Page:The Bank of England and the State, 1905.djvu/57

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15
Foreign Trade and the Money Market.

insurance business which our companies carry on abroad, and other similar services, are not included in the returns of exports and imports; these items must reach a very large total. The Liverpool cotton merchant, who buys his cotton in New Orleans and sells it, say, at Havre or Bremen, the Mincing Lane merchant, who sends coffee from Brazil to Italy, supplies no statistics of such transactions, which form a very large proportion of our general trade, and the profits on which must be added to our "invisible" exports. Then there are the earnings of all the banks which have branches either in the colonies or in foreign countries, and not only the dividends they pay, but also the interest they allow to their customers on deposits taken here. These banks are registered as English banks, and their income swells the general income tax ret1u'ns, although, strictly speaking, it is interest on foreign investments. On the other side, income receivable by foreigners from capital invested in the United Kingdom should really be added to our imports; but the total cannot as yet be very large. It must also be remembered, in considering our income tax returns, that foreigners are charged income tax on their investments in home securities; such interest appears to swell our national income, although it is really a charge on it.

In addition to these items, which by enquiry could possibly be ascertained, there are the transactions of private firms who may transfer capital from one country to another, and about these no information can ever be obtained. The only outward indication we can have whether there is an undue excess of imports must be in the foreign exchanges, and if these are constantly adverse, without special reasons, and the value of money were to become permanently higher here than in other centres, then there would be reason to fear that our invisible exports are not sufficient. What would follow then? Either we should gradually be turning from a creditor country into a debtor country, and the official publications certainly do not warrant such an assumption at the present moment, or the higher value of money would act detrimentally on all our industries and trade generally, our purchasing power would decrease, which would directly lead to a reduction of