THE UNITED STATES, III. AFTER 1914 311 
United States and put in the Morgan vaults as collateral to ensure 
the solidity and the ultimate payment of the bonds offered by them 
to the American public, now no longer borrower, but turned 
lender. These securities came chiefly from London. The British 
Government at first endeavored to bring about their transfer into 
its hands (by loan or purchase) thru friendly negotiation. But 
the urgent necessities led before long to stern measures. A full 
and detailed list of wanted bonds and stocks was prepared and 
published, and the holders were required to put them at the dis- 
posal of the British Treasury on pain of paying, as regards the 
income from them, an extra income tax of ten per cent (2 shillings 
in the pound). A committee was organized to manage the proce- 
dure, and it handled something like two billion dollars’ worth of 
securities.! After the sober British fashion, the pressure on the 
owners was made as little irksome as possible; they could sell or 
could loan; and if they loaned, they were to receive, so long as 
actual sale was not found necessary, not only the interest or 
dividends accruing from their properties, but 4 per cent on the 
nominal value in addition. The French Republic took similar 
steps toward getting into its hands American securities owned by 
its citizens; but its more solicitous policy toward property holders 
led it to resort to bonus rather than compulsion. With the 
details of these operations we need not concern ourselves. They 
are part of the whole series of fiscal and economic measures, quite 
unusual in character, to which the governments were led by the 
stern exigencies of the war. 
We may now consider in what way these two great move- 
ments, the flow of gold to the United States and that of secu- 
rities, fit into the received version of the theory of international 
trade. 
That gold should pour into the United States is quite in accord 
with the usual analysis. The huge exports had to be paid for, 
and a great movement of gold to the United States was to be 
t The Report of the American Dollar Securities Committee, dated July, 1919, 
gives summary figures concerning these operations. The amount stated in the 
text (2 billions of dollars) includes the value of securities which the Bank of England 
gathered before the Committee got to work.