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that, then we can conceive the social revolution that lies behind these extraordinary figures. Never before has any country in the world known a general standard of living comparable to this.

Such universal enjoyment of what elsewhere in the world is still regarded as a luxury indicates a very high degree of prosperity and a wonderfully high level of wages. But even prosperity such as the United States possesses and wages such as the workmen earn would not in themselves turn a population of 110,000,000 into motorowners, and the change would not have been possible but for the intensive development of what we know in England as hire-purchase a commercial device that we have associated until quite recently with many branches of the furniture trade, although the practice has extended to clothing and books. It is possible, for instance, to obtain a complete edition of Kipling by making a small initial payment. During the last few years motors in this line have outdistanced furniture, and both in England and the United States there has been an enormous growth of car-buying by installments. In England it is estimated that sixty per cent, and in America, according to the Index published by the New York Trust Company, about seventy-five per cent, of the new cars sold change hands on these easy terms, the sales by this method in 1925 being put at 2800 million dollars, out of a total of

3750 million; but whereas in England only about one person in a hundred owns a pleasure car, in America, as we have seen, one person in every six or seven is an owner, so that about thirteen million people buy cars by easy stages.

And where the motor trade with its enterprising salesmen has blazed the trail, other industries of choice or

necessity follow on. The mechanic who has paid down his forty-five dollars for a car and committed himself to regular payments for the balance has naturally gone some way to deplete his cash resources, and does not find it as easy as before to buy either the minor luxuries or the necessities of life. He has learned the trick of easy payment from the motor salesman, and is ready to accept the same kind of accommodation from those who supply his other requirements. The fashion has been set, and all sorts of other commodities begin to be bought and sold in the same way. Exact information is unfortunately not available, but the system has grown to such an extent that it is recognized as one of the vital economic facts of the country. Colonel Willey and Mr. Locock, for example, in their report on their visit to the United States which was published by the Federation of British Industries, thought it important enough to be signaled out in a memorandum of only twelve pages. They say:

The deferred payment or installment plan of business has increased by leaps and bounds, and includes now not only automobiles, furniture, and pianos, but every range of commodities, including clothes, radio sets, and even paint for the house. The financial risk is not taken by the producer, but is insured, and special finance corporations have been formed to take this class of business, which is widely reinsured. The system has certainly acted as an incentive to work in view of the necessity of

keeping up regular payments.

Every Victorian instinct that one possesses rises up in protest against this theory of prosperity, with the consumer pawning his future to stimulate output and toiling at his daily task, not to build up laborious savings as future capital, but to pay for the luxuries that he is at present engaged in wearing out. It may be that the old

nineteenth-century ideal of the thrifty workman, saving for old age or for the glorious possibility of passing himself into the ranks of the employers, is out of date, and certainly these two experienced observers were sufficiently impressed with the results to suggest that the hire-purchase system might with great advantage to this country be far more widely adopted here.

But whether installment-purchase is fundamentally sound or not, one thing is clear that it has set up an entirely new situation in America, and that no one can foresee exactly what will result from it. Colonel Willey and Mr. Locock mention the possibility of a reaction in trade and the complications that may arise when the change comes, but they are so convinced of the firm basis on which American prosperity rests that they say there is at present but little danger. Nevertheless, trade does ebb and flow. From the beginning of time it has ebbed and flowed, and there seems no reason to believe that the Almighty has by dispensation set the United States free of the ordinary laws of action and reaction. The reform of the banking system and the control exercised by the Federal Reserve have gone a long way toward stabilizing trade, but surely no one, however optimistic, can discard the possibility or the likelihood of trade in America at some time receiving a check and a setback.

And if and when this setback comes, the country may be faced with a novel and very interesting problem. Not only is every manufacturer producing at high pressure to meet the present demand, but in many trades, notably in the motor industry, he has 'scheduled' a great increase of production on which the whole policy of his business rests; and while he is planning this greater output for the future, he is still collecting from the consumer the

payment for goods bought months ago and already partially consumed. The country, in fact, may come to its trade reaction with a great industrial programme in full swing, relying on a body of consumers who not merely have not been saving, but are actually in debt to their manufacturers-consumers who are so far from having the accumulations of thrift to draw upon that they are still in pawn for their past luxuries.

