THE UNITED STATES, III. AFTER 1914 315 
settled; and the proceeds were used at once in payment for the 
coods.! 
The real meaning of all this was little understood by the general 
public; nor for that matter by the banking fraternity, the govern- 
ment officials, financial writers. The huge exports were thought 
of as sales for cash by Americans to foreigners. There was much 
gloating over the vast “ favorable” balance of trade that was being 
built up; what could do more to enrich the country? As for the 
loans to the Allies and the payments to them, here was no offset 
to the fructifying process, because ‘the money stayed in the 
country.” It is obvious that in reality, thru it all, both in the 
first stage (when the loans were still handled by bankers) and in 
the second, of advances by the Treasury, the thing that happened 
was that Americans bought from Americans. One group of Amer- 
icans produced goods which were exported; another group sup- 
plied funds for paying them. During the first stage the funds 
were supplied by the investors who bought the Afries and 
the subsequent issues floated by Morgan’s. During the second 
stage they were provided by those who took the several issues of 
Liberty bonds. At a still later stage, and indeed during the 
later phases of the second stage itself, something came from in- 
come taxes and excess profits taxes. Thruout, however, it was 
! An excellent detailed account of the Treasury operations is given in Foreign 
Affairs for April, 1925, by Mr. Albert Rathbone, who was Assistant Secretary of the 
Treasury at the time and was in charge of this phase of the Treasury's business. 
The following figures from Mr. Rathbone’s paper (p. 396) show what were the 
amounts of the advances to the several countries both for the period of hostilities, 
up to November, 1918, and for the subsequent period of winding-up. The figures 
are in millions of dollars. 
ERIC” 
Apr. 24, E05 
1918 
Nov. 15 
192° 
Torta 
GREAT 
3RITAIN 
Sgr 
~ 
TT YD 
oF Ls 
a. = 
“1,,, OTHERS! 
Le Ly 
iy 
- 
ToraL 
7098 
2368 
9466 
The form of certificate of indebtedness which the United States took from the 
borrowing foreign governments is given on p- 56 of the Report of the Secretary of 
the Treasury for the fiscal year 1919-20.