among its regular articles of export, it cannot go on, year after year,
parting with them, and never receiving them back. When a nation has
regular payments to make in a foreign country, for which it is not to
receive any return, its exports must annually exceed its imports by the
amount of the payments which it is bound so to make. In order to force a
demand for its exports greater than its imports will suffice to pay for,
it must offer them at a rate of interchange more favourable to the
foreign country, and less so to itself, than if it had no payments to
make beyond the value of its imports. It therefore carries on the trade
with less advantage, in consequence of the obligations to which it is
subject towards persons resident in foreign countries.

The steps of the process are these. The exports and imports being in
equilibrium, suppose a treaty to be concluded, by which the country
binds itself to pay in tribute to another country, a certain sum
annually. It makes, perhaps, the first payment by a remittance of money.
This lowers prices in the paying country, and raises them in the
receiving one: the exports of the tributary country increase, its
imports diminish. When the efflux of money has altered prices in the
requisite degree, the exports exceed the imports annually, by the amount
of the tribute; and the latter, being added to the sum of the payments
due, restores the balance of payments between the two countries. The
result to the tributary country is a diminution of her share in the
advantage of foreign trade. She pays dearer for her imports, in two
ways, because she pays more money, and because that money is of higher
value, the money incomes of her inhabitants being of smaller amount.

Thus the imposition of a tribute is a double burthen to the country
paying it, and a double gain to that which receives it. The tributary
country pays to the other, first, the tax, whatever be its amount, and