But even among the successors of Hume and Smith, a deeper insight into, so to speak, the physics of money and of international trade must have led to the recognition of many a truth which the mercantile system had, indeed, badly formulated, insufficiently proved, but which it had, nevertheless, an inkling of. And, indeed, how frequently it happens that the progress of science proceeds from one one-sidedness, through another opposed but higher one-sidedness, to the all-sidedness which knows no prejudice!
A. Precious-metal-money is, indeed, a commodity, but of all commodities, the most current, the most many-sided in its utility, the most economically energetic, and at the same time of peculiarly great durability.[A2-4-1] Money-capital, far from being the least useful portion of a nation's capital, is rather one of its most important parts; and especially in the higher stages of civilization, where the division of labor has been most largely developed, is it peculiarly productive and indispensable.[A2-4-2] ] Here it is really more likely that the possessor of commodities may be wanting the wished for money, than that the possessor of money should be wanting in the wished for commodities. And, hence, the numerous half mystic expressions of the magical power of money, which have passed into literature from the common usage of the people, can be, by no means, considered mere errors.
B. Just as little, can the impossibility of the preponderant importation of money for a long time, be asserted. Hume's rigid theory of a level, by no means, exactly corresponds with the reality. The precious metal which is, indeed, imported, but which does not subsequently enter into the circulation, need exert no influence whatever on the prices of commodities in general; and may, therefore, remain permanently in the country. Think only of the articles made of the precious metals, which minister to luxury,[A2-4-3] of buried private treasure, of the treasures of the state, which are idly stored up; as well as of a portion at least of most cash on hand.[A2-4-4] From the other side, also, the over-balance or under-balance (Ueber-oder Unterbilanz) of a country may continue, a very long time, when its internal trade with its money-need is, in the first case, an increasing, and in the last, a decreasing one. So far, the preponderance of the importation of money may be called a favorable sign and the preponderance of the exportation of money an unfavorable one. And the person who thinks that a permanent preponderance of exports or imports is not at all possible in the way of commerce, overlooks the possibility of a very extensive national indebtedness.[A2-4-5]
C. But a distinction should be made between the balance of payments and the balance of trade in the narrower sense of the expression.[A2-4-6] In the case of the latter, to be complete, it is necessary to carry to the credit side of the account: 1, The exports of commodities; 2, the profit made by parties at home by realizing on (Realisierung[TN 126]) the exports in foreign countries; 3, the freight-profit made by parties at home on exports and imports, as well as in foreign carrying trade (Zwischenverkehr); 4, the sale of inland ships in foreign countries; 5, premiums and compensation for damage on account of maritime insurance from foreign countries. On the debit side, on the other hand, the corresponding items when foreigners have received from the home country, as in the case of imports, etc. To obtain the general payment-balance, we have still, in addition, on the credit side: 1, The profit from home participation in enterprises in foreign countries and the transfers of capital originating therefrom; 2, the interest and repayments of money-capital loaned in foreign countries; 3, the sale of stocks (Effecten) to foreign countries as well as new loans to which the home country makes in foreign parts; 4, remittances from foreign countries to foreigners sojourning in the home country, and money brought with them by travelers and emigrants; 5, inheritances, pensions and extraordinary payments from foreign countries. Then, too, on the debit-side, belong the corresponding counter-items.[A2-4-7] If we, in this way, take a survey of the whole world, we shall perceive a treble current of the precious metals. The first and most regular goes, in long lines, from mining countries, over to the commercial countries of the world, and distributes the newly acquired gold and silver as commodities according to the wants of the coinage, of manufactures, etc. The second oscillates, as it were, in short waves from country to country, in order to adjust the plus or minus for the time being of payment-balances. Lastly, regular sudden currents, with slow subsequent counter-currents, when single economic districts require to make extraordinary drafts or shipments of the precious metals, by reason of bad harvests, war, a disturbed double standard, etc.
D. Since international indebtedness has so much increased, precisely the richest nations may have the greatest regular excess of exports over imports; partly because of the great amount of capital, etc., which they possess in foreign countries; partly because of the great development of their system of credit in the interior, by means of which they find substitutes for so great a part of the metallic currency.[A2-4-8]
[A2-4-1] Locke, Civil Government (1691), § 49, seq., emphasizes this durability of the value-preserving metallic money, in opposition to the perishable articles of consumption, as a principal element in the development of private property and of economic civilization. But even Petty ascribes to the precious metals a higher quality as wealth than to any other commodity, for the reason that they are less perishable, and possess value always and everywhere. Hence, he esteems foreign trade more highly than inland trade, and would have those businesses which import the precious metals protected more than others against taxation. (Several Essays, 1682, p. 113, 126, 159.) Adam Smith also recognizes this, at least so far as intermediate trade is concerned. (W. of N., IV, ch. 6.)
[A2-4-2] Even Rau, in his additions to Storch (1820), p. 397, concedes the peculiarly charming, vivifying power, which money possesses to an extent greater than any other commodity. Well distinguished whether the money-want of a country is already fully satisfied or not. (Ansichten der Volkswirthschaft, 1821, p. 157.) Carey exaggerates when he calls money the cause of the movement in society, out of which force is produced, what coal is to the locomotive, or food to the animal body (Principles of Social Science, ch. XXXII, 5), or the only want of life for which there is a universal demand. (Ch. XXXIII, 1.) But he rightly calls it the "instrument of association." Excellent demonstration, as to how, at the sudden outbreak of a war, of a revolution, etc., all those who have money on hand, even when they had previously obtained it while peace still prevailed, in the form of a loan, are in an infinitely better position than the owners of the otherwise most useful commodities. (Ch. XXXVII, 12.) Earlier yet, P. Kaufmann placed the "principal character of money" in this, that it was "most perfect property (Vermögen);" and he calls its quality as a commodity, philosophically considered, in question; and judges the balance of trade according to this, that in commodities, interest-yielding as well as dead capital is exported, but in money-capital, which is always gain-engendering. (Untersuchungen im Gebiete der politischen Oekonomie, 1829, I, 4, 74, 80.)
[A2-4-3] In England, Patterson estimates the regular additional importation (Mehreinfuhr[TN 127]) of money at from four to five millions sterling, of which the greater part is devoted to purposes of luxury. (Statist. Jrl., 1870, 217.)
[A2-4-4] Fullarton's view (Regulation of Currencies, 1844) suffers from exaggeration. Knies, Geld and Credit, II, 285, very well shows that the "hoards" are by no means mere idle stores, and that, therefore, their void produced by the exportation of money must be soon filled up again. Adam Smith, even, may be considered a predecessor of Fullarton. (W. of N., ch. 2, p. 250, Bas.)
[A2-4-5] Even Büsch (Werke, XIII, 26) says that the under-balance (Unterbilanz) of the Scotch vis-a-vis of England was for a long time made up in two ways, by the marriage of wealthy English heiresses and by Scotch bankrupts. Thus the troops, who, in the 17th century, were traded over to France, and in the 18th, to England by German princes, brought the money, in part, back again, which was exported by the unfavorable balance. According to List, the exported metals, after they have risen in price with us, flow back to us again; not, however, as exchangeable articles, but in the form of a loan, by which it is made possible for us to dispose of them again, and again to receive them in this shape. (Werke, II, 37.)