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ARE WE LIVING ON CAPITAL? 283
balancing of loss and gain, so as to draw out the net
result to the community as a whole.
\
With these preliminary observations I propose to
deal, first, with the question of a nation living on its
capital in consequence of the nature and results of its
international trade. The case is quite different from
that of a nation losing its capital in consequence of ex-
cessive expenditure on armaments, although the one
thing may, of course, to some extent be the cause of the
other. A nation which is extravagant on armaments
may have to part with its capital to provide for the
extravagance, J'ust as it would part with its capital in
order to provi e for any other extravagance. I t is not
suggested, however, that extravagance on armaments
has been the main part of that general extravagance
which has created the excess of imports over exports
that gives concern to so many people as the final and
complete proof of our commercial decay.
The allegation, generally, is that we are living
on our capital because there is an excess of about
£180,000,000 in imports over exports. In the year
just passed the excess is almost exactly £170.000,000
sterling. The imports in that year were £524,000,000,
and the exports, including British and Irish produce and
Foreign and Colonial merchandise, were £ 3 54,000,000,
leaving the difference stated. And, as such like ex-
cesses have been going on for many years, and increas-
ing from period to period, it is argued that the waste
of capital in the United Kingdom must really have
been enormous, and that we must be getting poorer
and poorer in our relations with foreign countries. It
is further urged in proof, I believe, that as a matter of
fact, we have lately been parting, in our international
dealings, with certain kinds of securities, especially
American securities, and that, to some extent, our
foreign neighbours have been lenders and depositors
in the Short Loan Market of Lombard Street to a
greater extent than at any former period. In other