232 
Wa 
INTERNATIONAL TRADE 
ps 
once. But the excess of imports from the United States was 
much greater than the borrowings there. A round billion of dol- 
lars remains to be accounted for, not borrowed in the United 
States, yet leading to imports from the United States. Not only 
did Canada get from the United States the goods which the loans 
put in her hands; she got them mainly thru a process different 
from that of utilizing American loans directly for purchases in 
the United States. 
The goods which Canada thus procured from the United States 
were of the most varied character. Some were capital goods, 
such as machinery, electric apparatus, railway equipment, coal, 
brick, cement, minerals. Some were consumers’ goods, such as 
food and clothing. What was true in this regard of the United 
States was also true of the other countries from which came a 
substantial tho smaller flow of imports; with the minor difference 
that from these others the proportion of consumers’ goods (such 
as sugar, tea, coffee) was larger. 
Whether the articles that flowed into Canada were of the one 
class or the other — for producers’ use or for consumers’ — the 
chain of causation which brought them in was evidently an indirect 
one, not direct. And this is of no small importance for our prob- 
lem of verification. In discussions of capital exports, it is often 
assumed that the adjustment of merchandise balances in such 
manner as to equalize the international payments is a simple 
matter. There is supposed to be really nothing here that calls for 
explanation; it is the most natural thing in the world that a 
country which lends capital should carry the transaction to its 
final stage by exporting merchandise in corresponding amounts. 
The same view is often held, perhaps by implication rather than 
explicitly, about the entire balance of international payments. 
The various items — import or export of capital, interest pay- 
ments, freight charges — result in a balance of payments in favor 
of a country or against it; an excess of merchandise imports or ex- 
ports then ensues by a quasi-automatic process, which calls for no 
special consideration. This simplification of the problem seems to 
me quite unwarranted. The experience of Canada shows how com-