IX. THE TRANSPORTATION OF AMERICAN FOREIGN TRADE X. MARINE INSURANCE IN RELATION TO FOREIGN TRADE XI. THE FINANCING OF AMERICAN FOREIGN TRADE XII. THE PROMOTION OF AMERICAN FOREIGN Trade OUTLINES OF AMERICAN CHAPTER I THE PRINCIPLES OF TRADE Production without trade. If each individual ordered his life activities so as to make, by his own efforts, entire provision for all his daily wants, there would be no trade as between individuals; no surplus would be produced by anyone for exchange. Similarly, if small groups or societies of human beings made entire provision each for its own wants, there would be no trade as between groups. Also, if each nation or political division managed its economic life so that all its wants were supplied solely from articles of local production, there would be no trade as between nations; that is, there would be no international or foreign trade. Such production wasteful. But the plan of living whereby each provides for all his own wants is wasteful in both time and labor and brings very poor results; this applies equally well to the individual, the small group, and the nation. It is highly probable, however, that individual self-sufficiency had to be practiced in the beginnings of human existence; if primitive man required a certain implement or weapon to enable him the better to carry on the struggle for existence, it was produced, in all probability, directly by his own labor. The article so fashioned was necessarily crude, for it was only by continued practice that skill was acquired. Beginning of specialization. In the course of time it was perceived that if each worker devoted his time and energy to 1 carrying on one kind of work exclusively, not only would the total product be greater but also the articles produced would be much better made. Naturally, each producer would bring forth that which he could fashion with the least effort and pain, or with the most satisfaction to himself. Continued practice in the same occupation would result in making the worker more and more expert in his trade, so that there would be turned out a better product at a decreasing cost of material, energy, and time. Each worker could follow his own bent, or devote himself to the work he had chosen to carry on, without anxiety; for he would see others specializing, and this would give him assurance that whatever he needed, in his simple life economy, could be obtained by exchanging the surplus of the product of his own labor for the things which others, as a result of their specialization, would have in surplus. Division of labor between individuals necessitates exchange. Thus it came to be the rule of industrial society that each man, instead of undertaking to supply all his own wants, specialized in the production of a single article or in performing one operation as a stage in the production of a single article, which, perchance, he never used himself. Thus division of labor arose, giving rise, in its turn, to exchange; for without division of labor no trade could exist, and the further the division was carried, the greater it reacted upon or stimulated exchange. Division of labor impracticable without exchange. The intimate relationship between division of labor and trade can easily be perceived if we assume, for the moment, division of labor being carried on by individuals without having any intercourse with each other. If A devotes all his energies to the production of food, with the result that he has ten times as much food as he can consume, the large surplus will spoil and go to waste while A suffers from the lack of clothes and shelter. Similarly, if B spends all his energy in making clothing, he will, in time, have a considerable surplus of clothing if, in the meantime, he does not die of hunger, and exposure for lack of |