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 it; and it may go on for years without damaging a country's credit, as was shown by France before the war. But if the Government of a foreign state borrows in London instead of making its citizens pay for the normal expenses of administration, the result is a serious check on the vigilance with which its expenditure is watched, and the natural tendency to official extravagance is encouraged, and in all subsequent years the check on home consumption and the adverse effect on the exchange that are involved by foreign debt are penalties for the extravagance.

It may be contended that all these considerations are the concern of the borrower rather than of the lender and that if the investor thinks that a foreign security is good enough to hold he need not bother his head about the purpose for which it was raised or the way in which the money was originally spent. Within limits this is true, but bad financial habits are so easy to contract and so hard to reform that when a country's foreign debt has been chiefly raised for purposes that have not helped to increase its revenue and its export trade, it is likely to find the service of it increasingly difficult to meet.

We find then that the real security behind a Government debt is an extremely elusive