i86 FOREIGN CAPITAL

which produces a considerable surplus of goods and
services which it is prepared to place at the disposal
of the world. Owing to the possession of this surplus
it becomes a market in capital, and so gets a con-
siderable jobbing business, but the backbone and
foundation of its position must be, in the end,
industrial activity in the widest sense-of the word.
It therefore seems that the Committee's argument
that the free flow of capital is essential to the
maintenance of London's finance might have been
reinforced by the very much stronger one that it is
essential to the recuperative power of British
industry, which will need every assistance it can
get in order to re-establish itself after the war.

The Committee points out that " any legislation
which would tend to impede or restrict the free flow
of capital here by imposing restrictions or creating
impediments ought to be jealously watched, lest in
the endeavour to prevent what has come to be called
' peaceful penetration' the normal course of com-
mercial development should be arrested," and it goes
on to observe that at the end of the war, " if it should
be concluded upon such terms as we hope and antici-
pate," it is not likely that our present enemies will
be in possession of capital looking for employment
abroad. This is certainly very true. By the time
the Germans have made the reparations, which will
involve so much rebuilding in Belgium and in the
parts of France that they have overrun and swept
clean of industrial plant, and have in other respects
made good the damage which their ruthless and
uncivilised methods of warfare have inflicted, not