72 THE SCIENTIFIC MONTHLY
invest the same amount in foreign securities each year. At the end of the twentieth year, interest on twenty such annual investments would be due, and if the rate of interest was five per cent or 1/20, the return to our country in interest would just balance the yearly purchase of securi- ties. That is to say, item 2 on the credit side would just ofEset item 3 on the debit side. Or if this interest was compounded or more than compounded by an ever increasing annual investment by Americans, the annual purchase of foreign securities might indefinitely exceed the in- terest returns on them. But it is not only inconceivable that the annual investment should continually increase, it is inconceivable that it should remain constant. It is quite possible that any of these things might occur for one year or for a number of years, to be offset in other years by reverse flows, but that in the long run, or as a continuous process, our investments should regularly exceed the returns from them is im- possible. The process of investing is a process of saving or creation of capital goods, and it is well understood that the amount of capital goods the world can use is limited. With the progress of invention this amount would increase and might increase rapidly, but could not in- crease indefinitely. Static periods and periods of decline must alter- nate with these rises, in which the capital in existence is sufB^cient and there is no saving at all. Mankind generally must forever produce and consume as a continuous process, but mankind generally can not save as a continuous process. The moment a certain limited and sufScient capital stock is brought into existence, saving must cease, for there is no gainsaying the principle that men seek to satisfy their wants with a minimum of effort. If mankind does not consume what can not be invested, then his wants can be satisfied with both less labor and less capital.
We conclude then that our annual purchase of foreign securities can not regularly exceed the interest returns from them, for if such were the case it would mean that Americans were gradually and surely ac- quiring the resources of the rest of the world at the same time they were receiving no net return.
Statistics showing the country^s status in regard to items 2 and 3 are difficult to obtain. In The Review of Reviews (April, 1915) is a pertinent discussion of the billion-dollar export balance augured for 1915, and its relation to these " invisible factors " of international trade. We will quote from this in part, and in reading it the fact that our export balance has hovered around the half-billion mark for the last four years should be borne in mind. For the four years ending with 1914 the balance was 522, 551, 652 and 470 millions, respectively, so we may fairly say the normal excess is roughly half a billion dollars, and that the billion-dollar excess for 1915 is an abnormal excess induced
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