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fundamental industry. Railway construction with its appendages of docks, harbours, warehouses, etc., has been a notorious example. When an era of industrial prosperity has evoked great confidence in its continuance, and high profits yield a large investment fund available for speculative enterprise, a boom in American and other foreign railways has been organised to take off the capital superfluous for safer home uses. "The most common form for the absorption of capital, as well as the most correct barometer of activity in the United States from 1848 to 1890 was railway building, which in each case reached a maximum some months or years before the occurrence of the crisis or the beginning of the depression."^[1]

The statistics of Great Britain's foreign investments bear out this ascription of over-investment in fundamental industries of a speculative order as a precipitating cause of depressions. This misdirection of the enlarged saving-fund of prosperous trade is natural enough. While it lasts, it means a full employment and large development of the fundamental industries in the investing country and others, coal and iron, metals and engineering, which go to furnish the concrete capital for the foreign railroads, etc. When it becomes evident that the process has gone too far, and that many of these roads cannot within any reasonable time be made to pay their way and yield a profit to investors, a financial crisis follows, the flow first of bank credits for immediate financing of the ventures, then of new capital to carry them further, fails, and an era of bankruptcy and reconstruction sets in,