But to imagine that any conclusion drawn by thus emasculating the problem of its vital elements can possibly have any value, is as absurd as to imagine that the two rows of trees on opposite sides of a street will still continue to wave their green tops across to each other when the roots of one row have been poisoned, or their bark has been ringed; or to imagine that the business of the Stock Exchange could continue indefinitely by the mere nods exchanged by its 'bulls' and 'bears' with each other across the floor, whether the brokers who exchanged them, or their clients, were men of substance with assets to meet their liabilities, or not. But the strange thing is, why the orthodox economists should have a tendency to believe that because trade is free between any two nations picked out haphazard, there should necessarily be any trade between them at all; or if so, why when once started it must necessarily go on for ever, especially when one is already superior to the other in the production of any and every commodity; and most strange of all, why this perpetual motion should be accomplished by means of the passage of gold between them - a mere medium of exchange in this connection, a symbol and shadow only, as much so, indeed, as bank notes or credits - and not of the vital factors of international trade, which are real commodities, real instruments of production, and the real relations which they establish between each other.

Do they imagine that if a country were snowed under long enough, until its manufactures and other instruments of production were practically ruined and it had become another Greenland, or if its soil were turned into a sand bed, like another Sahara, that its trade could still be kept going by the effect on relative prices of the passing of gold backwards and forwards between it and other nations, just as if nothing had happened to its instruments of production? When I ventured to assert in an article in the Fortnightly Review on the Free Trade controversy, that if England were to lose her supremacy in manufactures and the shipping trade to-morrow, there was no reason why, if she still persisted in keeping her ports freely open to her trade conquerors, she should not return in a little while to her sheepwalks again as in the Middle Ages, Mr. Pigou, with his perpetual-motion scheme in the background of his mind, scouted the idea as inconceivable under any circumstances. The passage of gold and the mechanism of the Foreign Exchanges would, according to him and Mr. Sydney Webb, have the same effect on trade as the gold on the 'wappened widow' in Shakespeare's 'Timon of Athens,' and would 'embalm and spice it to the April day again!' If it did, I conceive that the revivified trade would be rather a passage of goods for the relief of distress, sent out as a charity, than a bona-fide commercial enterprise.

But why, I ask, this anxiety of the Free Traders to prove that if once Free Trade is established among all the nations of the world, it will irrigate them all alike, whatever may befall? Obviously it is to support that axiom of the common reservoir of wealth in the world, on which the whole Free Trade theory hangs suspended, and which if no flood gates in the shape of hostile tariffs are erected anywhere, must, according to this theory, water all nations alike. And yet if they will keep in mind the distinction I have drawn between competitive and complementary products, it will, I think, be apparent that while the trade between nations in complementary products, - as of the corn of one country for the manufactures of another, its fruits or wines for coal or tobacco or what not, - may go on indefinitely, there is no more reason that a trade in competitive products (and especially when it is admitted that one nation is superior to another in everything) should go on indefinitely, or indeed go on at all, than that there should be a continuous interchange of amenities between rival stags, - in the way of sharing the herd between them, as the economists propose to do with the trade of rival nations, - when once the one has defeated the other in a pitched battle.

And with this we may now pass on to the consideration of the mechanism of the Foreign Exchanges, on which, along with the passage of gold, the orthodox economists alternately rely in defence of their primal illusion that if the trade between nations were free, it would not only be for the benefit of the world as a whole, but of each and every nation in it. For this mechanism of the foreign exchanges is believed by them to have the same magical efficacy which they attach to the backward and forward passage of gold between nations, and acts in the same way on prices; namely, by throwing the weight alternately from one nation to another, like our boy on the middle of the see-saw, keeping the prices at each end going up and down alternately, and so the trade going on between them indefinitely or for ever.

Now the mechanism of the Foreign Exchanges is a simple enough matter in principle, although rather complicated when you have to describe it; but as all this has been done admirably and exhaustively by Mill, Goschen, and the other leading economists, I shall refer the reader to these writers for the details of the process, and concentrate only on the practical conclusions which they have founded on it. The essence of the process may be briefly and roughly put as follows; - If the traders, say in England, send a greater quantity of goods, as measured in gold, to Belgium, than the Belgian traders are sending to England, the balance due in gold on the aggregate of the transactions, when like bank cheques they are written off against each other, must be in favour of England. But as the Belgian traders who owe this balance will find it more troublesome and costly to ship the gold to England than to send a draft or bill of exchange for it, they are willing to pay a trifle more for the goods they buy, to anyone who will take the risk and trouble of sending the gold, and give them a bill of exchange instead.