national trade is just that-a trade: I give you something I have that you want in exchange for something you have that I want. If your workshop burns up and everything you have is destroyed, we cannot trade any longer because you have nothing to barter; and I lose you as a customer. Rather than do that, I lend you money with which to rebuild your shop, so that you may make more goods to trade for my goods.

That is exactly what we shall ultimately have to do for Europe-lend back much of the money we have got from her, so that she may go into business again and resume a normal trade with us. We have already done this on a small scale; but until peace permits Europe's men to return to industry Europe will not need all the money that we have to spare.

But China needs it, South America needs it, India and South Africa need it. They used to get their money from England or France or Belgium: now those countries are spending it on war instead. The undeveloped countries of the world have therefore turned to us for the capital that Europe cannot now supply. Here opens for the United States an opportunity to carry its enterprise abroad-an opportunity that is also a duty.

A READY PATH TO FOREIGN TRADE

Fortunately, we have already in existence the machinery to do this. The engineering and financing organizations that answered the call of the West for water power and traction systems need only a slight adjustment to new conditions to be ready to go outside the United States into the byways of the world upon the same errand of development. What the great firms of Stone & Webster, of Boston, and J. G. White & Company and Ford, Bacon & Davis, of New York, have been doing for years in the West and South are exactly the things that we shall now have to do in Asia and South America. To understand what Mr. Vanderlip's new American International Corporation will do abroad it is necessary only to understand what has happened dozens of times in the experience of these companies at home. To make this clearer, let us im

agine a series of events that are purely fictitious yet that exactly illustrate the methods of these companies:

Suppose that you are a citizen of a smal but rapidly growing town in central California. You would call your town a city, but it has no electric lights or trolleys. Both are needed. You know that in the mountains forty miles away a fair-sized stream flows steeply from an upland meadow through a narrow gorge. You get the idea that this gorge could be dammed and electric power developed from the pent-up waters. That power could light your town and run your trolleys. You preëmpt this water and get options on the land for a reservoir. Then you carry your dream to your local banker.

He throws up his hands. "Heavens! man, that will take millions of dollars!" Then he remembers that he has heard of big Eastern firms that handle this kind of work. He writes to his bank in New York, and they refer him to J. G. White & Company. That company writes back for all the details you may have; you send them all the facts you can think of. Now begins an office examination of the project in J. G. White & Company's New York office. Young engineers get out Government maps and reports and study them. They find that your town has 10,000 population; that it is the centre of a profitable fruit and dairy industry; two steam railroads run through it and provide an outlet for its products; the outlook is good that it will grow and prosper. Next they study the contour maps of the mountains where your water claim is situated. From them the project of a dam seems feasible. Government reports of the run-off of the tributary watershed indicate that there will always be water enough to keep your proposed reservoir full. Altogether the proposition seems worth further study. An engineer is sent to make an investigation on the ground.

A BUSINESS SURVEY

He meets you and goes with you for an automobile ride through the town and its surrounding country. He makes notes on the condition of ranch houses that he passes; the number of new houses that are

going up; the appearance of the orchards. and the cattle. He calls on the bankers and learns the number of depositors they have and how much money is in the banks. He gets from the postmaster the amount of mail and money orders he handles. He talks with merchants about their business. He stations men at important street corners and gets a record of the number of people who pass them during the day. When he leaves town he probably knows more about it than any one man in it—not by guesswork, but by accurate figures written down in a book. And he makes a similar survey of your power-site and of the country over which the transmission line must pass. He returns to New York and advises a more detailed survey. This second survey leaves nothing to chance: it covers everything that could affect the possibility of success or failure in the undertaking.

