STOCK EXCHANGE AN INTERNATIONAL MARKET 517 
this market regularly plays in our international traffic in 
securities. 
Automatic Character of International Adjustment.— 
Between gold standard countries, the adjustment of trade bal- 
ances through the shifting of bank credit and securities, and 
to a lesser extent of gold, is practically automatic because of 
the effect of exchange rates and interest rates. If, for example, 
French franc exchange should decline in terms of dollars, 
bankers’ bills or securities valued in terms of francs would 
become cheap to American purchasers, and induce additional 
purchases of both from New York. Similarly, when the New 
York money rates rise above those in France, there is at once 
an inducement to Frenchmen to invest in short dollar credits 
and in American securities if their price has declined under the 
influence of advancing domestic short-money rates. 
For the same reason, debtor countries which chronically 
need credit and capital will normally have higher interest rates 
and security yields than creditor nations which have surplus 
credit and capital. This situation is apt to induce a flow of 
capital and credit from the low interest creditor countries into 
the bills and securities of the high interest debtor countries 
which may continue for long periods of time. 
The Pre-War American Trade Balance.—Every nation, 
according to its age, temperament, situation, and resources, 
differs from every other nation in the respective proportions 
to which the many items in its visible and invisible trade enter 
into its total exports and total imports. For purposes of illus- 
tration, the foreign trade of this country as it existed prior 
to 1914 may be contrasted with that of Great Britain. We 
regularly exported more raw materials and manufactured 
goods than we imported. But our excess visible exports were 
balanced by our excess invisible imports. Despite our large 
foreign trade, the American flag was hardly ever seen prior 
to 1914 on the seven seas, and we were consequently forced to 
pay huge annual sums to British and other foreign shipping