on the countries to whom she lent, of her moneylending activity in the
past? As soon as we begin to look into this question we see once more
how close is the connection between finance and trade, and that finance
is powerless unless it is supported and in fact made possible by
industrial or commercial activity behind it. England's international
trade made her international finance possible and necessary. A country
can only lend money to others if it has goods and services to supply,
for in fact it lends not money but goods and services.

In the beginnings of international trade the older countries exchange
their products for the raw materials and food produced by the new ones.
Then, as emigrants from the old countries go out into the new ones,
they want to be supplied with the comforts and appliances of the older
civilizations, such as, to take an obvious example, railways. But as the
productions of the new countries, at their early stage of development,
do not suffice to pay for all the material and machinery needed for
building railways, they borrow, in effect, these materials, in the
expectation that the railways will open out their resources, enable them
to put more land under the plough and bring more stuff to the seaboard,
to be exchanged for the products of Europe. The new country, New Zealand
or Japan, or whichever it may be, raises a loan in England for the
purpose of building a railway, but it does not take the money raised by
the loan in the form of money, but in the form of goods needed for the
railway, and sometimes in the form of the services of those who plan and
build it. It does not follow that all the stuff and services needed for
the enterprise are necessarily bought in the country that lends the
money; for instance, if Japan borrows money from us for a railway, she
may buy some of the steel rails and locomotives in Belgium, and
instruct us to pay Belgium for her purchases. If so, instead of sending
goods to Japan we shall have to send goods or services to Belgium, or