If the final report is favorable, your rights and the other necessary rights are acquired by mutual agreement. J. G. White & Company organize a corporation to make your dream come true. Now they must find the millions to do it with. The directors have been doing this work for years. They know and are trusted by men of great fortune who are willing to invest money on their judgment. If four millions are needed, the directors themselves may take a few hundred thousand dollars apiece of the bonds of the new corporation, and their friends take the rest. They get these bonds at, say, $80 cash for a bond worth $100. Possibly, in addition, they get a share of common stock for every two bonds, as a bonus. By this means, the sale of $5,000,000 worth of bonds, par value, and $2,500,000 worth of stock, par value, yields the $4,000,000 of cash that is needed to build your system.

FINANCIERS, ENGINEERS, BUILDERS So far, you have dealt with the New York company simply as specialists in the financing of public utility properties of every description. Now you begin to deal with the same people in a new guise: to deal with them as highly efficient engineers and contractors engaged in the design and construction of hydro-electric,

steam railroad, and electric properties; and electric light and power stations, and gas plants. In other words, they are not only experts in deciding on the value of dreams, and financiers in touch with large bodies of capital; they are also equipped actually to build the thing they have financed. And so, in a few months, thousands of workmen and engineers are swarming over your mountain site, across your fertile valley, through your busy streets, and soon your power house and transmission line and trolleys are a reality, and your town becomes the city you had imagined it. Then, most likely, you will find the same people established in your city in still another guise: for the same company's men act as operators and managers of public service properties and industrial corporations. It thus gives you the benefit of a third experienced and efficient service which it is organized and equipped to render.

ENTER, THE BOND MERCHANT

Meantime, the Eastern capitalists, who have rendered your community a most. useful service by giving it the means to a larger growth, are getting their return. Your system is a financial success: the bonds they bought at $80 on the hundred are now worth $95 on the hundred. The capitalists may then dispose of them at a profit. They take them, we will say, to bond merchants-N. W. Halsey & Company, Spencer Trask & Company, or other concerns of that kind in New York, to whom they sell them for, not $95, but, say, $90. This leaves these bond merchants a margin of $5 on each bond for their selling expense and profits. They, in turn, sell them retail to the public, so that ultimately the indebtedness of your company is owned by a merchant in St. Louis, a school teacher in Boston, a doctor in Denver, and thousands of other small investors all over the country. The stock may be disposed of by similar methods. By this circuitous path you have drawn upon the savings of the whole nation to make life in your town more convenient and more prosperous. And the transaction has been profitable for everybody concerned.

One more point should be considered in

this picture. When the J. G. White Engineering Corporation came to build your system, it had to bring from the East much of its materials-its generators, switchboards, wire, trolley cars, rails, and other things-because only in the East are they manufactured. What more natural, when the financiers were looking for the capital, than that they should say to the manufacturers of these things: "We are about to create a market for your goods; share with us in financing the project that will benefit you?" And what simpler way could the manufacturers find of making a new market for their goods than by investing money they can borrow at 6 per cent. in an enterprise to which they can sell goods at a profit of 10 per cent?

Now this picture is an exact illustration of the way American engineers, American capitalists, and American manufacturers purpose to create a new market for American goods abroad. Instead of a 4-milliondollar trolley system in central California, substitute a 50-million-dollar steam railroad in China, a 10-million-dollar copper mine development in Chile, or a 2-milliondollar industrial plant in South Africa, and you have a precise picture of the use to which our surplus millions are to be put and an explanation of why it will profit American capitalists, American manufacturers, American investors, and American workmen.

THE AMERICAN INTERNATIONAL

This is what was meant by lending your customers the money with which to buy goods from you, and this is the means by which a large share of the foreign trade of Great Britain, Germany, France, and Belgium has been built up. In this way British capital built the South African railroads, creating a market for British-made rails and cars and locomotives. In this way French capital built the Suez Canal, creating a market for French dredges, scrapers, and tools. And so on, through practically the whole list of developed resources in Asia, Africa, and the Americas -even in the United States, for much of our own development was financed in this way, and paid an earned tribute to the owners of foreign capital.

