run to supply young communities
with opportunities for outrunning the constable, and it is possible that
when this wholesome platitude is more clearly grasped by the public, no
issuing house will be found to bring out a loan that is not going to be
used for some definite reproductive purpose, or to float a company, even
of the semi-speculative kind, the prospect