sales of goods to us, in other words from the adverse (to foreign countries) balance of trade. The handling of these accounts is a banking affair and it is a serious factor in the present situation. These accounts must either be settled by the sale to us of goods or property, or else they must be written off as losses. Inasmuch as the former kind of settlement can not be effected quickly, in all probability this foreign indebtedness will eventually have to be funded, to a more or less extent, t.e., we shall have to take Europe’s long-time obligations.
4, Foreign investment of American capital. This has taken the forms of:
(a) Purchase of foreign internal governmental and municipal securities and currency.
(b) Purchase of foreign corporate securities.
(c) Purchase and development of physical property abroad.
(d) Investment of capital for the conduction of commercial enterprises abroad.
There is no sharp line of division among the kinds of investment classified as 4(b), (c), and (d). These forms of investment have increased considerably during the last five years. They are likely to increase much more in the years to come, for one of the ways to obtain payment of the bonds and bills that are owed to us will be to take foreign mines, manufactories, railways, etc., or interests in them.
Debits.—The obligations of the people of the United States to the people of foreign countries fall under the same classifications as the credits, but practically the only things that now amount to much are the residues of Europe’s ownership in our internal property, or the corporate securities that represent it.
