It will be seen that the excess of imports of merchandise over exports has risen from £100,000,000 in 1885, and only £80,000,000 in 1886, to £179,000,000 in 1902. I cannot absolutely subscribe to the theory that every import of goods must of necessity imply an export of goods. It must imply an export of something, which may be an export of earning-power, either by the sale of foreign investments hitherto held here, or by foreign capital being invested in our home securities. About such processes there are absolutely no statistics, and we can only judge from observation of the facts that come before us. It has been asserted by some that if paid for by sales of investments, part of the excess of imports has been paid for out of capital; but this theory is entirely misleading. For the proceeds of such sales of investments, if not re-invested abroad, or of foreign capital invested here, are employed at home, and become, perhaps not immediately, but eventually, productive; the capital does not disappear, but the interest on that capital, instead of coming to us from abroad, accrues at home, and to that extent there is a diminution of what are termed "invisible" exports, though not of capital. I do not say that this process has already become effective; in fact, the official figures point to an opposite conclusion; but there is a possibility of it, and the point requires constant attention. The other modes of payment for the excess of imports are, of course, well known to you all. In the first place, the difference is much greater in appearance than in reality, because of the difference in values, the imports being charged at their value on arrival here, while the exports represent their value in this country, not the price at which the goods are eventually sold—the stated values are nett—and the profits of our merchants should be deducted from the value of the imports, and added to that of our exports respectively.
Then there are the earnings of our carrying trade, shipowners and underwriters, and, as pointed out in the Blue Book, not only on the carriage of our own imports and exports, but also on the