THE BALANCE OF TRADE 223

imports. As to the United States, taking’ into account the
fact that the imports are valued without allowance for cost
of delivery, that a substantial amount of foreign capital is
invested in industrial enterprises in that country, that a not
unimportant sum represents spendings of American tourists
abroad, and that the corresponding items on the other side
of the account, the chief of which are the earnings of the
United States mercantile marine and the interest on United
States capital invested abroad, are relatively small, it is
probably within the truth to suppose that one-half of the
apparent credit balance of the United States in recent years
is only apparent. In other words, instead of having had
a sum of 560 millions sterling to spend, in purchasing
American securities held in Europe or in making investments
outside the United States, during the five years to which the
figures quoted at the opening of the chapter relate, the sum
available for that purpose has probably not far exceeded
half that figure. Even so it is a very remarkable fact that,
within so short a time, the net indebtedness has been able
to be reduced by so substantial an amount as seems likely
to have been available for that purpose.
The two illustrations selected serve to bring out so many
of the important features of the balance of trade, that their
application to other actual cases may be left to the reader.
In past controversies, the balance of a country’s trade
with the whole world is not the feature which has alone
attracted attention. The apparent balance as between
different pairs of countries has been made the basis of many
erroneous conclusions, The trade between two countries
represents only a part of their mutual obligations. But if
we attend to the trade alone, the direct trade does not fully
represent the balance of obligations. It is often more
convenient to adopt a triangular course of exchange, or one
even more complex. Thus if A sellsto B, B to C, and C to
A, and the amounts sold are of equal value, no mutual indebtedness
 need remain. If, to a certain amount of direct
interchange of goods, such triangular trading be added, an
appearance of unpaid balances is produced which corresponds
to no reality. Thus France receives from India and China