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The National Aspect of Foreign Trade 1

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THE NATIONAL ASPECT OF FOREIGN TRADE 1. Foreign trade a matter of national interest.— We have thus far considered the importance of for eign trade from the point of view of the individual business man. In this chapter we shall attempt to answer the question why the nation as a whole should be interested in foreign trade.

It is possible to assume two extreme positions in regard to the question. On the one hand it may be urged that each nation should try to become as nearly self-sufficient as possible. On the other hand foreign trade may be looked upon as an end in itself. As is usually the case, the right attitude will most likely be a compromise between the two. In order, how ever, to appreciate the nature of the problems in volved, it will be helpful to consider the extreme po sitions.

2. The self-sufficient state.—In case of a blockade in war a self-sufficient state is without doubt in a more favorable position than a country which is dependent upon other countries for any of its staples. Still, it requires little imagination to see what the inhabitants of a country would sacrifice should they voluntarily forego commercial intercourse with other nations. In a country of the temperate zone it would mean going without tea, coffee, cocoa, spices, rice, rubber, in short, all the numerous products of the tropics which by this time have passed out of the class of luxuries into that of necessaries.

But this would not be the only sacrifice involved in closing the frontier to importations.

3. The character of goods exchanged.—Even as suming that the country in question has within its borders all the resources and all the technical skill re quired to make all the goods it needs, still if some goods were more skilfully and more cheaply made abroad, their importation, broadly speaking, would be desirable.

National traits as well as natural resources neces sitate differences in production. The practical minded and resourceful Anglo-Saxon has generally excelled in inventions of a mechanical nature. The telegraph, telephone, phonograph, submarine, air plane, steam engine, typewriter; a list of inventions too long to enumerate testify to his ability to master and subdue the forces of nature. The Frenchman,

with his well-known love for the perfect, the har monious and the beautiful, has been long considered the logical person to supply those articles of luxury which are not easily produced in quantity, but require an artist's taste and skill. Other races have shown ability in the elaboration of the inventions of others.

It should be kept in mind that the word "better" has a very elastic meaning in trade. Excepting raw products and food products, and even these to some extent, much importation takes place not to supply cheaper goods or more useful goods, but to satisfy a demand for exclusiveness. England im ports American cloth, France imports English and American cloth, while America imports French and English cloth. In the retail shops of France, Eng land and America, the exclusiveness and general su periority of the imported article is urged upon the purchaser. "Exclusive imported patterns" is a catch phrase in every country of the world. It does not pay to "carry coals to Newcastle" because coal is a raw product. It does pay to import automobiles into America, tho such cars are extremely expensive in first cost and may give much trouble to repair. Their very expensiveness makes them attractive.

4. The international division of labor.—From what has been said, there can be little doubt that the greatest economic efficiency can be obtained only when each nation produces almost exclusively the goods it can produce most economically and when every individual within each nation is engaged at tasks for which he is by nature and training most adapted. This specialization by nations is sometimes referred to as an international division of labor. Each country may thus be said to make its contribution to the inter national stock of goods. Producing the goods in which it excels most, it exchanges the surplus which remains after home demands are satisfied for those goods in the production of which other nations are more efficient. Such international cooperation, it is represented, moreover, will so knit the nations to gether and make them inter-dependent that conflicts will in time become economically impossible.

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