It is a fine piece 0f pedantry on the part of the Old Economists that, having founded their system on the industrial regime of a particular nation - and that, too, covering a period of not more than fifty years in all its history -they should still continue airily and complacently to keep it going on the same principles of that regime, under the pretence that they would allow for the exceptional instances where Trusts, Combinations, Monopolies, and Tariffs have taken the place of the "economic man," free competition, and laissez-faire; and of the instances where the industrial or money powers of individuals, classes, or nations have, like highwaymen, held up other individuals, classes, or nations, while they appropriated to themselves the spoils. As if, indeed, there ever was a time in the history of the world (even in the short reign of industrial Free Trade and Free Contract) when some individuals, or classes, or nations, had not by their power managed either to enslave outright, to reduce to serfdom, or to industrially exploit the rest, from the time of the dominion of the sword in the ancient and mediaeval world to that of the dominion of the dollar, as in the American Trusts of to-day. They might as well, like the old anatomists, start from the dissection of the dead body, and then allow for the laws of its physiology when alive, instead of starting from the living, and allowing for its manifestations when dead.

New Economy Rapidly Advancing

And I appeal to the reader whether it is not time that Political Economy should start afresh from the living industrial facts of to-day - Trusts, Combination, Monopoly, Co-operation, and the incidence of personal or money power, all of which have come to stay - and only then allow for the effects of Free Competition, Freedom of Contract, and laissez-faire, when these still linger on around the outskirts or in the shade. And I take it as a step in this direction, and as a recognition of the rapidity with which the New Economy is making its way, as well as an indication of the freedom from bias which the Editor of The Financial Review of Reviews has shown in desiring to have all schools of economic thought represented in his pages, that I should have been invited to set forth the principles of the New Economy in their bearings on this important and practical problem of the Geographical Distribution of Capital.

The Meaning Of Geographical Distribution Of Capital

What, then, are the points of this problem on which Political Economy is invited to pass judgment? The problem itself may be stated in a word, namely, how to get out of investments the greatest amount of income compatible with the absolute safety of the capital invested. And the questions which the Editor wants answered from the standpoint of adherents both of the Old and the New Economy are: 1st, What effect will the Geographical Distribution of Capital have on individual investors; 2nd, What on the nation to which these investors happen to belong; and 3rd, What on the world of international trade and industry as a whole ?

Safety Of The Investor Under Geographical Distribution Of Capital

Now, it is to the security and welfare of the individual investor under this scheme that the greater part of the following pages' will be devoted; but I may say here in a general way that I do not think that on this point there can be two opinions. In my judgment, Mr. Henry Lowenfeld, the author and originator of this scheme of Geographical Distribution, has, as we shall see in detail later, reduced it to something like a scientific demonstration, when regard is had, that is to say, to the ticklish risks which attend every investment of capital in a world so rapid-changing and everywhere subject to so many unforeseeable industrial and financial contingencies and cataclysms. And, in passing, I may be permitted here to congratulate him on the wonderful unanimity with which his scheme has been everywhere received by financial experts of every kind: bankers, brokers, officials of the Chambers of Commerce, foreign financial authorities, etc., as well as by the most eminent political economists, English and foreign, of the old Academic School. To this unanimity of opinion from the adherents of the Old Economy I am willing to subscribe for what it is worth my own tribute of appreciation from the point of view of the New.

False Impression Of Geographical Distribution Of Capital

To many, if not most readers, perhaps the phrase "Geographical Distribution of Capital'" would suggest that the scheme is only a variant on the old general injunction that if you wish to sleep o' nights you ought not to put all your eggs into one basket. But this kind of security can, as regards capital safety, be had almost haphazard, as out of a bag, by any one who will select a sufficient number of gilt-edged securities from out of the ordinary miscellaneous assortment of them on the market. And yet, when we remember that Consols even, with their low rate of interest, would, during the last ten or more years, have lost the investor quite a fourth of his capital were he obliged to sell them out to-day, it is obvious that even the most gilt-edged securities cannot be depended on even as regards the safety of the capital invested in them. But when an increase of income over and above that of the humble yield from Consols or other first-class stocks of the same character is desired, then this easy method of putting all your eggs into these various gilt-edged baskets is quite out of the question. No! Mr. Lowenfeld's scheme, although, it is true, a question of baskets, is not one of this simple and easy kind; but, on the contrary, is a scientific statement of precisely what quality, kind, and location of basket you are to put your eggs into; and, like all scientific generalisations which are of ultimate value, is founded on what I believe is admitted to be perhaps the largest and most carefully sifted collection of stocks and shares from all the world yet known, and includes their past history as well as their present status; all of them being brought together month after month in the pages of The Financial Review of Reviews.

Consols And Loss Of Capital. Opinions On Geographical Distribution Of Capital

Later on, I shall put the whole scheme, with its appendages and abutments, on to the world-wheel of wealth production and distribution which symbolises the method of the New Economy, to see how it will turn out. But in the meantime I can personally re-echo the opinion of Professor Karl Bramer, as expressed in a recent number of the Review, that "Mr. Lowenfeld's book develops the principles of a new science - Comparative Trade Statistics - formerly treated as a side branch of statistics; but now it can claim to be a special science of itself"; or of Mr. Hobson, who says that "Lowenf eld has shown that profit varies directly and risk inversely with Geographical Distribution, which gives the largest, safest, and most equable dividends." It will be interesting, therefore, to see how this scheme in its inter national, national, and individual aspects works out under analysis.