francs 17 centimes and a small fraction, which is the par of exchange between France and the United States.

From the explanation now given, it appears very clearly that bills of exchange represent the items in the account current between England and America; and the specie shipped either way is the cash balance that is struck on the adjustment of the account. Bills of exchange are not drawn against air; they represent real transactions. The New York merchant cannot draw bills on London unless he has debts due to him there, which debts have been contracted for cotton, flour, tobacco, and other American products, which he had sent thither to be sold. On the other hand, a New York merchant cannot have debts to pay in London, except in return for manufactured goods, whether of cotton, silk, woollen, or iron, which he has received from England, and consumed or sold in America. And in the long run, it is evident that our exported goods must exactly pay for our imported goods, or the two sides of the account must balance each other. If they did not balance, if our exports were not equivalent in value to our imports, the deficiency would have to be made up by sending specie abroad; and a continued drain of specie, according to what has already been demonstrated, would raise the value of the money left behind, and, in consequence of raising the value of money, would lower the prices of goods in America; and the influx of specie into England would lower the value of money there, and raise the prices of goods. Erelong, then, the tide would turn; more goods would be sent from America, where they are lower in price, to England, where they are higher in price; and in payment for these goods, the current of specie would set in the opposite direction, till the value of money in the two countries was equalized again.*

* There is a curious feature in the management of the trade between England and the United States, which is in marked contrast with the course of mercantile transactions between England and all other commercial nations. For some inexplicable reason, the bills of exchange are all drawn one way. In Boston and New York, bills can always be purchased on London or Liverpool; but neither London nor Liverpool is supplied with any bills on Boston or New York. When cotton or flour is purchased in America for the English market, the seller draws bills of exchange on the consignee of the goods for the proceeds of the sale, and disposes of these bills in the New York market. But when manufactured goods are bought in Great Britain for the American market, the seller, instead of drawing directly on the New

The exports of any country must exactly balance its imports, for the same reason that, when two individual producers of different articles trade exclusively with each other, they must really barter merchandise for merchandise, exchanging equivalent values of different kinds; money serving no purpose between them but that of facilitating the exchanges of goods; and this is, in fact, the only office that money, as such, ever performs. It is oil that diminishes the friction of exchanges. If, for instance, a hatter trades exclusively with a shoemaker, the former can buy no more shoes than he can sell hats with which to pay for them. He may, indeed, run in debt for a large stock of shoes at once; but that debt he will be obliged ultimately to pay by restricting his purchases of shoes, and enlarging his sales of hats. So, this country, trading with all the rest of the world, can buy no more foreign products than it has domestic products with which to pay for them. Money and bills of exchange cannot help us to pay our debts; they only facilitate and represent the operations out of which those debts have grown. Thus, in the fatal year 1836, the imports into the United States were about 190 millions of dollars, and the exports were less than 129 millions, apparently a balance of 61 millions against us; a sum much too large to be accounted for by the ordinary profits of trade and charges of transportation. We ran deeply in debt that year, and had to suffer for it afterwards. In 1838, the balance was 5 millions, and in 1839, it was 41 millions, the other way. The sum of these two, or 46 millions, probably paid off, or

York merchant to whom the goods are consigned, draws on a banker in London, and the bills so drawn are accepted by the banker on commission for the American purchaser, who undertakes to make provision for them before they become due by making remittances of English bills which he purchases in New York. Of course, the London banker, by accepting the bills before remittances are made to meet them, becomes responsible for their payment, and charges an extra commission for assuming this responsibility.

In reference to this anomalous course of business, Mr. W. J. Lawson, the author of a "History of Banking," remarks: "To place the trade of America on the same footing as that of all other commercial nations has long been a desideratum. Numerous appeals, in the shape of pamphlets and other publications, recommending the adoption of a course of exchange between the two countries, have brought conviction to the mind of almost every mercantile man; yet, strange to say, no step has yet been taken to effect the object; it is an evil which must ultimately work its own cure."

nearly paid off, the balance contracted the other way, in 1836, of 61 millions. For it is important to state, that, although we must really pay for our imports with our exports, the former must always exceed the latter in nominal amount, if we take the home valuation of both. This may easily be perceived by attending to a single voyage of one ship. Suppose a merchant sends a cargo of oil to Russia, and brings back a shipload of duck, iron, hemp, and other Russian products. If his venture be a successful one, it is evident that the aggregate value of the return cargo must so far exceed that of the outward cargo as to pay the charges of transportation both ways, and afford a reasonable profit on both parts of the transaction. Estimate the values in the Russian port, and it will appear that our general proposition holds true; the oil exactly paid for the duck, iron, and hemp, the exports just balanced the import. Estimated in the American port, the duck, iron, and hemp exceed in value the oil enough to pay the charges of the voyage and leave a profit.

