16 THE SCIENTIFIC MONTHLY
which does not materialize until converted into goods or services for consumption. Now money or credit is merely a sign of uncompleted exchange, and a man's exchanges are not complete save to the extent that he has spent outstanding money or credit for goods or services for con- sumption. What we really have in mind when we say selling is hetter than buying is that a large excess of a man's sales over his purchases of capital goods is profitable because it is followed by a large purchase of consumable goods. Dealings in capital goods are profitable only because of this. The fallacy in transferring the idea to international trade lies in slurring over just this usually unexpressed qualification. With the man we are thinking of his uncompleted exchanges, while with the nation the " balance of trade " is an item in a balanced account of com- pleted exchanges, and to that extent it is not a balance at all. With the man, his excess of sales is a credit, a lien upon the market, while with the nation her excess of exports is not a credit. That the trade balance is not a credit appears in startling form when we begin to look about for tangible evidence of credit. No one is puerile enough to believe that the nine-billion-dollar export balance of the United States, accrued during twenty-five years, is a lien to that extent upon the wealth of other nations and that either American citizens or the American government hold mysterious papers that have the power to recall nine billions of foreign wealth to our shores when we shall choose to have it. And if any doubts remain as to a certain store of gold, it is only necessary to remember that that nine billions is over and above all exports paid for with gold.
The current idea in regard to the balance of trade is closely associ- ated with the doctrine of protection and the popularity of that doctrine is doubtless another source of the support the trade-balance idea receives. Those who believe in the protective tariff will believe in the " favorable balance of exports. In this connection its fallacies are obscured by the ease with which people are impressed with the concrete good or evil of an individual or small group of individuals, and the difficulty with which people are impressed with the general good or evil diffused over the whole community. It is doubtless true that protection and restricted imports are favorable to some Americans, but it can only be so at the expense of all other Americans, for we have seen that it is not favorable to the community as a whole.
But the question of the balance of trade here stands clear cut and apart from the tariff controversy, of which it forms an independent part. In the light of our demonstration it may fairly be said that of all popular fallacies it would be difficult to find another so groundless, so contrary to our simplest intuitions, and so readily capable of disproof, as the notion that it is more profitable to send things away than to take them in.
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