Mr. Lowenfeld's Scheme

AFTER what I have already said in former chapters, the principles, maxims, and detailed application of Mr. Lowenfeld's scheme for the Geographical Distribution of Capital need not detain us long; for although his detailed exposition of them extends through several volumes, his leading principles are confined mainly to those I have discussed in my last chapter. I have thought, therefore, that it would simplify matters for the reader, as well as avoid needless repetition, if I arranged his materials in my own way, and kept as close as possible to the order of my own exposition in the last chapter. But I wish to say frankly at the outset that the credit of the scheme belongs to Mr. Lowenfeld and not to me; and that it was only when it had been submitted to me for an opinion, and after I had found myself essentially in agreement with it, that I undertook to take up the whole question from my own separate and independent point of view.

Generalisations Based On Actual Transactions

To begin with, then, I may remark that Mr. Lowenfeld approaches his problem in a strictly scientific spirit, and from the true Baconian standpoint, founding his generalisation on a wide induction from the particulars of actual transactions; and these generalisations he applies to the infinite complexities of trade through the medium of a large number of business maxims.

Principles And Maxims Of The Propounder

I am aware that the late Sir Edward Law enunciated the same principles as being those which guided him in his capacity as investor for a large Insurance Company, but Sir Edward Law's publications are subsequent to those of Mr. Lowenfeld and based upon what was already in print. In the meantime we may extract a few of Mr. Lowenfeld's principles and maxims with the view of giving the reader a taste of his quality as a financial expert. His principles are few in number. The largest in scope of these, and the one which, if scientifically established, forms the presupposition, axiom, or postulate of the rest, which hang on it and draw their vitality from it, is that the great trading countries of the world form themselves into different groups, each of which has an organising financial centre which, like the brain, dominates and controls the separate markets as well as the trading hopes, fears, and possibilities of the whole group. London, for example, as we saw in the last chapter, is the brain and Money Market centre for all British Trustee stocks; and although these have been lately extended to certain Indian and Canadian stocks, to the stocks of great Corporations, like the City of London, the London County Council, Belfast, Birmingham, and so on, as well as to the Inscribed stocks of our widely separated Colonies, they all rise or fall in value together - and quite independent of their intrinsic, ultimate, individual merits - according to the freedom or stringency of money in the London Money Market.

London The Brain For British Trustee Stocks. Geographical Divisions Enumerated

It is the same, too, with the Trade Currents as with the Money Markets of the world. They each have their separate geographical divisions, routes, and connections; and Mr. Lowenfeld's first object, accordingly, is to ascertain precisely what these geographical divisions are. He has succeeded in reducing them to ten, all told, viz., British, Colonial, North Europe, South Europe, Asia, Africa, North America, South America, and an International division representing International Trusts, Shipping, Telegraph, and Marine Insurance, etc. These major divisions he splits up, in turn, into subdivisions, with the object of more accurately marking out and separating the Money Market connections from the connections of the Trade Currents and of the Stock Exchanges. This done, he has then to show two things before he can launch his scheme. The first is, that the relative amount of trade done by these different divisions of the world collectively may be divided into two halves, as it were, which are complementary to one another; so that when the trade and monetary conditions of the one half are known, those of the other half may be roughly inferred. But that, again, can only hold good provided it can be shown that the trade of the world as a whole is a steady or slowly progressive one, and not capricious and variable. And this position Mr. Lowenfeld finds verified in the statistics compiled with much care and accuracy by Mr. Holt Schooling.

Progress Of The World's Trade

It will be as well therefore, if we are to rightly apprehend Mr. Lowenfeld's position, to pause for a moment to consider what these conclusions of Mr. Schooling specially are, and what further conclusions can logically be drawn from them. They may be summed up, then, in the following propositions : (1) That the trade of the world as a whole, owing to the increase of population and the mouths that have to be fed, is steadily increasing; (2) that it has compensatory fluctuations as between Europe and the rest of the world; (3) that the exports of Europe are two-thirds of those of the whole world; (4) that the share of European exports is gradually falling; (5) that as far as Europe and the whole of America is concerned, the share of exports is falling in the former and rising in the latter; (6) that Europe as a whole has largely increased her export trade, but that the United Kingdom has not kept up to the rest of the world in this respect; and lastly, and as conclusion and summary of the whole, that although fluctuation in the amount of trade characterises the different parts of the world, the world as a whole is free from fluctuation.