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Rh have been exceeded by old loans maturing, in the period under discussion.

The growth of the unfunded debt was accompanied by a great collapse in the foreign exchange rates, a collapse which first assumed dramatic proportions in June, 1919.

The primary source from which this money was drawn was the American banks, which provided it directly or indirectly through the creation of new bank credit. The major part of this credit was not extended directly by American banks. A greater part came, in the first instance, out of the working capital of American producers and exporters, who thus tied up a great deal of working capital in indefinite advances to Europe. This led them, however, to have resource to their American banks for the replenishment of their working capital under ordinary “line of credit” loans, and the banks thus indirectly bore the burden even where they did not bear it directly.

In a private communication to me, Doctor Anderson estimated that at the middle of 1921 the unfunded indebtedness of Europe to the United States had risen to about $4,500,000,000. This estimate was confirmed by an article in the Federal Reserve Bulletin for August, 1921.

John H. Williams in The Review of Economic Statistics,” [sic] supplement No. 1, June, 1921, presents the results of a careful study in which he arrives at a radically different conclusion as to the amount of the unfunded indebtedness to the United States. According to his calculations this was $616,000,000 at the end of 1920, and allowing for possible errors probably did not exceed $1,000,000,000. The greatest difference between Doctor Anderson and Doctor Williams relates to the