pay Belgium with the claim on some other country that we have
established by sending goods or services to it. But, however long the
chain may be, the practical fact is that when we lend money we lend
somebody the right to claim goods or services from us, whether they are
taken from us by the borrower, or by somebody to whom the borrower gives
a claim on us.

If, whenever we made a loan, we had to send the money to the borrower in
the form of gold, our gold store would soon be used up, and we should
have to leave off lending. In other words, our financiers would have to
retire from business very quickly if it were not that our manufacturers
and shipowners and all the rest of our industrial army produced the
goods and services to meet the claims on our industry given, or rather
lent, to other countries by the machinery of finance.

This obvious truism is often forgotten by those who look on finance as
an independent influence that can make money power out of nothing; and
those who forget it are very likely to find themselves entangled in a
maze of error. We can make the matter a little clearer if we go back to
the original saver, whose money, or claims on industry, is handled by
the professional financier. Those who save do so by going without
things. Instead of spending their earnings on immediate enjoyment they
spend part of them in providing somebody else with goods that they need,
and taking from that somebody else an annual payment for the use of
these goods for a certain period, after which, if it is a case of a
loan, the transaction is closed by repayment of the advance, which again
is effected by a transfer of goods. When our country doctor subscribes
to an Australian loan raised by a colony for building a railway, he
hands over to the colony money which a less thrifty citizen would have
spent on pleasures and amusements, and the colony uses it to buy railway