the European Powers, to denote a condition of affairs in which no one State is permitted to have such a preponderance as to endanger the independence of the others. This idea is not confined to modern times. The Greek States acted upon it by a kind of instinct of self- preservation, though it was not directly formu- lated. It has, however, been more distinctly avowed as a motive of political conduct, and more systematically acted upon since the time of Charles V., whose ambitious designs awak- ened the European Powers to the danger of such overwhelming preponderance in one dynasty. The motive of preserving the balance of power came first distinctly into the foreground in those alliances which England, Holland, and Austria repeatedly formed against the schemes of Louis XIV. It was the same cause that broke up the most powerful of these coalitions; for in the War of the Spanish Succession, when the Hapsburg candidate for the Spanish throne became, by the death of Joseph I., sovereign of Austria and Holy Roman Emperor, and the power which, in the hands of Charles V., had menaced the equilibrium of Europe, seemed likely again to be wielded by one man, England withdrew from the coalition, and saved Louis from a decided overthrow. The kaleidoscopic changes in political alliances that characterized European history from the Treaty of Utrecht to the end of the Seven Years' War, were the result of a frantic attempt on the part of Con- tinental statesmen to preserve the balance of power. The aggressions of Napoleon called all the powers of Europe to arms against him in the name of the balance of power; and in re- adjusting the map of Europe the balance of power was often invoked to cover the jealousy which resisted claims to restitution of territory. For some time the balance of power in Europe has been embodied, as it were, in a hexarchy or permanent congress of the six great Powers — Great Britain, France, Germany, Austria, Rus- sia, and Italy. Mutual jealousy among the leading Powers, on the score of extension of boundaries, is looked to as the great safeguard of the smaller States. After this manner the Crimean War arose out of Russia's renewed at- tempt to extend her dominion over Turkey. It was in the name of the balance of power that the nations, in 1878, at the Congress of Berlin, deprived Russia of many of the advantages she had gained by the Treaty of San Stefano. With- in the last thirty years, however, the balance of power has encountered an opposing principle in the rising spirit of nationalism. It is now gen- erally recognized that countries may no longer be carved arbitrarily into morsels for the sake of preserving a political equilibrium, but that physical and social conditions must be taken into consideration as forces playing a part in the formation of States. United Italy, United Germany, and the Pan-Slavic spirit in Russia exemplify the growth of this political idea. On the other hand, a new phase of the old problem has been presented by the spread of European colonization and commerce in Asia and Africa. The balance of power has been in a measure extended over the whole world, and France, Germany, and Italy are everywhere seeking colo- nies and 'spheres of influence' to balance the colonial empires of England and of Russia.
BALANCE OF TRADE. A term applied to
the difference between the value of the exports
and imports of a country. This difference
was formerly measured roughly, by the outflow
or inflow of the precious metals in the settle-
ment of accounts. When the exports exceeded
the imports, causing an inflow of the precious
metals, the balance was deemed favorable; in
the contrary case, unfavorable. All of these
expressions, which are still familiar, had their
origin in the conception of political economy
dominant in the so-called mercantile period.
(See article Political Economy.) It was one-
of the fundamental errors of that system to con-
found the wealth of nations with their stocks
of precious metals, and the economic policy of
the period zealously favored anything which
seemed to increase the stock of the precious
metals, and as sweepingly condemned whatever
had an opposite tendency. It will be readily
understood how upon such principles the attain-
ment of a favorable balance of trade became the
chief end of commercial policy. Various meas-
ures were adopted to secure this end, and led to
the manifold restrictions upon commerce which
characterize peculiarly the Eighteenth Century.
With the spread of the notions of economic freedom and the gradual adoption of a more liberal if not an absolutely free-trade policy in commercial affairs, the 'balance of trade' lost its commanding place in economic doctrine. But it remained for a long time, and is to-day, a frequent popular criterion of national prosperity. Apart from the importance thus ascribed to the balance of trade there is doubtless the feeling that a nation which imports more than it ex- ports must pay the excess from its accumula- tions, and thus gradually become impoverished. But if it be true that a people living upon its accumulations is on the road to impoverishment, it is by no means true that an excess of imports over exports is evidence of such a fact.
Whatever its bearing upon the national wel- fare, there could be no doubt that under the simpler conditions of a century ago an excess of merchandise exports over imports was an ade- quate explanation of an inflow of the precious metals. This would still be true if current sales and purchases were the only economic relations that bound peoples together. But this is far from being the case. In addition to movements of goods we have movements of debts (bonds, stocks, etc.), and movements of services (freights for transportation), between the na- tions. Any inequality in the movement of goods may be compensated, not only by payments of gold and silver, but by transfers of indebtedness or the performance of services. Indeed, the last two factors may be of such importance as to determine a movement of gold exactly contrary to what the merchandise movement might lead us to expect. Thus the United States, in the year ending June 30, 1900, with an excess of merchandise exports over imports of $544,541,- 898, exported $3,693,575 in gold. In the United States an excess of mercantile exports, and in Great Britain an excess of merchandise imports, may be said to be normal conditions of trade. Since it thus appears that the balance of mer- chandise exported and imported no longer ex- plains the phenomena of international payments, the scope of the phrase 'balance of trade' has sometimes been extended to include the balance
