THE FOREIGN EXCHANGES 219 
“active” securities, and of the international securities among 
them; just as they tend, by increasing the carrying charges, to 
lower the price of exchange on foreign countries. An inflow of 
gold, which might be expected to take place toward the country 
of tight money, is replaced by an outward movement of securities. 
That movement of securities in itself tends to lessen the differences 
between the two money markets, both as regards security prices 
and interest rates, and so tends to lessen the immediate pressure 
toward a movement of gold. 
These short-time transfers of securities from one market to an- 
other are not unrelated to the international investment operations, 
that is, the loans and interest payments whose more permanent 
effects have already been analyzed and will engage our attention 
further as we proceed. International loans take place thru the 
sale of securities which soon have an international market. Tho 
at the outset the effect of the loan is to cause a remittance in one 
direction only — from the lending country to the borrowing, 
from the country that has sold the bonds to the country which 
has bought them — the bonds or stocks at an early date come to 
be bought and sold in the financial market of both. They are 
likely to drift to and fro under the influence of the general condi- 
tions of trade and of the money market. Underneath this drift 
there remain the deeper currents. On the whole, securities are 
sold by the borrowing country during the earlier stage of its inter- 
national investment operations, and move toward the lending 
country. And on the whole, when the borrowing country has 
grown to economic maturity, it tends to buy back its securities; 
a movement the other way sets in. The several flows intermingle, 
and at any given time it may not be easy to discern which is domi- 
nant — the more noticeable, which is impelled by the money 
markets of the moment, or the less conspicuous undercurrent 
which depends on the trend of investment. 
The effects of the movement of securities are by no means always 
of the moderating and offsetting kind. A financial collapse, or a 
marked depression, in one financial market may cause securities 
to move thence to another, and so introduce a new substantive