of Mr. Medley, but I declare that I have been quite unable to find a single word in answer to the above observations. He does not deny the great, the paramount importance which I ascribed to this proposition, that every import necessarily brought about an export, and does not qualify or find fault with my statements on that head, such for instance as the following:

But this belief, that by importing largely we are by some mysterious law inevitably securing to ourselves an outlet for our manufactures by an increase of our exports, lies so universally at the root of the faith in Free Imports, and as it seems to me constitutes so entirely the basis of all reasoning in favour of that belief, that I may be pardoned if I pursue the subject a little further.'

But what does he say to it? He shall speak for himself. What he does say is this:

Lord Penzance, however, is of a totally different opinion. He thinks that the competition of the foreigner in the importation of manufactures is an injury to home production and to the employment of our dense population, because the Free Trade argument, which maintains that every import necessitates an export, is unsound in theory and false in fact, the truth being, according to him, that these importations are paid for in actual money, as may be seen by the inspection of our Board of Trade returns, in which the actual results of a system of Free Imports are recorded for us.

The above is the substance of Lord Penzance's argument, which is spread over several pages. It is brimful of fallacies. In the first place, he asserts that we pay for these importations in actual money, but what does he mean by the term? He cannot mean bullion, for in the very next line to that, in which he says that we pay in money, he writes 'it is plain that we do not pay by sending bullion abroad.' He thus draws a distinction between money and bullion, but in international dealings there is none. A nation cannot pay another nation in money except by the transmission of bullion; if bullion be not sent, no money is sent.

In the first place, then, Mr. Medley says, he wants to know what I mean by money, when I say we pay for these importations in actual money. I am at a loss to know how to make my meaning plainer. This is the passage which Mr. Medley says he does not understand :-.

'How then do we pay? I know how the actual importer in any case pays. He does pay in money, that is, he gives his acceptance at two or three months, or whatever prompt is customary in the trade, and when the bill falls due, he pays it. When and how is it then that this money payment, before it arrives in the foreigner's hands, is converted into goods as the Free Importers say that it is? What becomes of the acceptance? We know that it is or may be transferred from hand to hand by endorsement in this country, or sold and sent abroad.

"It is impossible to conjecture into whose hands it may have found its way whilst running, or to whom it may ultimately be paid, but whoever may be the holder, unless the purchaser of the goods becomes insolvent (in which case the foreigner's goods are never paid

for at all, either in goods, or money, or anything else), the price of the foreign goods is paid in actual money when the bill falls due.'

I see no ambiguity in this-I meant exactly what I said—that the purchaser gives his acceptance for the goods, and that when the acceptance falls due it was paid in actual money over the counter at a banker's, as any other bill of exchange is paid, and I am not aware that payment is ever made except in gold or bank notes, and that is what I call money. Does not Mr. Medley also call that payment in actual money? I suppose that he would, but then it appears he has a difficulty. I could not mean bullion, he says, because in the very next line to that in which I said that we pay in money, I wrote, 'It is plain that we do not pay by sending bullion abroad,' and, says Mr. Medley, he thus draws a distinction between money and bullion.' This would have been, I think, a very silly distinction to draw, and why I am to be charged with drawing it I am at a loss to know. If I had said we did not send bullion abroad in payment, but did send money abroad for that purpose, Mr. Medley's charge of drawing a distinction between them would have been intelligible, but I said nothing about sending anything abroad in payment; on the contrary, what I said was, that the money was paid here at the banker's or elsewhere where the bill of exchange was made payable, either to the foreign seller of the goods himself, or to some one to whom he had transferred the bill.

And this delusion of a distinction between money and bullion, which no man in his senses would draw, is the sole answer which Mr. Medley makes to my statement that the individual importer of foreign goods pays his vendor in actual money. 'A nation,' he says, 'cannot pay another nation any money except by the transmission of bullion.' I will not stop to question this, though I do not agree with it; for I was not discussing what nations did-I was talking of the way in which an individual purchase is carried out. It is not nations who purchase goods, but individuals; and after showing how an individual purchase was carried out by a money payment, I added:

Surely this closes the transaction, and if all imports are paid for in this way, saving as I have said in the case of bad debts, what room is there for the assertion that they are paid for in goods, and goods of British manufacture?'