I borrow another striking illustration of this law from a speech by the great Senator of Massachusetts. Many "years ago," says Mr. Webster, "in better times than the present, a ship left one of the towns of New England with seventy thousand specie dollars. She proceeded to Mocha on the Red Sea, and there laid out these dollars in coffee, spices, drugs, &c. With this new cargo, she proceeded to Europe; two thirds of it were sold in Holland for one hundred and thirty thousand dollars, which the ship brought back, and placed in the same bank from the vaults of which she had taken her original outfit. The other third was sent to the ports of the Mediterranean, and produced a return of twenty-five thousand dollars in specie, and fifteen thousand dollars in Italian merchandise. These sums together make one hundred and seventy thousand dollars imported, which was a hundred thousand dollars more than was exported"; and yet, in each foreign port which the ship visited, equal values were exchanged. In those ports, the imports exactly balanced the exports; but in the New England harbor, the imports exceeded the exports by this large sum, which, minus the charges of transportation, was all profit.

This illustration brings us to an important qualification of

the principle as first stated, and to an explanation of another purpose, or office, of bills of exchange. To simplify the matter, I supposed at first that the United States traded with England alone, that bills of exchange facilitated our transactions with her; and we were thus led to the general proposition, that foreign trade is really a barter of merchandise for merchandise, equal values being exchanged, and money playing only a very subordinate part in the affair. But foreign trade is only a long and heavy account current of one nation with all the rest of the world, charges on one side being set off by charges on the other, and the account being finally adjusted by the transfer of a comparatively trifling sum in cash to represent the balance. Our trade is not confined to England; it extends to every nation of the earth, and to every isle of the sea. The account is not balanced with each nation separately; far from it. In the case of China, our purchases very much exceed our sales; in the case of the British kingdom, our sales very much exceed our purchases. We set off one case against the other; we pay our debt to China by transferring to her a portion of the debt owed to us by Great Britain,

bills of exchange enabling us to transfer debts not only from one individual to another, but from one country to another. We annually buy tea and other Chinese products to the amount of 101⁄2 millions; we export directly to China less than four millions. The balance, which is evidently too great to be accounted for solely by charges of transportation and profits of trade, we pay by sending to China bills of exchange on London. On the other hand, our annual exports to the British West Indies are from four to five millions, while our imports. from these islands seldom exceed one million. We may receive pay for the balance by bills of exchange on London; that is, the West India planters pay us for the articles of provision that we send to them, by transferring to us a part of the debt due to them for the sugar, molasses, spirits, &c., which they have sent to England. These very bills of exchange, emanating from the British West Indies, we might use in paying our debt to China for tea. One article of merchandise is really paid for with another, though the one is obtained from Canton, and the other is sent to Jamaica. Very little money is used in the whole circle of transactions; a single shipment of

half a million of dollars may suffice to balance an immensely long account, opened with England, the continent of Europe, China, and both Indies, amounting in the aggregate to sixty or seventy millions.

If we examine the facts as they are given in the official returns, we find that they agree with the theory. The reports, for instance, for the year ending June 30, 1844, show that the imports entered for consumption, exclusive of specie, amounted to more than 96 millions of dollars, while the coin and bullion we sent abroad that year was but $5,454,214. Our total exports of domestic produce for that year exceeded 99 millions, while the specie we received from abroad was but $ 5,830,429. The actual cash balance that year, of course, was the difference of these two sums of specie; that is, only $376,215. And this was the balance of an account current of the United States with all the world, which had 96 millions on one side, and 99 millions on the other. Again, if we take the year 1846, we find the imports amounting to over 110 millions, while the specie sent abroad was less than 4 millions; the exports were nearly 102 millions, and the specie received was a little more than 3 millions. In other words, a remittance of $127,536 in cash would have settled an account in which 102 millions were sold, and 110 millions purchased.

If we examine the returns for a series of consecutive years, and anywhere find an apparent departure from this rule, either by an excessive importation or excessive exportation of specie, we also perceive a corresponding excess of exports or imports, proceeding from some peculiar causes affecting the course of trade for that year; and we find, moreover, a recoil the following year, produced by that self-regulating power of the currency which has been explained. Take, for instance, the following table, which I have compiled from the Secretary of the Treasury's Report for 1854.

Here we find, for 1847, a great excess of specie imported,