CANADA 
233 
plicated is the actual situation. It is complicated, to repeat, unless 
the borrowing country uses the proceeds of the loans at once and 
in full for purchases in the lending country; and this it will not 
commonly do. Doubtless some part of the loans which Canada 
placed in Great Britain were so used. But by far the larger part 
of the loans made by the British were applied by the Canadians 
to purchases quite outside of England. Not a little was used 
in Canada itself, in payments for wages and materials in the con- 
struction work of railways and the like. A very large part was 
used in the United States, but was “used” thru a process in which 
the loans were quite in the background. The proximate forces 
were simply that “money” was plenty in Canada and prices were 
high; in the United States there were goods of the kind that 
Canadians wanted; individual promoters, builders, contractors, 
traders in Canada found it profitable to buy goods from individual 
concerns in the United States. The goods which it was thus 
profitable to buy were partly consumers’ goods, such as were in 
demand by the Canadians — workmen and others — whose 
services were wanted in the construction and agricultural opera- 
tions, whose wages were high, who had plenty of money to spend. 
Partly they were capital goods, also wanted in Canada in connec- 
tion with these same operations. Money incomes and prices of 
goods tended thruout to be higher in Canada; here was the proxi- 
mate cause of the inflow of goods from abroad. Behind it all 
was the actuating power of the loans, not operating directly, but 
thru a mechanism far from simple. 
All in all, this episode has unusual interest. So far as I know, 
it serves to verify and confirm the essentials of the Ricardian 
theory of international trade more completely and in greater detail 
than any economic experience that has been subjected to scien- 
tific analysis. Not only this; it has a position similarly unusual 
as regards the methodology of economics. 
It is a commonplace that in economics, as in all the social 
sciences, we are debarred almost completely from the method of 
scientific experiment. We can never isolate a given force or set 
of forces, never deliberately and rigidly arrange that one alone