BALANCE OF TRADE. In the "mercantile system" of political economy, which looks upon the- possession of gold as the grand aim, it not unnaturally came to be a maxim that a nation becomes richer just in proportion as the money value of its exports exceeds that of its imports; the excess, it was thought, being paid in gold, is just so much added to the national wealth. Now, the difference 'between the money value of the exports and imports of a state is called the " balance of its trade ;" and by the adher ents of the mercantile system, this balance was said to be "in favor" of the country or "against" it, according as the exports or the imports showed the excess.
lint this view of the matter rests on a twofold error; for, in the first place, the increase of national wealth is by no means to be identified with the immediate influx of hard eash; nor is gold the highest expression of national wealth, but only a means of turning real wealth and the faculty of labor to account. Further, the assumption that excess of exports represents excess of income, is completely false. It takes exports for income (because payment is received for them), imports for expenditure (because they must be paid for), while it would be more consistent with the truth to say that exports are identical with expenditure, and imports with income; so that wealth increases in pro portion as the value of the imports (what is received) exceeds that of the exports (what is given away); and that whether these exports and imports consist solely of goods or partly of money. It may sometimes be desirable to get payment.of exports in gold— that is, to import bullion. But the case in which this will be beneficial to the merchant seeking his own profit in the transaction, will be that in which it will be beneficial to the. community. In the majority of cases, however, the individual merchant finds it his best policy to lay out the money due to him in a foreign country in purchasing the wares.
of that country as return-value. The far-sighted Venetians early recognized the truth of the principle in a national point of view; for, by a law of 127'2, they laid a tax of one fourth the value on the importation of all coined gold and silver. The mercantile system of political economy, on the contrary, consistently following up the notion of the B. of T., enacted laws prohibiting importation of foreign manufactures, or imposing high duties upon them, and giving premiums and other protective for exportation; as if it were possible to go on exchanging always for gold only—ever exporting goods and goods alone, and never importing any. If this could be, and if it were true that a nation with the B. of T. constantly in its favor must become richer, while, with that balance against it, it must become poorer, England, whose official returns have for many years exhibited a large excess of exports over imports, must have had at this time about £500,000,000 in precious metals, while in reality the amount does not exceed perhaps £60,000,000. The truth is, that no safe conclusion can be drawn from the B. of T. exhibited in official statements; from the way in which they arc arrived at, a great part of the facts of the cases are necessarily left out. Almost all nations exhibit favorable balances, and how could that be possible, if the whole affair were not decep tive? In the regular legitimate commerce between two nations, both actually gain, though the gain may not be exhibitable in the form of a money-balance. If the gains of nations from commerce consisted of differences between the amount of exports and of imports to be compensated by balances in money, nearly all nations would be yearly receiving accessions of gold and silver, the united amount of which would exceed, by more than ten times, the produce of all the mines in the world.