These travelers are not only a source of profit to European merchants and hotel keepers, but also an important source of revenue to European Governments, as practically all of the Continental nations levy taxes on tourists. The rates vary from 4 to 25 per cent of the hotel bill, with frequently an additional charge of 10 to 25 cents a day, and in most countries a passport charge of $10.

The expenditures of American tourists in Canada, as reported by local official and semiofficial bodies, showed a considerable increase over 1923. The number of Americans visiting Canada for pleasure can not be stated, as there are so many who go back and forth frequently and so many who travel for business reasons and whose expenses, therefore, are met from their earnings in Canada and do not constitute a charge against the United States. Unless the estimates of Canadian observers are grossly exaggerated, American tourists spent at least $150,000,000 in Canada during 1924, principally in Quebec, Ontario, and British Columbia.

The total spent by American tourists in Europe, Canada, and elsewhere thus comes to $570,000,000. To this may be added $30.000,000 for the expenditures of Americans residing abroad more or less permanently.

Against this total of $600,000,000 must be set something like $100,000,000 spent by foreigners in this country. One hundred and seventy-two thousand nonimmigrant aliens came to the United States in 1924, besides an unknown but doubtless large number of Canadians. However, it is likely that some of the aliens who declared themselves as nonimmigrant actually became permanent residents, as the number of nonemigrant aliens departing during the year was only 142,000.

This is all the more striking inasmuch as the term "nonemigrant alien" includes not only aliens who leave the country after a temporary sojourn here, but also resident aliens who go abroad for a temporary stay. The latter class have the same effect on the balance of payments as American citizens traveling abroad, for their expenditures are out of income derived from this country. Moreover, some of the transient aliens supported themselves while in the United States out of earnings derived from this country, and others of the "nonimmigrant" class are really immigrants returning from a trip home. Their average expenditure of money from foreign sources could hardly have exceeded $500. The rest of the $100.000,000 stated above represents the estimated expenditures of visitors from Canada. The net debit on account of tourists is therefore estimated at $500,000,000.

This item has for many years been a unique feature in the balance sheet of the United States. Even in the first half of the nineteenth century Americans spent large sums in foreign travel. In the period since 1900 the annual debit on this account has usually exceeded $150,000,000, except during the war. No other country, except England, spends nearly so much money in this way. On the contrary, tourists' expenses are a credit item for most European nations.

GOVERNMENT RECEIPTS AND EXPENDITURES

The principal receipts of the United States Government from foreign sources were payments of interest and principal of loans to

foreign governments. The details of these are given in the following statement from the Treasury Department:

PAYMENTS RECEIVED FROM FOREIGN GOVERNMENTS ON ACCOUNT OF PRINCIPAL AND INTEREST DUE ON THEIR OBLIGATIONS TO THE UNITED STATES, DURING 1924, WHICH AFFECT INTERNATIONAL BALANCES

The principal payments made abroad by the United States Government were as follows:

There were other transactions between various departments of this and of foreign Governments that are not stated above, since they did not involve the transfer of funds but were settled by entries on the books of the Treasury and of the other departments concerned.

The receipts tabulated above are not entered in the general statement of international payments as a separate item, but are included with other items of principal and interest. The expenditures are given under that heading, as they are of a distinct nature.

For the purpose of this study no account needs to be taken of the sums spent by the United States Government on account of diplomatic missions, naval ships in foreign ports, etc., since such expenditures must be nearly offset by consular fees collected abroad and by the expenditures of foreign governments for similar purposes in this country.

INTEREST AND PROFITS

The amount of income received from foreign sources by residents of the United States can only be estimated on the basis of known investments and average yields. Income-tax statistics are not yet compiled for 1924 or 1923, and those compiled for previous years do not include all income from abroad. In 1922, 1,521 citizens residing abroad reported $11,364,148 and 33,418 citizens residing in the United States reported $43,025,275 of income from foreign sources. Also 1,266 corporations reported net profits of $40,000,000 from foreign business. In 1924 it is believed such incomes were considerably larger. Nonrealized profits, incomes under $5,000, and interest on bonds payable in the United States are not included in these figures, which are therefore much below the truth. The amount of interest

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on foreign loans publicly issued and still outstanding is reckoned in the following table:

INTEREST RECEIVED IN 1924 ON FOREIGN SECURITIES ISSUED IN UNITED STATES [Millions of dollars]

Foreign securities issued here and outstanding Jan. 1, 1924

Foreign Government and Government-guaranteed securities floated here in 1924 (excluding refunding)..

Foreign corporation securities floated here in 1924 (excluding refunding)..

In addition to the above securities, Americans have invested largely in foreign-currency bonds and in real estate and industrial enterprises abroad. The amount of such investments can only be roughly stated. Even the amount of American-issued bonds held by Americans is not exactly ascertainable, as many issues floated in this country have been partly sold to foreigners, either at the time of issue or later. The best evidence available indicates that the distribution of total foreign investments is as shown in the following table. The total for the end of 1923, as published in Trade Information Bulletin 215, was $8,000,000,000, but later information seems to show that it was nearer $8,105,000.000, as investments in Canada were apparently overestimated by some $50,000,000, and investments in Japan, China, and the Philippines underestimated by $155,000,000. Some securities previously classed as industrial are here entered as Government guaranteed, since they do not represent such an active interest in foreign industry and commerce as do nonguaranteed bonds, stocks, and direct investments.

ESTIMATED VALUE OF AMERICAN INVESTMENTS ABROAD AT THE END OF 1924

1 The apparent decline, when compared with the figures given in Trade Information Bulletin 215, is due mainly to the transfer of $300,000,000 of Canadian Government railway securities to the column of Government obligations.