This situation is so different from anything we have known in the past that it would be imprudent to dogmatize, and certainly presumptuous for anyone without an intimate recent experience of American conditions to start ringing the alarm bell. But observers in the United States are already sounding a note of caution, pointing out that this hire-purchase can be regarded as a kind of inflation, that the convincing motor salesman may prove to have nullified the careful anti-inflation policy of the banking authorities, and that once the system has become generally popular it is extremely difficult for the manufacturers either to abolish or to restrict it. Whether this is so or not, the position is full of interest, and it would appear to be beyond dispute that the effects of any sudden decline in trade must be aggravated and complicated by the new system of long-term retail credit.

II. HUNTING PROFITS ABROAD

INSTANCES multiply of the way in which the United States is changing its position in the world's capital market; and one is led to believe that one of the greatest experiments in carrying economic theories to their logical conclusions ever experienced is in process of realization. There is protection for manufacturing industries through the tariff, protection for labor

through immigration legislation, protection for commerce and finance through the amazingly exclusionist State legislation on company laws and banking; and there will shortly be, unless all signs fail, some sort of Federal subsidy for agriculture. Costs are being forced up, and the diminution of supplies has little to do with it, while the supposed iniquities of foreign monopolists have still less responsibility. It is the fact that each participant in the economic process wants to thicken his particular layer of profit, and juggles things into such a position that more must come to him, that makes America a country of such uneven, and perhaps basically unwholesome, economic conditions.

European observers are frequently dazzled by the majestic proportions of mass production in America, and the efficiency of the integrated industrial organizations. They rarely stay long enough, or explore deeply enough, to perceive that these phenomena characterize almost exclusively groups of industries enjoying real tariff protection, or great domestic markets. When the tariff does not shut out foreign competition substantially, as in some of the textile industries, visiting observers are likely to find considerably less of the much-advertised efficiency of operation. The same is true when domestic markets are being saturated, or, again, when differences in wage levels are causing concerns in one region to languish and die or move to the place where wages are lower the experience of the cotton-goods manufacturers, for example, and, to a less extent, of the leather trades in general.

Nor do these observers linger long enough, as a rule, to consider the effect of standardization upon the distributive stages in the process. Not long since a person well informed with regard to the state and progress of an

important manufacturing industry told the writer that only two concerns were left at the manufacturing end of the industry, and that the jobbers were steadily and silently being eliminated. Where there had been eight important jobbers in the Pacific Coast states ten years ago, there were now but two, the rest having gone out of business or into receiverships. Standardization of products has made it easy for retailers to carry adequate supplies of all lines; and the concentrated wealth of the gigantic manufacturing concerns enables them to grant even better credit terms to the retailer than the jobber was accustomed to grant - at least until the jobber has been eliminated. One sees examples of this in quite distinct trades. It is true that there is much resounding satisfaction expressed over the annual showing of these great corporate establishments, but few set themselves the task of adding up the economic loss to the nation as a whole involved in the suppression of free competition among distributors, and the slow transformation of retailers into feudatory retainers, enjoying something not without its analogies with the precarium of the small farmers in the later Roman Empire. And one could stop at this point, too, to meditate upon the unwieldiness of these great concentrations of wealth and power after the vigorous personalities whose acumen and aggressiveness brought preeminence have passed away. Often, perhaps usually, these corporations fall a prey to the bureaucratic irresponsibility that is associated with a state of affairs where the daily bread of the employee, high and low, is reasonably guaranteed for the indefinite future.

Many of these glowing appreciations of America's industrial and commercial development-one hears less about her financial achievements that are

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being published in Great Britain, and especially in Germany, might have been differently framed if consideration had been devoted to these factors.

