preference by or for the members of either of the great European alliances automatically creates a discrimination against those outside! Whether we face the Teuton or the Allies' group—or both—in the grand economic line-up, we shall have to fight for commercial privileges that once knew no ban.

There are two well-defined beliefs about the practical working out of the pact as a pact. Let us take the objections first. They find expression in a strong body of opinion that the whole procedure is both unhuman and uneconomic—a campaign document, as it were, conceived in the heat and passion of a great war, projected for political effect in cementing the allied lines. In short, it is what business men would call a glorified and stimulated "selling talk," framed to sell good will between the nations that now propose to carry war to shop and mill and mine.

"But," as a celebrated British economist said to me in London, "while all this talk of Economic Alliance sounds well and is serving its purpose, the fact must not be overlooked that, though war ends, business keeps right on. Self-interest will dictate the policy that pays the best." This is a typical comment.

Now we get to the meat of the matter: By the terms of the pact half a dozen important nations—to say nothing of the smaller fry—are bound to a hard-and-fast trade agreement. Business, in brief, is projected in terms of nations.

Go behind this new battle front and you will find that it conflicts with an uncompromising commercial rule. Why? Simply because, so far as business is concerned, nations may propose, but human beings dispose. Individuals, not countries, do business! Being human, these individuals are apt to follow the line of least resistance. Hence, the best-laid plans for imposing international industrial teamwork are likely to founder on those weaknesses of human nature that begin and end in the pocketbook.

After the Franco-Prussian War of 1870-71, and while the Peace of Versailles was being negotiated, commercial travellers of each nation, laden with samples, filled the border villages, ready to dash across the frontier and open accounts. Of course no one dreams that such history will repeat itself after the present war; but there are many persons in England and France to-day who contend that the business needs of peace will be stronger than the costly hang-over of wartime passions.

Trade, after all, is a Colossus that rests with one foot upon Necessity and the other foot upon Convenience.

Will the Allies be such valued commercial helpmates to each other? Perhaps not. When this war is over the fighting countries will be impoverished by years of drain and waste. As a result, they will be poorer customers for each other, but very sharp competitors. International trade is merely an exchange of goods for goods. You cannot sell without buying, and vice versa. No groups of nations can live by taking in each other's washing. They are bound to get outside linen. When peace comes we shall have the lending and purchasing power of the world. Can anybody afford to shut us out?

Again: Can the Allies present a united front or carry on a uniform line of conduct? Will not their interests overlap and cause an inevitable conflict, even when intentions are of the very best?

France, for example, competes with England in chemicals, surgical instruments, high-speed tools, scores of things; Russia's competitors in wheat are not Germany, but Canada, India and Australia; Italy and France are rivals for the same wine markets. Russia for years has kept down the high cost of her living by buying cheap German goods at her front door and having her projects financed by German capital. Will she face bankruptcy by going hundreds—even thousands—of miles out of her way and paying more for products? England for years has made huge profits out of the re-export of Teutonic articles, thanks to the grace of free trade and huge carrying power. Is she likely to forego all this?

In the last analysis Propinquity and the Purse are the Mothers of Trade Alliance.

Finally, will not any organised exclusion of German products, coupled with a definite and organised campaign to throttle German trade the world over, throw the business of the Kaiser's country smack into the lap of the United States? Sober reflection over these possibilities may stay economic reprisal.

On the other hand, there are many ways by which even a near translation of the economic pact into actuality may work hardship—even disaster—to American commercial interests. No matter which way we turn when peace comes we shall face the proverbial millstones in the shape of two great alliances. One is the Allied Group, jealous of our new wealth and world power, bitter with the belief that we have coined gold out of agony; the other is the Teutonic Union, smarting because of our aid to its enemies, stinging under reverses, mad with a desire to recuperate.

Examine our trade relations with warring Europe and you see how hazardous a shift in old-time relations would be. To the fighting peoples and their colonies in normal times we send nearly seventy-eight per cent of our exports, and from them we derive seventy per cent of our exports. The Allies alone, principally England and her colonies, get sixty-three per cent of these exports and send us fifty-four per cent of all we get from foreign lands.

As the National Foreign-Trade Council of the United States points out: "Any sweeping change of tariff, navigation or financial policy on the part of either group of the Allies, and particularly on the part of the Entente Allies, may seriously affect the domestic prosperity of the United States, in which foreign trade is a vital element."

Why is this foreign trade so vital? Because, during these last two years of world upheaval we have rolled up the immense favourable trade balance of over three billion dollars. In peace time this would be paid for in merchandise. But fighting Europe's industries, with the exception of a part of England's, are mobilised for munitions. Therefore, these goods have been paid for largely in gold.

This gold is now part of our basis of credit. When the war ends Europe will make every effort that ingenuity, backed up by trade resource, can devise to get that gold back. One way is through loans from us; the other is by exports to us. Now you see why we must maintain our foreign commerce.

Our huge gold reserve hides another menace: The war demands for our commodities, paid for with the yellow metal, have increased the cost of production; and it will stay up. This will lead to an unequal competition with the cheap labour markets of Europe when the war is over. Both groups of Allies will be able to undersell us.

Turn to the raw materials and you encounter a further danger in the economic pact. If the Allies develop their own sources, it will cut down our export of cotton, copper and oil. If they cannot develop sufficient sources for self-supply they may, through co-operative buying outside their dominions, satisfy their needs. In the third place, they may stimulate, through tariff or shipping concessions, or by subsidies—which are much talked of in Europe to-day—a preference for their own manufactures over American products in both allied and neutral markets.

Take navigation: England controls an immense shipping. As a matter of fact, outside the three-mile limit, she practically owns the waters of the world. If she makes lower rates for her allies, or others to whom she gives preference, where shall we be in our chronic and unpardonable dependence upon foreign bottoms? Here is where