STOCK EXCHANGE AN INTERNATIONAL MARKET g11
before the war, the United States regularly showed greater
exports than imports in its trade returns, and many people,
who gave the matter only a careless consideration, were wont
to think that this country profited by the amount of our excess
exports. Such a fallacious view, of course, left out of all
reckoning our invisible trade, wherein we were steadily importing
 more services from other nations than we exported.
Strictly speaking, then, there is normally no such thing as a
permanent “favorable balance” in a nation’s total foreign trade
with the world. There may be a relatively permanent favorable
 balance in the visible or in the invisible trade, but total
exports must in the long run balance total imports.

How International Payments Come to Balance.—At this
point it may well be asked how it happens that every nation’s
total exports and total imports come to balance in this way.
Trade is, after all, mainly free, and individuals in every country
 can usually buy and sell such goods or services from or
to foreigners as they please. When the Chicago merchant
buys French tapestries, or when the Detroit manufacturer
sells an automobile to an Argentine or a Brazilian, neither has
the slightest thought or anxiety as to the effect of his transactions
 upon our national trade balance. Indeed, relatively
few people here or abroad even understand what national trade
balances really are. Furthermore, most items in a nation’s
international trade are governed as to their amounts not only
by free choice but also often by inevitable and quite inflexible
circumstances. What, then, brings about this continual balance
 between each nation’s total exports and total imports?
The answer, of course, is—the flexible financial items in the
total trade list, consisting of gold, bank credit, and securities.
Fundamentally, in every gold standard nation, the basic
method of balancing its international trading account with
the world consists in shipping or receiving gold. Such shifting
 of actual gold bullion can be effected fairly quickly, and
no gold standard creditor can, of course, ordinarily refuse to