THE EQUALIZATION OF THE INTERNATIONAL BALANCE OF PAYMENTSAND THE MOVEMENTS OF THE TRADE BALANCE
The classical school has taken its position on the problem just stated in its theory of free-trade. The large interests of foreign trade aroused economic thought at an early date. The economic policy of the great rulers and statesmen of the mercantilistic era and the mercantilist doctrine accompanying this policy were what the classicists first considered. In their polemics directed under the leadership of
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Adam Smith against the mercantilists, the theory of international trade ranks foremost. Economic science is indebted for a number of its most important discoveries to the keen investigations carried on by the classical school, in an attempt to establish their theory of freedom also for international trade. The mercantilists had contended that commercial policy should strive to increase the money wealth of the country. To this end it was necessary to bring about a surplus in the value of its exports when contrasted with imports. The arguments by which the classicists met this view were chiefly instrumental in broadening the scientific structure of economic theory. But by this very exposition, it may be shown that the classical doctrine did not penetrate to the roots of economic theory. As has already been pointed out in an earlier connection, so here, it is undeniable that the classical masters failed to carry their individualism to its final consequences, and that they did not lay bare the ultimate individual bases for economic theory.