How then, I ask again, does Mr. Medley deal with this? He makes no attempt to explain how, consistently with this money payment, it can still be asserted with truth that the foreign import is paid for with British goods, but first manufactures a delusive distinction between money and bullion, and then puts it into my mouth.

Utterly insufficient as this suggestion is by way of answer to me, it would have been well for Mr. Medley if he had rested content with it; but he was tempted to go further, and in doing so he has met with a catastrophe and fallen into the terrible misfortune of entirely admitting and proving his adversary's contention.

If the reader will forgive me, I should like to quote the entire passage without the omission of a word. Having said (as quoted above) that if bullion is not sent, no money is sent, he goes on thus:

Something else may be sent. It may be money's worth, but it is not money. The moment this is admitted, however, the bottom of the argument, to use Lord Penzance's own words, tumbles out. Money's worth can consist only of two things, merchandise or securities; and if either of these be transferred to the foreigner, it constitutes the 'export' which balances the import.

'Money's worth,' he says, ' may be sent in payment of foreign goods, but that is not money,' and now comes the fatal admission: 'Money's worth can consist of only two sorts of things, merchandise or securities, and if either of these is transferred to the foreigner it constitutes the export which balances the import.

The export, then, which is 'necessitated' by the import may consist of securities, and is not necessarily an export of goods. Alas, Mr. Medley, where have you got to now? Is this what you have been meaning all along when you preached the doctrinal faith that every import necessitates an export to pay for it? If you had only made that plain when you inculcated in the Cobden Club pamphlets the import and export doctrine, who would have cared to dispute it? But, no; the export hitherto spoken of as balancing the import, and brought about by it, was an export not of securities but of British goods. In no other sense had the proposition any value or sense as an argument in support of the modern doctrine of Free Imports, and in no other sense has the word 'export' been used in any passage of any one of the voluminous writings on this subject for the Cobden Club, either by Mr. Mongredien or Mr. Medley himself. I do not trouble the reader with many instances, it will be enough indeed if I refer to the single passage which I quoted in the article to which Mr. Medley is replying.

The trade of a country consists of the aggregate operations of individual traders, which are always equal, co-ordinate, and self-balancing, and which necessitate to a mathematical certainty, excepting bad debts, an import to every export, and

vice versa.

And again :

Now, if the country imports articles X, Y, Z, it necessarily exports in exchange for them (for every increase of imports necessitates an increase of exports) other articles of native production, which we may call A, B, C, and thus further channels of employment are created.

'Other articles of native production.' Could the writer by these words have meant securities, and foreign securities? If the import is paid for by the transmission of a security (say an Egyptian bond), of what benefit is that to the British producer? Is that an article of native production,' and does it create further channels of employment?' It was vaunted as the magical merit of 'Free Imports,' that by freely importing we were infallibly securing an export of our own produce in return, and were thus doubly gainers; first by having

bought what we wanted in the cheapest market, and then, in addition, by securing a market for an equal amount of our own produce. This was the faith of the true Free Trader, as explained, with some contempt for the stupidity of those who did not embrace it, by Mr. Medley, and with much fulness and lucidity by the other exponent of the views of the Cobden Club, Mr. Mongredien. In Mr. Mongredien's pamphlet, entitled Free Trade and English Commerce, he says:

All are agreed as to the great advantage it is to a country to export largely, only it has been, and should not be, overlooked that those exports must be paid for in goods, since, as we have seen, specie is not used for that purpose, except sometimes provisionally, and to a fractional extent. If, therefore, you import little you can only export little; if you want to export largely you must import largely. You cannot curtail your bête noire imports without curtailing to just the same extent your pet exports. For every pound's worth of foreign articles which, by protection or prohibitory duties, you prevent coming into your country, you prevent a hundred pounds' worth of your own articles of production from going abroad. It cannot be repeated too often, because it is at the very root of the question, that to restrict imports is, by the inexorable law of logical sequence, to restrict exports to the same extent, and therefore to that extent to restrict foreign trade.

