3. Permanent excess of imports impoverishes, and 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 page 14 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. The fact is that these permanent excesses of imports over exports, or vice versâ, consist of non-mercantile 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 buys more than it sells, nor sells 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 exports beyond what it imports, it gets no return for; whatever it 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 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 a country, add to its present wealth page 15 if the excess represents a loan; or to its permanent wealth if it represents a payment.

How it comes to pass that this excess of 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 in the Board of Trade returns as imports without any corresponding amount of exports. They will appear as an excess of imports over exports to the extent of £100,000,000. But how can receiving £100,000,000 a year, and keeping it without making any return, be either a cause or a symptom of impoverishment? By what peculiar twist of the mind can this be made the subject of regret or alarm? At all events, this excess of imports must continue, and probably in-crease, as long as England possesses an annual income from abroad and the ocean-carrying trade. Even if England were to double or treble her yearly exports, her imports must of necessity continue ahead of them by that £100,000,000, or probably more.

The converse applies to over-exporting countries; their excess of exports generally represents the amount which they have to pay to the world, as borrowers, for annual interest, &c. The fact, in brief, is that all lending nations must necessarily import in excess of their exports, and all borrowing nations page 16 must export in excess of their imports; and the alarm which some feel at our over-importations should be converted into exultation at the wealth which they imply and to which they minister. To sum up, the truth is that The Wealthier a Nation is, the Greater will be the Permanent Excess of her Imports over her Exports; and a Permanent Excess of Exports is a Sure Sign of Indebtedness.