“In the foregoing, even upon the principles of the commercial system, it was very unnecessary to lay extraordinary restraints upon the importation of goods from those countries with which the balance of Trade is supposed to be disadvantageous. It obvious depicts a picture that nothing, however, can be more absurd than this whole doctrine of the balance of Trade, upon which, not only these restraints, but almost all the other regulations of commerce are founded. When two places Trade with one another, this [absurd] doctrine supposes that, if the balance be even, neither of them either loses or gains; but if it leans in any degree to one side, that one of them loses and the other gains in proportion to its declension from the exact equilibrium.” (Smith, 1776, book IV, ch. iii, part ii).
3.3. John Maynard Keynes on balance of Trade
John Maynard Keynes was the principal author of the ‘KEYNES PLAN’. His view, supported by many Economists and Commentators at the time was that Creditor Nations should be treated as responsible as debtor Nations for Disequilibrium in Exchanges and that both should be under an obligation to bring Trade back into a state of balance. Failure for them to do so could have serious Economic consequences. In the words of Geoffrey Crowther, ‘if the Economic relationship that exist between two nations are not harmonized fairly close to balance, then there is no set of financial arrangement that Can rescue the world from the impoverishing result of chaos. This view could be seen by some Economists and scholars as very unfair to Creditors as it does not have respect for their status as Creditors based on the fact that there is no clear cut difference between them and the debtors. This idea was perceived by many as an attempt to unclassify Creditors from debtors.