Chapter 7

The Diversity of Gain by Foreign Trade

January 26, 2020

In the course of foreign trade, there are three sorts of gain.

  1. The gain of nation

This happens when the merchant (who is the principal Agent therein) loses. A nation may be happy while the merchant is not.

If the East-India Company sends out £100,000 to India and gets £300,000, the nation’s wealth is tripled. These Merchants shall lose at least £50,000 if bulky goods were traded according to their sale and use in Europe. The expenses in freight, insurance, charges, etc. cannot be less than £250,000 which produce a loss when added to the principal.

Thus, the government gains while the Merchants lose grievously. The nation would much be richer if the Merchant is a gainer like the government.

  1. The gain of the merchant

Sometimes this gain is just and worthy, even if the nation is a loser. The merchant may bring in goods and sell them for profit, but the nation might grow poorer if they consume more goods in value than the national wealth can pay for. This is like a person who spends beyond his means.

  1. The gain of the government

The government can gain even if the nation or the merchant are both losers. For example, when=

  • our commodities are over-balanced by foreign goods consumed, and
  • the Merchants are not successful.

Let us suppose that the national exports and imports at £4,500,000 and it increases its imports by £200,000 per annum. The government shall gain near £20,000, but the nation shall lose the whole £200,000 spent in excess. The Merchant may also lose when the trade is increased to the government’s profit. But in the long run, the government will suffer the greatest loss when his Subjects become impoverished


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