Those then who are considering an investment in any oversea public debt have to decide or make guesses about:—
1. The risk of war with the debtor, because in war there is no interest and the security is probably unsaleable.
2. The extent of the debtor's external debt and the rapidity of its growth as compared with
(a) its wealth,
(b) its trade balance,
and, since (a) and (b) are largely a matter of estimate.
(c) its internal debt, and
(d) its total expenditure.
3. The proportion that its total debt charge bears to its total expenditure.
4. Its habits with regard to balancing its budget.
5. The stability of its currency.
The risk of war is evidently guesswork, and so also to an extent that will surprise any conscientious investor who tries also to be an investigator, are the facts, or what ought to be the facts, included under 2 and 3. Even the matter of the amount and growth of the external debt is by no means always made clear from official statements, because at times when
