imports, the home demand would slacken, and wages and prices generally would fall, and the surplus production of our factories, failing a market at home, would have to be exported. Thus, through the pressure of hard times, the balance would gradually be restored. This is the process, though by no means a desirable one, by which an excess of imports, if really undue, must right itself; but it would mean hard times and much distress. To arrive, however, at the conclusion that such a situation has already arisen, or appears likely to arise, does not seem in the least warranted by any evidence as yet before us. What does seem evident is that of late years the margin is not so large as it was in former years, or in other words, that we are not at the present moment in the position of placing as much capital for investment abroad as was the case previously. The importance of such investments, as already mentioned, cannot be overrated. It has been stated in some public speeches, that the working-man cannot live on foreign investments, but the fact of our having them enables him to buy his food and other necessaries at a very much lower cost; and, as shown before, we pay for such investments by exports, and they thus directly contribute to provide employment. The very fact of our money market during the last few years not having been conducive to the issuing of foreign loans seems to me in a great measure to account for the growth of our exports not being equal in proportion to that of our imports. That the exports have grown most satisfactorily is undeniable, for, taking even the year 1872, about which so much has been said, as a basis, we find the total exports of that year 315 millions, of 1902, 849 millions; but according to 1872 prices, as shown by Sauerbeck's index numbers, the value of 1902 exports would amount to 551 millions instead of 849 millions, showing an increase of 75 per cent. against an increase in the population of 81 per cent. I mention this to prove that exports have grown, though imports have grown in much greater proportion. I think everyone will agree that it is most desirable that there should be greater elasticity and expansion in our exports; the difficulty is to find the true reason for this comparative lack of expansion and the true remedy for improving it.
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Foreign Trade and the Money Market.