Foreign trade is essentially no different from domestic trade. It rests on differences in climate, soil, capabilities of workers, and standards of living - that is, on territorial division of labor. Much of the domestic trade of our country resembles foreign trade in Europe, for the area east of the Mississippi River is approximately as large as all western Europe. Thus trade between New York and Florida is much like the trade between England and Spain. Mere distance, then, is not an important characteristic of foreign trade. As we shall see a little later, the chief difference between domestic and foreign trade is that the latter is always more or less hindered by national boundary lines, and by differences in languages, in customs, and in money units.

Our chief interest at this point is not in the trade itself, but rather in the methods of settling accounts among individuals, among sections, and among nations. The getting of goods from the producer to the consumer is a matter of production; the mechanism employed to make payments by the consumer to the producer is one of exchange.