The newest and the biggest organization to send American capital into foreign lands in this fashion is the American International Corporation, recently organized by Mr. Frank A. Vanderlip, president of the National City Bank of New York. The foregoing explanation should make plain why Mr. Vanderlip happens to be chairman of the board of this corporation

he is the head of one of the biggest financial concerns in the United States and a leading member of the group of great capitalists who are always seeking new fields of profitable investment for their money. It explains also why Mr. Charles A. Stone is president of the company-he has for the last twenty-five years been president of the firm of Stone & Webster, of Boston, which has been doing with New England capital the kind of engineering, financial, and construction work that J. G. White & Company have done with New York capital. It explains why many of the foremost manufacturers of the United States are big stockholders in the company

their products will be used in one or another of the developments that the new corporation will undertake, and it is good business for them to help finance these undertakings.

A WIDE FIELD FOR AMERICAN CAPITAL

The field that lies before this corporation is not limited to the kind of enterprise that has been described above, though that will probably be its chief form of endeavor. Any kind of business into which money can be profitably invested is legitimately within its scope. It is a great mechanism of finance by which surplus American capital may safely be put to work in all parts of the world by means of expert investigation of big business opportunities, and of sufficiently close American supervision or management to make sure that the investment does not depreciate in value. Thus the corporation may buy outright existing public utilities or indus trial plants, in India or Brazil, whose owners may no longer care or be able to continue them. Or it may merely supply capital and an improved management to half-developed or run-down mines in the Transvaal or Peru. Already it has an

nounced the purchase of the Pacific Mail Steamship Company's fleet of seven vessels plying from San Francisco to the West Coast of Central America-an investment which, if not profitable in itself, will aid in making profits by facilitating the shipment of goods and supplies for ventures in that still only partly developed storehouse of agricultural and mineral wealth.

MR. VANDERLIP'S CAREER

The chain of events by which Mr. Vanderlip and Mr. Stone have been thrown together in this outward-bound excursion of American capital is characteristic of the life of this country. Mr. Vanderlip is a native of Illinois, which is part of that Middle Western empire in the development of which New England capital played a conspicuous rôle. He began his career as a newspaper reporter, became a student of business, financial editor of the Chicago Tribune, attracted the attention of Mr. Lyman J. Gage, who took him to Washington to act as his Assistant Secretary of the Treasury, and graduated from that post into the vice-presidency and later the presidency of the National City Bank of New York. During his newspaper days, Mr. Vanderlip was especially interested in foreign trade, and in 1902, after a studious trip abroad, he wrote and published in Scribner's Magazine a series of articles on "The American Commercial Invasion of Europe" that attracted national attention to the already great achievement of American business men in other lands, and to the immense possibilities that were yet to be developed.

This American trade which Mr. Vanderlip found so large abroad needs to be distinguished in kind from that which his American International Corporation is now undertaking to create. The companies engaged in it were chiefly great American corporations like the Standard Oil Company, the Singer Sewing Machine Company, the International Harvester Company, and the United States Steel Corporation. They were concerns which, after achieving an enormous success at home, had turned to foreign fields to find a market for their surplus product, or a market which might be active when the

home market was dull. Abroad, they were simply alien merchants selling an alien product in competition with the native product. They conferred no benefit upon the countries in which they sold their goods beyond the benefit of supplying a good product at a competitive price. In a sense, their status was that of an itinerant peddler who comes to town, sells good tin pots and pans, and leaves with a lot of good local silver in his pocket. That kind of trade, worthy and necessary as it is-and in the long run it will probably always be by far the larger share of all international tradedoes not so quickly build up such strong ties of mutual interest between nations as the kind which is now being undertaken. This new kind of trade creates a situation comparable to that which is created when the younger son of a New England merchant decides to live in Los Angeles, brings his inherited money with him, buys a lot in a business block and a lot in the residence section, builds a store and a house, employs local salespeople, and makes a specialty of New England wares. In other words, he puts money into the city as well as takes it out, and by becoming a part of the life of the community creates permanent local ties that make him much more useful to his father's concern in New England.

