We have been trying to-night to discover ders is they mean, bat analyse the daily exchange quotations, to functions perform and upon what final causes are based. It is subject upon which it would be easy to write eau: atagly dluseutt or I at least have found it so, to compress definite account of it within the narrow limits of an evening's discourse. But I shall be disappointed if I have not said enough to-night to warn you against the danger of hasty generalis wae tapers Chal explanation is nearly always the wrong one. There are more sins laid at the door notations than can justly be it events have rather altered the cry, which used to be common enough I first came to China, that " low exchange is be favourable to the export trade. Now it aching" "ich is dealing the death-blow to imports But there is no amic heresies. One of the reasons, you may remember, which led the Chinese into the war of 1842 was the dread that the empire would be erippled by the drain of silver to pay for opium. Who would have expected to seo wees hat this time by the foreigner! A still more signal instance of the revival of an old economic heresy is to be founded in the pious remark attributed to an American railway magnate at the banquet given in New York to the late Chinese ambassador at Washington last November. "God help us," Mr. J. J. Hill is reported to have said, " if they (the Chinese) ever get started and turn their attention to the production of the articles that enter into the commerce of the world.
Will you in turn be compelled to put up Chinese wall?" What does such a remark imply if not the old fallacy of t! Mercantilists that one trading nation gains st the expense of another? It is surely unnecessary to point out that the exact reverse of this is the truth.
Take again the exaggerated importance attached by recent writers to exports, as if the prosperity of China were to be measured solely by the extent of her foreign trade, Tu 8 recent report on the Trade of China issued by the British Commercial Attache who it is stated that the balance of trade against China for the quinquennial period 1896-1900 amounts to £16,137,382. This astonishing result is arrived at by adding to the surplus imports the sum of eign loans. Now it is quite true that, from the balance of trade point of view, interest payments are to be reckoned as imports. But then it is one of the first canons of the science of statistics that the same thing is not to be counted twice over under a different name. And this is just what the writer of the report has done. If he takes account of the invisible imports, he must take account of the invisible exports also. It must either be both, or neither one nor the other. The point is that these interest payments are remitted as exports, and to add them in this way to the total of imports is to count them twice over. The premiss is defective and we need not be surprised therefore, when we find that it leads to the unsound deduction that " Her (China's) only hope of economic salvation would seem to be an immediate and extensive development of her exports." I should be sorry to think that was a correct diaguosis of the economic situation in China to-day.
The Ethical To all such sweeping generalizations I ould advise you to adopt an attitude of sceptical reserve, until you have been able to test their validity for ourselves A low exchange may indeed prove a tem-Porary stimulus, but there is absolutely no proof that in the long run it is favourable, or the reverse, to foreign trade. There can by no greater mistake than to lay exaggerated emphasis on any isolated factor in what is a vast and intricate problem. We need have no fear but that Chinese exports and imports will continue to be exchanged, so long as differences in comparative cost remain, even though the exchange quotations' should fade and dwindle to the vanishing point like the mile of the Chezhiro Cat. No doubt for-ign trade is of great importance but even foreign trade, as Dr. Cannan reminded us in his address at the last meeting of the British Association, is after all but an incident in the division of labour. It was a favourite dictum of Adam Smith's that the homo trade is to preferred to the foreign, the near to the far. And though some of the contions which lent force to his argument have altered since his day, it still remains true that, a nation may prosper by the development of its internal trade while its foreign trade remains stationary or even decline It is to be remembered that even in Great Britain, the trading country par excellence, only 20'per cent of her manufactures is exported; the remaining four-fifths are consumed at home. In the United States the proportion is 96 per cent and 4 per cent respectively. From which we may deduce the corollary, which by he way hus recently received the imprimatur of Mr. Andrew Carnegie, that the best way to foster the foreign commerce of a country is to develop its internal trade. The economic value of missionary entoroverlooked. And yet the work of those Prise in this respect is often, strangely who stok to inform the intelligence and to uplift the spirit of the Chinese people is as truly productive. as that of any department of industry. Do not let us deceive ourselves. It is not in any change in the medium of exchange, not even in the volume of things exchanged, that the future hope of China lies, but in her wonderful endowment of national strength and industry and skill. It neede but honesty and intelligence st the head of these unrivalled forces, to raise China to a high place among the nations of the roe by the solidarity commerce, to enhance the prosperity all those with whom she excl e her commodities. For the ultimate basis of
Text read from the printed page and cleaned; old type leaves the occasional error.