The question narrows itself into a few simple issues, on which plain commonsense is quite competent to deliver a verdict. We propose to show, first, that for every export of goods that is not sent to pay a previous debt, there must be an import of goods to the same amount, and vice versa for every import of goods that is not received in liquidation of a previous debt, there must be an export of goods

to the same amount.

But what becomes of this comforting belief when Mr. Medley informs us that the export which was so inevitably secured for us by every import of foreign goods need not be an export of British goods at all, but may be an export of securities'?

All honour to Mr. Medley's sagacity in perceiving this truth, though somewhat late in the day, and to his candour in admitting it; but it is none the less the fact that when Mr. Medley once admitted that the foreigner was paid by securities, instead of British goods, he surrendered the entire position which he and Mr. Mongredien had previously laboured so hard to establish. Hard driven by arguments which he found himself unable to answer, and loth to resign his favourite shibboleth that every import necessitates an export, he has clung to the words at the expense of their meaning—that is, of the only meaning which supports the doctrine of Free Imports or makes it worth the while of any disbeliever in the doctrine of modern Free Trade to dispute it. But here, again, I say it would have been well for Mr. Medley if he had stopped even there, but he hastens on his downward course. Lightened and invigorated in having thrown off the weight of the arguments he had in vain been struggling to meet-a result which he achieved by this device of a new meaning to the word 'exports '-he has been fairly run away with by his new proposition, over which he has no more control than Mr. John Gilpin had over his holiday nag, and stop he cannot till he is

landed fully and fairly in the camp of the Fair Traders.' For this is how he goes on. Having stated that if the foreign import is paid for by merchandise, there is no injury to our home production, he proceeds to the case in which these imports are paid for by securities, and he takes the case of a foreign security.

There remains (he says) the case where a foreign security is taken off the market, but that foreign security could only have been obtained by us by means of some previous export on our part, and so we come round, as we must always do, to the fact that, sooner or later, directly or indirectly, an import is either the cause or the effect of an export.

'Either the cause or the effect.' Here is another new proposition, but I pass it by, only begging to be allowed to ask why must a foreign security (say an Egyptian bond), with which the import has been paid for, have been obtained by a previous export? Is the export of goods the sole means of acquiring wealth? Is the harvest of this country, for instance, worth nothing to us? Is the labour of our people, except that portion of it which produces an export, worth nothing? Are the dividends or interest payable to us yearly, on the accumulated wealth which we have invested at home and abroad, no source of wealth to us? But I pass by this astounding assertion also, because I wish to fasten upon the great truth to which Mr. Medley has unwittingly given the weight of his authority. If paid for by an export at all, it is, he says, by a previous export, that is to say, the Englishman acquires his Egyptian bond by his skill or labour as embodied in goods exported at some previous time; weeks, perhaps months, perhaps years before-in short, by his savings, by his previously acquired wealth. But this is precisely what the Fair Traders have complained of. They have complained, as I understand it, that instead of purchasing what you consume in the shape of imports by the sale of your current labour as embodied in manufactured goods, the great difference between the amount of your imports and your exports tends to show that you are largely paying for your purchases out of your savings, out of your previously acquired wealth, and that to arrange your legislation so as to encourage the purchase of imports paid for in this fashion is to encourage the gradual dissipation of wealth previously acquired, instead of stimulating the production of fresh wealth by the sale of your own manufactures.

In the result, then, Mr. Medley must be held to have obtained a great victory in establishing on a firm footing his doctrine that every import necessitates an export, but it is a victory gained at the expense of refuting the system which he has been enlisted to support; for his proposition is only true by understanding it in a sense which tends to condemn the practice of 'Free Imports,' and, so understood, he may hold it, and proclaim it in peace, for no one will be found to contest it with him. Imports are paid for, he says, either by the export of merchandise, or by securities. Be it so. In the word 'security' he includes, I presume, bills of exchange, which I have