fear to touch Consols, but rush eagerly to buy the securities of
Colonial Governments which had gone much further in the direction of
Socialism than we had. Those were great days for all who handled the
machinery of oversea investment and in the last few years before the
war it is estimated that England was placing some 200 millions a year in
her colonies and dependencies and in foreign countries. Old-fashioned
folk who still believed in the industrial strength and financial
stability of their native land waited for the reaction which was bound
to follow when some of the countries into which we poured capital so
freely, began to find a difficulty in paying the interest; and just
before the war this reaction began to happen, in consequence of the
default in Mexico and the financial embarrassments of Brazil. Mexico had
shown that the political stability which investors had believed it to
have achieved was a very thin veneer and a series of revolutions had
plunged that hapless land into anarchy. Brazil was suffering from a
heavy fall in the price of one of her chief staple products, rubber,
owing to the competition of plantations in Ceylon, Straits Settlements
and elsewhere, and was finding difficulty in meeting the interest on the
big load of debt that the free facilities given by English and French
investors had encouraged her to pile up. She had promised retrenchment
at home, and another big loan was being hatched to tide her over her
difficulties--or perhaps increase them--when the war cloud began to
gather and she has had to resort for the second time in her history to
the indignity of a funding scheme. By this "new way of paying old debts"
she does not pay interest to her bondholders in cash, but gives them
promises to pay instead, and so increases the burden of her debt, which
she hopes some day to be able to shoulder again, by resuming payments in
cash.

Mexico and Brazil were not the only countries that were showing signs,