St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1894-03-19
INTERNATIONAL TRADE AND
ITS CURRENCY.
Written for the Globe. !

| lNIi TIE GlODc.
! How easy it is to conduct trade with
out money. as we generally understand
money, may be seen when We consider
! international trade
There is no universal currency that is
! good the world over; and yet trade, to
| the extent OF thousands of millions of
dollars annually. is conducted between
the people of different nations.
All this vast commerce is carried on
I all these vast exchanges are made-by
refined and perfected processes Of bar
| ter.
Of course it must be plain to all that
whatever goods are brought into a
country must he paid for by sending
out goods to an equal value. Indeed
this is true of all trade. No individual
can import unless he exports. In other
words. no man can buy unless he sells.
If buy a coat it is because | have the
means with which to buy-but how
do l get the means to buy? Plainly, l
must have sold something to get the
means. We usually pay for things with
money, but how do we get The money?
! Why, we buy money with the things we
sold, when we got the money. Money
then is, in this case at least, only
medium of exchange. Sometimes, how
| ever, a better medium is found III book
accounts. Sometimes these book ac-
counts are transferred from one to
another by means of written orders.
Such orders when passed between in
dividuals are called checks. If they
pass between persons III distant places
they are called drafts or bills of eX-
change, and it the persons are in differ
| ent countries these written orders are
always called bills of exchange.
A bill of exchange is, in its real es.
sence, simply an order Oh the pc rson to
whom the goods were sent to pay the
bill for the goods.
Now, as the goods sent into country
must be equaled by the goods sent out,
1t follows that the bills of exchange
drawn and sent into any country
must be eQualed by the bills drawn and
sent out. These bills find their way
into the banks and clearing houses, and
are made to Offset each other. just as
checks are made to Offset each other in
bank or clearing house-just as the
| grocer i'll a country lOwn makes the
debit and credit sides of the farmers
account on his books offset each other.
Now, the farmers account OIL the
| grocer's books may not balance: he may
have bought more from the grocer than
| he sold to him. In this case there will
! be "balance of trade' against the far
mer. and he will have to give The grocer
something 10 make up that balance. he
might bring the grocer some wheat or
pork. or lie might pay him some money.
When different banks balance their
accounts at the clearing house, there is
generally balance of trade" against
me OF the banks and iii favor of
others. These balances can he paid at
the close Of each day, and usually are /:
or they can be carried over from day to
day Tor month or year or many
| years if need ue.
just so with the trade between the
people of different nations. At the end
OF any day. or week, or month there
might be balance due one way or the
other. More goods may have been
brought into country than were
shipped out to pay for them-and il
would seem that there is "baIauce of
. trade" that would have 10 be paid.
Suppose the stale of the clearing
houses should show that there had been
imported into the United States sos. GOO.
Geo worth of goods and only SIS, OOO. OOO
worth had been sent out. There seems
to be balance of trade that has 10 be
met. How will it he met? Money
can't be sent; that is, United
States money can't be sent. for
il would he Uf no use when It pot there
, but TO send back here again. The onlv
way the balance could really he met
, would be to send cut $1,000. eco worth of
: goods CT some kind 10 pay it, just as the
farmer took wheat or pork to the grocer
: to pay his balance of trade"
a But" you say, gold could be sent.''
OF course. but the gold wouldn't be
money when 1t got there. 1t would lie
just gold, that is all. But gold would
not be sent unless it were the thing
least wanted here and most wanted
h there.
e 1t may seem very paradoxical. but
:, the following statements are literally
II true:
o First-There is really no such thing
t as a "balance of trade" between ma.
r tons.
Balances of trade" betw cen
" nations are never paid
e Thlrd-When balances of trade be-
S tween nations are paid they are more
t often paid i'll something else than with
gold. "''''
n PerhapS these statements NAV he
- made more clear. These so.called
&c balances OF trade are not between ana.
tons" as such, but between lndivid.
uals. Nations" do not trade. lndi.
vidual citizens trade.
Where there appears TO be a balance
OF trade today 1t may disappear tomor.
TOW, Jus, as the farmers account on the
! grocerS book may show balance dine
the grocer today, but due the farmer tn.
morrow. Goods are going both WAYS
all the while, and any balances that IN.
pear are not permanent, but only tenn.
porary.
=. AS to the second statement. there he
Ing no international money. of course
9 there can be no payment of interna.
tlonal balances in the sense that the
larller pays me grocer the balance he
owes him by giving him some money
Third, these apparent balances are. of
course. paid, but how? What are thew
S paid with? Many good people really
DelleYe they are always paid in gold.
Perhaps they will learn better as thew
: grow older.
= Let US go back to the point where
t there appeared to be a balance of ST.
j. 100000 against us; that is, we had
!. brought In 100000 worth of goods
Q more than we had sent out. How is
that to be paid? Possibly the apparent
4 balance will all disappear in a dav or
two through the normal course of trade.
But let US suppose it did not, and the
, $1,000, 0C0 balance persisted in showing
itself. How will it be paid? Something
must be sent out 10 meet it. What will
be sent? Such things as we want least
+. and they want most. Some products of
h our country of which we have a surplus
r Will he sent out and that balance will
be paid. "
|, This never occurs in the way that one
might think from the above statement.
because the exchanges abegt the Yqgd
sent from New York to Brazil
to pay an apparent balance of
trade due in London. In Such a case
our goods would 60 to Brazil-some
goods would be sent from there to Lon.
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