Fluctuations in the Foreign Exchanges. 11 



expenditure, and conversely it is Cr. for the expenditure of other 

 governments or of foreigners inside its territory — that is, of 

 course, as far as they derive their power of expenditure from 

 their native country. 



8. Another type of international payment which is of special 

 interest at the pi-esent time is that of tribute or indemnity 

 payable by one country to another. The paying country is Dr. 

 and its receiving country is Cr. for such payments. Last of all 

 we may include a streamlet, which sometimes swells into a 

 respectable torrent, in the money carried with them by emigrants 

 and the amounts sent yearly to "remittance men" and other 

 undesirables. Of exactly the same nature is the drain of money 

 caused by the wealthy American heiresses who marry English 

 and European husbands, and draw yearly, large sums from the 

 United States as dowries. This "dowry drain," as it has been 

 called, makes a fairly serious item in the American balance sheet. 



Such then are the principal, but by no means the only items 

 that determine the balance of indebtedness. It is important to 

 fix the attention on the cardinal fact that the equation of 

 indebtedness is the condition to be satisfied in all solvent trade. 

 Equivalence of exports and imports may or may not exist. There 

 is no advantage or disadvantage in excess of either. A country 

 may be prosperous or the reverse in either case, but these are of 

 importance, because in general the exports and imports are the 

 most easily altered items in the account, and an adjustment in 

 the balance of indebtedness will take place through them. An 

 unfavourable balance will be discharged, in most cases, by a 

 reduction of imports or by an increase of exports, or by 

 a combination of both processes. 



We have now to consider in what manner the indebtedness 

 created through the several elements named is discharged. There 

 are several alternative methods. Payments may be made in gold, 

 or commodities to the value of the debt may be shipped. In 

 practice, however, we find that debts are discharged by means of 



