e will droop. But if the political sky is serene and
people are saving money fast and investing it in Stock Exchange
securities, then the price will go up and those who want to buy it will
pay more. The price of all securities, as of everything else, depends on
the extent to which people who have not got them demand them, in
relation to the extent to which those who have got them are ready to
part with them. Price is ultimately a question of what people think
about things, and this is why the fluctuations in the price of Stock
Exchange securities are so incalculable and often so irrational. If a
sufficient number of misguided people with money in their pockets think
that a bad security is worth buying they will put the price of it up in
the face of the logic of facts and all the arguments of reason. These
wild fluctuations, of course, take place chiefly in the more speculative
securities. Shares in a gold mine can go to any price that the credulity
of buyers dictates, since there is no limit to the amount of gold that
people can imagine to be under the ground in its territory.

All the Stock Exchanges of the world are in communication with one
another by telegraph, or telephone, and so their feelings about prices
react on one another's nerves and imaginations, and the Stock Exchange
price list may be said to be the language of international finance, as
the bill of exchange is its currency.

CHAPTER IV.

FINANCE AND TRADE

We have seen that finance becomes international when capital goes
abroad, by being lent by investors in one country to borrowers in
another, or by being invested in enterprises formed to carry on some
kind of business abroad. We have next to consider why capital goes
abroad and whether it is a good or a bad thing, for it to do so.

Capital goes abroad because it is more wanted in other countries than in
the country of its origin, and consequently those who invest abroad are
able to do so to greater advantage. In countries like England and
France, where there have been for many centuries thrifty folk who have
saved part of their income, and placed their savings at the disposal of
industry, it is clear that industry is likely to be better supplied
with capital than in the new countries which have been more lately
peopled, and in which the store of accumulated goods is less adequate to
the industrial needs of the community. For we must always remember that
though we usually speak and think of