218 ECONOMIC PRINCIPLES

arranged to get a loan in a foreign country, whether the loan
be for government or industrial purposes, effected publicly or
privately, will, so long as the loan runs, not need to export
goods to fully balance the imports. The loan completes the
balance. Similarly, the lending country will export goods
in excess of what are needed to balance imports. When the
loan is repaid, the opposite state of affairs is produced. It is
as well to remember, in this connection, that the deferment,
for a month or two, of a payment due at once is effectively
granting a loan for that period of time. This consideration
brings a good many transactions under this head which are
occasionally dealt with in quite other connections. The
opening of a credit, however well secured, by a banker for a
foreign customer, is obviously granting borrowing privileges.
In practice, temporary trade balances are carried forward, by
means of transactions of this class, to a period when the changes
in the relative volume of imports and exports enable the loan
to be discharged without the requirement of actual shipment
of cash to and fro. Another way in which loan variations
take place is by the purchase or sale of stock exchange
securities, when the purchase or sale is effected in one country
for account of residents in another. Thus, the sale in New
York ‘of American securities held in Europe, for account of
European holders, is effectively a repayment of loans made
by Europe to the United States. Similarly the purchase in
Europe of bonds of American railroads is a loan to America,
though the form is not quite identical with that by which a
new loan is effected. Even in form, however, the process
presents very close resemblances to the operation of floating
a new loan, When the securities sold are bonds or stock of
the government or of companies of a third country, that is,
of a country different from that of either seller or buyer, it
might seem better to describe the transactions as an export
or import of securities, classifying it rather as analogous with
merchandise exports and imports than with loan operations.
It is so closely analogous with what are direct loan operations
that it seems sufficient to class it with them, instead of making
a separate heading for this particular set of stock exchange
dealings, It is to be noted that the volume of international