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 BALANCE OFTRADE 83 former times. These are all cases of the movement of the country is entitled in its trade as a shipowner and goods irrespective of international sales and purchases, commission merchant, and to exhibit at the same time the though the movements themselves appear in the inter- magnitude of British foreign investments, which cannot be national records of imports and exports, and therefore it less than 2000 millions sterling and must bring in an seems to be assumed, though without any warrant, in the enormous annual income. Other countries, however, such international records of the balance of trade. There is yet as France, Germany, Belgium, Holland, Denmark, Norway, another failure in the comparison. The individual trader and Sweden, are in the same condition, though their foreign would include in his sales and purchases services such as trade is not on the same scale, and similar rules apply to repairs performed by him for others, and similar services the. reading of their import and export accounts. The which others do for himself; but no similar accounts are kept United States, on the other hand, is a conspicuous instance of the corresponding portions of international trade such of a country which as yet is in the position of a borrower as the earning of freights and commissions, although in and has a. large excess of exports over imports, though strictness, it is obvious, they belong as much to international there are signs of a change in the opposite direction. New trade as the imports and exports themselves, which cannot countries generally, such as Canada, Australia, and the therefore show a complete “ balance of trade.” South American countries, resemble the United States. The illusions which may result then from the confusion Comparisons are made difficult by the want of uniformity of ideas between a balance of trade or profit, and a balance m the. methods of stating the figures, but that different of cash paid or received, and from the identification of an have to be grouped according as they are indebted excess of imports over exports or of exports over imports countries or creditor countries is undeniable, and no study of the with the. balance of trade itself, though they are not the trade statistics is possible without recognition of the undersame, things, hardly need description. The believers in lying economic circumstances. such illusions are not entitled to any hearing as economists,. In conclusion it may be useful to repeat the main proposihowever much they may be accepted in the market-place tions laid down, as to the balance of trade. (1) A “ balance or among politicians. of trade ” to the. individual trader, from whose experience the The balance of trade ” and “ the excess of imports over phrase comes, is not necessarily, as is supposed, a balance exports ” are thus simply pitfalls for the amateur and the unwary. On the statistical side, moreover, there is a good received or receivable in the precious metals. It may be deal more to be. urged in order to impress the student with invested as it accrues—in machinery, or warehouses, or stock-in-trade, or in. book debts, or in stocks and shares or care and attention. The records of imports and exports other property outside the trader’s business, as well as in themselves may vary from the actual facts of international cash. (2) What is true of the individual trader is also purchases and sales. The actual values of the goods im- true of the aggregate of individuals engaged in the foreign ported and paid for by the nation may vary from the published trade of a country. Cash is only one of the forms in returns of imports which are, by the necessity of the case, only estimated values. And so with the exports. The which they may elect to be paid. (3) The imports and recorded in the statistical returns of a country do actual purchases and sales may be something very different. exports not correspond with the purchases and sales of individual A so-called sale may prove abortive through its not being traders, as the sales especially may be set off by loans, Paid for at all, the debtor failing altogether. In any case the while the so-called imports may include remittances of purchases of a year may not be paid for by the sales of the interest and of capital repaid. (4) When capital is repaid year, and the “ squaring ” of the account may take a long the country receiving it need not be living on it, but may time. Still, more the estimates of value may be so taken as not to give even an approximately correct account as be investing it at home. (5) The foreign trading of countries may also comprise many transactions, such as the far as the records go. Thus in the plan followed in the earning of freights and commissions, which ought to appear United Kingdom imports are valued as at the port where they arrive and exports at the port where they are de- in a proper account showing a balance of trade, as similar appear in an individual trader’s account, but spatched from—a plan which so far places them on an equal transactions footing for. the purpose of striking a balance of trade, which are not treated as imports or exports in the statistical imt m the import and export records of the United States returns of a nation’s foreign trade. (6) Import and export a different plan is followed. The imports are no longer returns themselves are not the same as accounts of purchases valued as at the port of arrival with the freight and other and sales; the values are only estimates, and must not be charges included, but as at the port of shipment. The relied on literally without study of the actual facts. (7) Import and export returns in different countries are not in results on the balance of trade drawn out must accordingly all cases taken at the same point, there being important be quite different in the two cases. With other countries variations, for instance, in this respect between the returns similar differences arise. To deduce then from records of of two great countries, the United Kingdom and the imports and exports any conclusions as to the excess of United. States, are often compared, but are really imports or exports at different times is a work of enormous most difficult towhich compare. (8) The United Kingdom is a statistical difficulty, quite apart from the farther difficulties conspicuous instance of a country which has a great excess ot substance above described which beset the problem. It remains only to notice that the country which presents of imports over exports in consequence of its large lending the most interesting questions in connexion with the study is abroad in former times; while its accounts are specially the United Kingdom, which has by far the largest foreign affected by the magnitude of its services as a trading trade Its annual imports and exports, excluding bullion, nation carrying passengers and goods all over the world, exceed 800 millions sterling, and the bullion one year with which do not result, however, in so-called “ exports.” The United States, on the other hand, is a conspicuous instance another is 100 millions more. Its excess of imports more- of an indebted nation, which has or had until lately few over m the last forty years has gradually risen from a small or no sums to its credit in foreign trade except the visible gure to 180 millions sterling annually, and has given rise mainly to the popular discussion referred to respecting an exports. (9) The various countries of the world naturally fall into groups. The nations of Western Europe, such adverse ” balance of trade, and particularly to the belief as France, Germany, Belgium, Holland, with Sweden and existing m many quarters that the nation is living on its capital. The result has been a new investigation of the Norway, fall into a group with Great Britain as creditor subject, so as to bring out and present the credits to which nations, while Canada, Australasia, and the South American countries fall into a group with the United States as