Mr. Vanderlip plainly discerned this distinction. He saw how much of England's trade rested upon England's investments in foreign lands. When he returned to America the time was not ripe for us to follow England's example: neither was Mr. Vanderlip in a position to lead American capitalists into this field. The next few years, however, put him in a place of first influence with those capitalists, and when the time did come at last, he had clearly in mind the vision of the path in which to lead them.

THE STORY OF CHARLES A. STONE

Meanwhile, Mr. Stone's career had flowed in channels equally American and as singularly adapted to fit him for his present opportunity. He was born in Newton, Mass., in 1867, and graduated from the Massachusetts Institute of Technology in 1888, in the same class with Edwin S. Webster. The two at once

formed a partnership and started business as consulting electrical engineers in two rooms on Post Office Square, in Boston. They did anything that came to hand to do-laying out electrical wiring, designing small generating plants, etc. They invented and put on the market an improved kind of wire for fuses. From this rather local and restricted field their activities soon spread to other parts of New England and embraced work on a more ambitious scale. It was not long before they ventured into a bit of pioneering. The use of alternating current in the transmission of electrical power was then in its experimental stage: Stone & Webster achieved some of the more striking of the early successes with it in some of their installations.

In the early '90's, when "hard times" sent many electrical enterprises into receiverships, the owners of the securities. were often puzzled to know what to do with these properties when they were thus thrown on their hands. They knew nothing about the technical problems involved in their operation and management. Both Mr. Stone and Mr. Webster were well known to many of these financiers in Boston, and these men naturally turned to them for expert advice concerning the value of such properties and for expert plans for putting them on a paying basis. Out of this situation, Stone & Webster gradually developed an organization equipped to investigate, construct, and operate public utility properties of all kinds. They acquired a financial interest in many of the concerns they helped to reorganize. Besides making over old properties, they originated new projects, financed them, constructed them, and operated them, usually retaining at least a partial proprietary interest in them. Nearly all the electrical power development, electric lighting systems, and interurban trolleys of the Puget Sound region -about Seattle, Tacoma, Everett, and Bellingham are products of the Stone & Webster organization. As contractors they installed the power plant and transmission lines of the great Mississippi River hydroelectric development at Keokuk, la., which lights St. Louis, 140 miles away. Their

enterprises are scattered all through New England, through the South (Savannah, Jacksonville, Tampa, Key West, Baton Rouge), the Southwest (Galveston, Houston, Ft. Worth, Dallas, El Paso), and the West (Reno, Carson, Nevada City, and Puget Sound). When the European war broke out they had financed sixty-seven companies whose aggregate capital was 186 million dollars.

It is his twenty-five years of experience in this work of technical investigation and specialized finance that Mr. Stone brings to the direction of the foreign activities of the American International Corporation. He has at his hand exactly the kind of organization that is competent, through long practice, to appraise accurately the technical and financial worth of an investment enterprise.

FACILITIES FOR ASIATIC FINANCE

Thus Mr. Vanderlip has supplied the vision of foreign opportunity and the access to capitalists in New York: Mr. Stone has supplied the organization for accurate investigation of properties and the access to capitalists in New England. Added to these resources of the new company are the centres of information about new projects that now exist in the branches of the National City Bank recently established in South America under the direct supervision of Mr. W. S. Kies, and more recently of the branches in Asia acquired by the purchase of the International Banking Corporation, of New York, which has long been established in China, Japan, and India. And for the negotiation of business in Asia, in the complex tangle of Chinese business and politics and the currents of international intrigue that eddy around the new throne of Emperor Yuan Shih Kai, the corporation has the intimate knowledge of Mr. Willard D. Straight, its vice-president, whose experience as United States Consul-General for Manchuria and as representative of the House of Morgan in the "six-power loan" of three years ago have given him an exceptional opportunity to learn how affairs-especially financial affairs-are managed in the Far East.

One link in this chain of American foreign promotion remains to be forged: the