But the most interesting observation of all, perhaps, is the way in which the spiral of cost-increases—or more correctly, perhaps, of profit-contraction— is inducing the industrial aggregations to transport capital abroad. The phenomenon is not quite the same, it should be borne in mind, as the acquisition by, or through, investment bankers in foreign industrial plants offering attractive opportunities for profit. Take, for example, the automobile industry. It is obviously shifting, or preparing in the near future to shift, its main objectives from domestic to foreign markets, and to that end it is acquiring foreign holdings and 'digging in' right on the prospective markets. The domestic establishments will not expand materially; the cost is too great. So, too, the great aluminium industry-dominated by one company is preparing to produce its metal abroad, perhaps more economically than at home, the prospect being that of eventually diminishing operations at home, no doubt. As to the copper industry, to which I adverted in my correspondence a few weeks ago, the attempt to establish the Copper

Export Association on a new basis, in the circumstances indicated, represents clearly the shifting of emphasis from production within the United States to production in Africa and Latin America at much lower cost; but no user of copper in Europe or America need calculate that the price to him will be lowered when control over the industry has thus been riveted by the group now dominant therein. Another striking example of the internationalization of capital — or, in any case, its extra-national operation is the course of the radio-telegraphic industry, controlled from New York, with a solid grip on three, perhaps four, continents.

There can be no fiscal procedure or other form of governmental control adequate to keep track of the resources and policies of corporations such as these. At the outset they are channels for the export of capital and the acquisition of greater profits; in the end they must become a new type of economic entity, and give rise perhaps to a new series of legal concepts and administrative practices in international law. There are many examples of the law lagging far behind the economic situation, and only tardily working out the correlative formulas of rights and obligations.

SUDAN AND ABYSSINIA 1

BY LEOPOLD WEISS

EVER since the beginning of the century England and Egypt have been at loggerheads over the waters of the Nile. Great Britain desires to divert part of those waters from the Nile's upper course especially from the Blue Nile -to irrigate the arid but fertile plains of the Sudan, which have proved to be excellent cotton country. When Lord Kitchener was Great Britain's representative at Cairo, a plan for this was submitted to the Government of Egypt; but the proposal met violent opposition, as it was thought to threaten that country's very existence. So it was not until shortly before the World War, after long negotiations and the exercise of much pressure on the part of London, that the Egyptian authorities finally reluctantly consented to the erection of the Makwar Dam on the Blue Nile, which will provide water to irrigate about five hundred and thirty square miles of land, in the Gezira district, lying between the White and the Blue Nile.

When the Nationalist movement swept everything before it in Egypt, after the war, this concession was a thorn in the flesh of the Cairo Cabinet. The members knew that the amount of water to be taken from the Blue Nile would not seriously threaten Egypt's supply. Furthermore, in 1920 Lord Allenby promised again, in the name of the British Government, that the quantity called for in the original plan

1 From Frankfurter Zeitung (Liberal daily), May 3

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was all that would ever be diverted. But the Egyptians could not help asking themselves whether such a promise would be kept forever. Moreover, Egypt's population is growing rapidly

almost twice as fast as that of Germany, for instance- and she needs more land for her own people. Her population density is already 417 per square kilometre, while it is only 2.7 in the Sudan itself. In Egypt millions of people depend on agriculture for their daily bread. In the Sudan agriculture is pursued for the profit and convenience of Manchester spinners.

If Egypt and the Sudan were under the same Government the respective interests of the two countries might be reconciled, for all of the Nile's waters are never used for irrigation; great quantities flow undiverted to the sea, and there is plenty for all. Plans have been in existence for a long time to build dams and reservoirs in the vicinity of the Delta to irrigate larger areas there. A single Government might handle all the development along the entire river as one enterprise, and ensure that every part of its riparian area received equal justice.

These were the considerations that have moved successive Egyptian Cabinets, especially the one presided over by the Nationalist leader, Zaghlul Pasha, to assert so vigorously their jurisdiction over the Sudan. Their members do not think their country can be independent unless she controls that territory, for whosoever possesses the Sudan has a strangle hold on Egypt

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