EXPORTS AND ThIPORTS. [To THE EDITOR OP THE "SPECTATOR.")
SIR,—In reading the letters published in your columns I have seen no mention of the reason given by Professor Fawcett why in England imports must be permanently in excess of exports. The passage is at p. 403, Book III., chap. 7, "Manual of Political Economy," and is as follows :—
" It is not correct to say that in all cases the equation of inter- national trade requires that the exports a a country should be equivalent in value to the imports ; on the contrary, if a country is in debt to other countries, her exports will exceed in value her imports by an amount equivalent to her annual indebtedness. If, an the other hand, a country should be a creditor and not a debtor of other countries the value of her imports will exceed that of her exports by an amount which will be equivalent to the indebtedness of other countries to her. In estimating the amount of indebtedness of one country to another an account ought also to be taken of payment due for services rendered, such, for instance, as the carriage of goods. One of the chief reasons why the imports from the United States to England always largely exceed in value the exports is due to the fact that the carrying trade between the two countries is almost entirely done by British ships. It is therefore evident that a considerable amount of the produce exported from the United States represents a payment to English merchants and shipowners for the service rendered in carrying American produce. The enunciation of these principles at once affords an explanation of the circumstance that England's imports largely exceed her exports, whereas in India and in many other countries the exports exceed the imports. From the number of foreign loans that are raised in the London money market, and from the great amount of English capital that is embarked in various foreign investments, it is quite evident that large sums are each year due to England from foreign countries, independently of the amount which may be due to England for the commodities purchased from her. Hence it follows that foreign countries will have to send to England an amount of com- modities considerably in excess of the amount which would be required to pay for the commodities procured from England."
If this reasoning is sound, it appears more correct to say that the unexampled prosperity of the country is shown by the extraordinary excess of imports over exports than to say that it is notwithstanding this latter, as in the letter signed "0. 0. K." in the Spectator of August 8th.—I am, Sir, &c.,
L. G. F.
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