The money which the seller receives for his goods would be little more than so many pieces of broken slate were it not for its purchasing power. The consideration for which his goods have been given is not the mere coins, it really is the commodities which those coins will purchase. The mere money itself is utterly valueless, unless it be, sooner or later, turned into commodities, whatever those commodities may be, whether land or labour, raw materials, or manufactured products.

If you purchase wheat, and pay for it in money, that money may perchance be used for purchasing a horse, in which case the horse has been, indirectly but no less truly, bartered for wheat. To put it into a more general form, every sale or purchase is a barter of the commodities so sold or purchased with the commodities on which the seller may expend the money received. If money, as money, had any other value beyond its purchasing power, it might be said that every sale or purchase is a barter between goods and money. But money, as money, has no real but only a representative value. The barter really is between the definite goods given for the money, and the undefined goods which that money represents, and which it may at any moment realise. Just as when you buy a ticket for a concert, the consideration given for your money is not the piece of paste-board of which the ticket itself consists, but the musical performance which the ticket represents.

Let us conclude by an illustration. You, being in England, buy, we will say, a cargo of wheat from New York. Against the bill of lading, &c., of this

GOODS, NOT SPECIE, PAY FOR GOODS. 175

shipment you accept a bill drawn on you by the seller, payable in England, and probably you pay for this bill in money before you get possession of the wheat. Now, pray observe. The money which you pay for that bill is not sent over in specie to America. It remains in England, to the credit of the banker in New York to whom the bills drawn on you were endorsed. The usual and natural use which he makes of this credit is to draw bills from New York against it, which bills he will sell in America, for a given number of dollars, to any one who wishes to make a remittance to England—perhaps to a man who has ordered some Manchester goods, for which he pays by remitting those bills to Manchester. In such case, it is evident that the specie does not leave England, and that, substantially, the American wheat has been bartered for Manchester goods.

Frequently the process is more indirect and circuitous, but, if analysed, it comes to the same thing. For instance, the bills referred to above, instead of being sent direct to England, may be sent to Rio Janeiro to pay for coffee, and sent from Rio Janeiro to England to pay for Sheffield steelware bought for Brazil. In this case England gets the American wheat, America the Brazilian coffee, and Brazil the English steel. And thus a double barter-something like Capt. Marryat's triangular duel-has taken place without the slightest displacement of specie. Note, moreover, that this is the regular, normal, and nearly universal practice in mercantile operations. Hardly

once in a thousand cases are foreign goods paid for by direct export of specie.

To sum up, the truth is that ALL COMMERCE IS BARTER; FOR IT IS AN INTERCHANGE BETWEEN THE COMMODITIES SOLD FOR MONEY AND THE COMMODITIES WHICH THAT MONEY WILL BE USED IN PURCHASING.

CHAPTER XIV.

Excess of Imports mostly a sign of Wealth-4. Imports and Exports (except those for Loans or Repayments) balance each other-5. Protection Discourages Native Industry.

3. Permanent excess of imports impoverishes, ana permanent excess of exports enriches, a country. This is the reverse of the fact. It would not be true even if such excess of imports had to be paid for by the receivers, or if such excess of exports implied a return payment of some kind. But this is never the case. For had such excess to be paid for, the payment must necessarily be either in goods or in specie. Now, it could not be in goods, as then, ex hypothesi, the goods exported would equal the goods imported, and how could there be an excess either way? Neither could that payment be made in specie, for it has been shown over and over again that the displacement of specie between country and country is confined within a very narrow range, that it is almost exclusively governed by circulation requirements, and that balances due by one country to another are never paid, unless to a mere fractional extent, in specie.

NO COUNTRY BUYS MORE THAN IT SELLS. 177

The fact is that these permanent excesses of imports over exports, or vice versa, consist of nonmercantile operations which are not repayable. They consist of national loans (repayable at indefinite periods, but scarcely ever repaid), of investments in foreign undertakings, of interest and dividends on such loans and investments, of subsidies to allies (less in fashion now than formerly), of war indemnities (that of France to Germany in 1871 to wit), ocean freight earnings, and other similar disbursements which are outside of, and in addition to, ordinary commercial interchanges.

"How," the Protectionists ask, "can a nation go on buying more than it sells without at last (like a spendthrift who lives beyond his income) becoming utterly ruined?" The answer is simply that no country ever does buy more than it sells, or ever does sell more than it buys. The trade of a country consists of the aggregate operations of individual traders, which are always equal, co-ordinate, and self-balancing; and which. necessitate to a mathematical certainty (with the exception of bad debts) an import as a counterpart to every export, and vice versa. As we have already shown, all commerce is direct or indirect barter. Whatever a country permanently exports beyond what it imports, it gets no return for; whatever it permanently imports beyond what it exports, it gives no return for. Such excess goes either to liquidate old international debts or to contract new ones. Whatever is brought into a country over and above what is sent out from it is either a payment or a loan. If a payment, it is

M

retained for ever; if a loan, it will be retained till repaid at some future indefinite period. Of the rare and exceptional case of a nation paying off its foreign indebtedness, we shall treat elsewhere, but it does not invalidate the general principle that a permanent excess of imports over exports is not paid for, and must, therefore, far from impoverishing the country, add to its present wealth if the excess represents a loan; or to its permanent wealth if it represents a payment.

of

How it comes to pass that this excess imports or of exports takes place, we have already in great measure explained. Beside the normal commercial profits which naturally contribute to make what comes in of greater value than what goes out, wealthy nations which have lent money to foreign states, or otherwise invested money in foreign countries, have annually to receive large amounts for dividends on those loans and investments. These amounts are periodically remitted to them in goods (not in specie), which figure in their statistical returns as excess of imports. Let us take the case of England. She has yearly to receive about £60,000,000 from abroad for interest on foreign investments. She has also to receive some £40,000,000 to £50,000,000 more for ocean freight (gross) and charges, because two-thirds of the entire ocean-carrying trade of the world is conducted by her mercantile navy. Now, since England has to receive about £100,000,000 per annum from abroad in goods, for which, as they constitute a payment to her, and not a sale, she has to make no return, it is clear that these will figure