3. Physical conditions favorable to London.— London is situated on the threshold of Europe in the heart of the world's commercial activities, directly opposite the estuary of the Scheldt and nearly op posite that of the Rhine, and is within a short distance of every important exchange center in the world with the exception of New York. This may be considered as an almost insuperable obstacle to New York's am bition.
London has the advantage of ice and fog-free water lanes to every large port in the world with the ex ception of New York; the climate is equable and liquids and perishable goods run little or no danger of freezing in winter.
The restricted insular area of Great Britain, a little larger than the State of Minnesota, is also an import ant factor, as it not only affords an immense seaboard compared with its size, but concentrates the popula tion. A frequent and rapid transit service makes Great Britain practically one large city with London as the business center. Every bank in the country has a branch or correspondent in London, carries its reserves there and clears direct with every part of the country thru its London agent. The economy of resources effected by this natural concentration of funds is seldom realized and is worthy of study. The insular position of London renders it comparatively free from the danger of invasion and seizure by a hostile power and this immunity has been a factor in making London a world depository.
4. Mail and cable geographical sit uation of Great Britain, coupled with her willingness to invest money in international utilities, has placed her in a unique position as regards mail and cable fa cilities. Thru her immense mercantile navy. London has direct communication by fast steamers with every important port in the world and consequently acts as a foreign mail clearing house for all other countries. If French, German or Dutch steamers afford a faster service to any point they can be utilized with little or no loss of time.
- As Great Britain owns and operates two-thirds of the submarine cable mileage of the world, it is natural that London should be a great cable center with prac tically direct communication the world over. This service is now supplemented by a far flung system of wireless stations. Furthermore, under normal conditions, every main railroad on the continent of Europe gives its best service and equipment to its London mail train. The Trans-Siberian Railway
already gives access by rail to the Pacific and it is only a question of time before thru connections with India, China and South Africa will be estab lished.
5. Time advantages.—In dealing in foreign ex change and stocks London is the center of the world as regards time. She knows the conditions in eastern markets before they close and is open long enough to operate in New York before her own markets close. Her position is therefore pivotal as regards time and distance. Time is the essence of an exchange trans action; a day's delay may turn a profit into a loss and, granting that New York has the means and enter prise to create an efficient steamship and cable service in due course, bow can she eliminate the more serious handicap of distance by water from all other financial centers? 6. National characteristics.—Great Britain is a land of slowly acquired fortunes and the banker and merchant there are content with small profits and slow returns. They have long realized the fact that trade follows the loan and have, therefore, been willing to invest money in foreign countries with no prospect of recovering immediate returns or large profits. The financing of these loans abroad has been an im portant factor in making the London money market so supreme. It is doubtful if the American is adapted temperamentally for operations of this kind or for the small profits of the exchange operations connected therewith. The United States has still a vast area in proportion to its population, its natural resources are not yet fully developed and it is a coun try of large and rapidly acquired fortunes. It will. therefore, be many years before the investors and en trepreneurs are forced to direct their attention to for eign fields. Great Britain, before the war, invested over a billion dollars annually in foreign enterprises and at the beginning of the war had between twenty and thirty billions so invested. The United States at the same time was a debtor nation for over six bil lion dollars, and allowing that some two billions of this amount have been paid off or absorbed in the past two years of the war, she will still have to invest nearly twenty-five billions before she is on an equal footing with Great Britain in this connection.