Value Of British Investments, Freight, Etc, Not Included In Board Of Trade Returns

Now the value of these debts, due to English merchants, shipowners, and investors - freight of vessels, insurance, charges, agency commissions, profits and interest - do not appear in the valuation of our exports in these Returns, and hence, before our consideration of the apparent discrepancy between our Exports and Imports is concluded, we must add these receipts by us to the account. Is not the inference or, rather, the assertion justified, that the more the Imports exceed, the more impressive evidence is furnished to the extent of our national wealth? If a prudent tradesman he found on examination of his acts, to be buying more articles than he sells, is he necessarily approaching bankruptcy, or is it not rather the income he derives from the accumulated fund of savings which his intelligence and skill have amassed, which enables him easily and justifiably to expand more widely in superior and more varied forms of comfort and even luxury? His additional expenditure (or imports), instead of indicating financial weakness and rashness, furnishes an index to his stability and prosperity. Equally so with the mass of individual traders who constitute mercantile England.

Exports Paid For By Imports

It is sometimes difficult to make a learner understand that imports of goods form the necessary mode of payment of the prices of exported goods. The perplexity generally arises from the fact that the learner considers only an individual transaction instead of the mass of transactions which international commerce implies. Assume that he has sold (or exported) to a merchant, AB, abroad, £100 worth of manufactured articles; let him receive from AB in discharge of the price, a draft for the £100 upon an English firm of merchants, which he presents to his banker for discount, obtains notes, and cashes them at the Bank of England. Here, he retorts: "I have been paid in cash, and not in goods." But, consider; the foreign debtor AB, could not make a call upon the

English firm to pay the money, unless that firm had first received the equivalent of the amount. How can this occur? The foreign debtor, AB, bought the bill or draft for the £100 (we omit, for clearness, consideration of the rate of exchange and charges) from a local exchange dealer, for which he paid cash on the spot; and then transmitted it to his creditor (the learner) in England, as has been supposed. But how did that bill or draft come into existence, in order to be bought and sent? Simply because some other merchant in the place abroad had sold goods to the English firm in question (that is, the English firm had imported those goods) and had drawn the bill upon them for the price, and sold it for cash to the local money dealer from whom it was purchased by AB. Thus, although the person we have been considering (the learner) receives a bill which he converts into cash, the bill (and cash) is the representative and sign of the import of goods into England, that is to say, the learner's export has been really discharged by an import.

The Clearing House

Another valuable indication of the condition of trade is supplied by the Bankers' Clearing House Returns. This House is an admirable arrangement for avoiding the inconvenience and expense of every banker to whom customers have paid in cheques drawn upon other banks, being under the cumbrous necessity of directly presenting these cheques to the various banks on which they are drawn, and receiving their several payments in notes, or cash, or draft. By the device of a Clearing House - a building devoted to this purpose - each bank is represented by a clerk, and the several clerks exchange the whole of the cheques and bills which they hold against each other. If bank A, for example, has received (paid in by customers) cheques drawn upon bank B, for £5,000, and bank B similarly possesses cheques for £3,000, drawn upon A, B owes A £2,000, and closes the account by handing A a cheque for that amount, drawn upon the Bank of England, where every member of the Clearing House maintains an account for this express purpose.

During the year 1907, the cheques and bills thus cleared in the London Banking Clearing House, amounted to upwards of £12,730,000,000. In other words, this enormous sum expressed the total of the payments made by the people during that year by means of cheques. As our internal transactions in trade are completed by means of these paper documents (resting upon gold), the range of the clearing, as it is termed, furnishes a direct indication of the volume of those transactions - in other words, of the activity or depression of trade.

Railway traffic returns another indication of the state of trade.

The railway traffic returns are very serviceable in discovering the extent of the country's trade. An increased amount of receipts in the heavy or goods lines shows an enlarged conveyance of coal, iron, cotton, and so on, and indicates, therefore, a revived condition of those industries; while diminished receipts upon the southern, or passenger lines, imply a reduction in the extent of the Continental and holiday-making traffic.