Buy at Home Campaigns

Popular thought and speech provide a further similarity between interlocality and international balances of payments. "Buy National" (e.g., "Buy British-made Goods") campaigns are matched--in the same country--with "Buy Locally" slogans. It is, of course, perfectly obvious that if it were possible for all nations to succeed in persuading their citizens to cease buying foreign goods and services, there would be an immediate cessation of international commercial intercourse. If only a few nations attempted--or succeeded in--such campaigns, their balances of payments would at once show an overwhelming net credit. Should they be major countries, the cessation of imports would probably result in a collapse in the foreign exchange market and a sharp decline in their exports. The magnitude of the domestic repercussions would depend on the relative importance of foreign trade in the various countries involved.

Roughly similar consequences would follow from any widespread success of drives to induce people to buy only goods and services made or offered in the home town or state. It is commonplace to observe that if the residents of Ithaca, N. Y., or, even, of New York State as a whole, were actually to "keep their money at home" the consequences would be disastrous. If all localities followed such a policy, there would at once be an end to interregional trade and finance. Should it happen that only, say, New York State determined to cease all purchases of out-of-state products (including materials, services, securities, properties, etc.), her balance of external payments would become colossally one-sided--all "credits" and no "debits." There would be a flow of funds to New York (in payment for New York-made goods and services sold to out-of-state buyers) which could continue only so long as the monetary drain in outside areas did not induce an intolerable deflationary stringency. This would depend on the relative importance of New York in the total economy. There would not, of course, be the "pressure on the exchanges" which is peculiar to disequilibria in international payments balances, inasmuch as there would be no currency frontier, but all the other aspects and consequences of balance of payments disequilibrium would be present.