stages of A country is Balance of payments(2)

so long as we remained in this third stage of being a new creditor country-so long,that is , as we kept making new private foreign loans all through the 1920s-everything momentarily appeared all right on the surface.We could continue to sell more than we were buying by putting most of it(on the cuff)The rest of the world met our export surplus by sending us gold and by sending us IOUs.As long as Wall Street bankers could interest Main Street investors in foreign bonds,everythings seemed rosy.but by 1929 and later,when Americans would no longer lend abroad,the crash finally came.International trade broke down.Debts were defaulted.America,as much as the rest of the world,was to blame.
Japan and West Germany seem to be repeating in the 1970s many of the phases-and errors!-of the United States in the 1920s.
4. Mature creditor nation.England reached this stage some years ago,and as in such cases,her merchandise imports exceeded her exports.Before we feel sorry for her because of her so-called(unfavorable)balance of trade,let us note what this really means.
Her citizens were living better because they were able to import much cheap food and in return did not have to part with much in the way of valuable export goods.The English were paying for their import surplus by the interest and dividend receipts they were receiving from past foreign lending.
Fine for the English.but what about the rest of the world?Were they not worse off for having to send exports to England in excess of imports?
Not necessarily.Normally,the capital goods that England had previously lent them permitted them to add to their domestic production-to add more than had to be paid out England in interest and dividends.Both parties were better off.Nineteenth-century foreign lending was twice blessed;it blessed him who gave and him who received.Of course,international trade and finance did not always operate quite so smoothly.Some investment proved unwise.Political problems of colonies and nationalism complicated the situation.And the whole process went awry and broke down after World War I.
America has moved into the mature stage,where our earnings from abroad help finance our net imports from abroad and also our aid and security programs.Past capital movements are responsible for these vital investment earnings.