Excluding Porto Rico. $140,000,000 of Mexican railway obligations, previously included with industrial securities, are here given as Government-guaranteed.

Including Philippines. The figure of $190,000,000, given as the value of Government obligations in 1923 in Trade Information Bulletin 215, should have been $360,000,000, according to more recent information. That of $250,000,000 for industrial securities, etc., should have been $235,000,000.

The interest on foreign loans floated in the American market and payable in dollars is for the most part not included in the amount reported in the income-tax statistics as being derived from foreign sources, but is treated for tax purposes as domestic income. Consequently the $43,000,000 mentioned above as being received from abroad by individuals and the $40,000,000 received by corporations in 1922 should be added to the estimated income from such bonds, giving a total of $325,000,000 as the interest and profits on foreign investments. This total, however, is only a minimum figure, as it omits a good many small incomes and ignores accrued profits not realized in taxable form. Moreover, the taxable income earned abroad in 1924 was probably greater than in 1922. Consequently the figure of $455,000,000, equivalent to 5 per cent of the estimated value of foreign investments, may be taken as more nearly approximating the total amount of interest and profits on foreign investments during 1924. To this must be added $159,000,000 received by the United States Government as interest on its loans to Great Britain and other governments.

In 1922, according to the income-tax statistics, nonresident aliens received $38,000,000 of taxable income from services within the United States and its possessions. This includes interest, dividends, salary, commissions, and royalties. It does not include amounts received by individuals reporting less than $5,000 net income, nor does it include interest on tax-exempt securities. Foreign corporations reported a net loss of $6,000,000, but this can not be regarded as representing the actual situation. Since 1922 the amount of foreign capital in the United States has undoubtedly increased, although the 'flight of capital" from depreciating currencies and threatening legislation, which was so important in 1922 and 1923, seems to have been less important in 1924, and a reverse movement has set in, especially in the United Kingdom and Germany.

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Reports submitted by 68 banks show that the amount of securities sold to foreigners in 1924 exceeded the amount bought abroad by $205,000,000. Unfortunately it was impossible to separate American and foreign securities, so that it is doubtful whether the effect of these transactions is to increase the amount payable to foreigners as interest, or to decrease the amount receivable from them.

On the whole, there seems to have been little change in the amount payable on foreign investments in the United States, and the amount stated last year may be repeated for 1924; that is, $150,000,000. There is no doubt, however, that the balance due from foreigners was somewhat reduced by the year's market transactions, aside from new flotations, and the interest on securities sold must be set off against the interest on the new foreign issues.

MOVEMENT OF CAPITAL

The most important capital item is the amount of new issues of foreign securities in the United States. Several compilations have been published, which differ widely for three reasons-the difficulty of eliminating issues that represent merely the refunding of loans or bank credits previously obtained, the difficulty of ascertaining what part of Canadian issues was bought by Canadians, and a difference of practice with regard to long-term loans not offered for

public subscription. The accompanying table excludes loans of the last category and includes Canadian loans to the amount of only $195,000,000, of which only $118,000,000 is considered to represent new investment. The total par value of issues publicly offered was $1,210,000,000, of which $332,000,000 was merely a refunding of old loans. As most issues were sold at less than par the total actual new investment was only $828,000,000 when reckoned on the adver tised issue price, and the amount finally credited to the foreign borrower was even less, since bankers' commissions amounted to 4 per cent or more. The amount entering into the balance of international payments, either by actual transfer of funds or by the establishment of credit balances in American banks, was therefore only about $795,000,000, which is the amount entered in the table. Investors showed an even greater preference than in 1923 for Government-guaranteed securities, for of the $878,000,000 of new loans floated $775,000,000, or 88 per cent, were Government-guaranteed, whereas in 1923 the corresponding percentage was only slightly over 60 per cent. In fact the total par value of new corporate issues was apparently less than in 1923 ($103,000,000 against $130,000,000), but there were other important investments in foreign industrial enterprises not represented in the list of bonds publicly offered.

GEOGRAPHICAL DISTRIBUTION OF NEW SECURITIES

The geographical distribution of these securities is of interest. The par value of loans to Europe publicly offered, excluding refunding issues, was $525,850,000, of which $511,850,000 represented Government or Government-guaranteed borrowings, and $14,000,000 bonds of private corporations. The market value of these securities did not exceed $439,590,250 for the Government issues and $13,675,000 for the others. The actual investment by Americans was even less than these figures indicate, as many of their bonds were bought by Europeans; moreover, the bankers' commissions should be deducted, and these ran in some instances as high as 8 per cent.

It is very difficult to estimate the amount of Canadian securities purchased by residents of the United States, as the bankers who underwrite such issues have customers on both sides of the boundary and there is no hesitation on the part of investors in either country at investing in the other. Considering the circumstances under which each issue was offered, it seems likely that Canadian Government securities sold in the United States, excluding refunding issues, amounted to about $99,000,000 and Canadian corporation securities to about $35,000,000.

Cuban sugar plantations obtained $17,500,000 and other corporations operating in Latin America obtained about $21,000,000. These companies were all under American control. Large investments were made in Bolivia and elsewhere that were not financed by the sale of specific securities. About $81,000,000 was advanced to LatinAmerican Governments and municipalities.

The greater part of the loans to Asia were for the benefit of Japan. About $90,000,000 of new capital went to Japan. The only other Asiatic country borrowing here during 1924 was the Philippines, which obtained less than $2,000,000.