The spirit of democracy. [volume] (Woodsfield, Ohio) 1844-1994, 1879-02-11
Some Fallacies About the Balance
Of Trade.

kJVIlkO uAlttOlCo AOOuV UAkO AS0AoAASS
Of Trade.
The phrase "5alance OF trade" has
come into general circulation of late on
account Of its supposed relation 10 the
maintenance Of resumption, and because
the "balance OF trade" is now largely 10
our favor we are congratulating our
selves that the country is growing rap
idly rich.
. II is perhaps not overstating the truth
to say that nine-tenths OF those who em
ploy the phrase have the most erroneous
ideas Of its real significance; the preva-
lent opinion being that whatever amount
the official statements may show that the
balance OF trade is in our favor, is so
much net gain to this country. This
opinion is based upon the idea that ex
ports represent our income while imports
represent our expenditures. So far from
this idea being correct, it is susceptible
OF demonstration that in some instances
the very converse may be nearer the
truth. But this demonstration Is not
quite to our present purpose.
All goods exported from this country
are listed at the custom houses at their
value in this country: All goods import.
ed into this country are listed at the
custom house at their value in the coun
try from which they come. The differ
ence between this valuation OF exports
and this valuation OF imports consti
tutes the "balance OF trade"
The old "mercantile system" was
based upon the fallacious maxim that a
nation becomes richer just in proportion
as it's exports exceeds its imports; and
although among the shrewder political
economists this notien was rejected as
long ago as the time when Venetian
commercial prosperity was iu its prime
| ye. II is very generally prevalent to this
day. ss
The fundamental error In this view Il
the assumption that the difference be
tween the exports and the imports il
made up by hard dollars received by the
country having the excess OF imports =
That this is not true-that the exporting
country does not receive its "balance o1
trade" in money-can be very conclu.
sively shown.
During q series Of years the balahc,
Of trade in favor Of England has beer
two thousand millions of dollars Ther
il this theory were true England shoult
have two thousand millions Of dollars il
coin in addition to what she had whel
this favorable balance set in. The fac
is that instead OF having two tholsant
millions in coin England has not one
fourth OF that amount.
| Another fact which proves the bal,
absurdity OF the assumption is, that th
official statements. under the method o
valuation universally employed, sho,
that the aggregate annual exports Of th
world exceed the imports by eight hun
dred million dollars! Obviously q "bal
ance of trade" based upon calculation
and official statements which produc
such result must be utterly unreliable
But perhaps the fallacy may be n Or
clearly shown by . few simple illustrs
Itions.
/ A cargo OF coffee valued in Brazil 6
100000, and SO entered upon the book
OF our custom house, arrives here, On
being more valuable here is exchange
B for $4,000 worth OF -four .(value
bere) which is taken back to Brazil :
, Now here are imports 500, 900, export
!, $4,000, balance of trade in our favo
$40, ,000. But where is the $4,000
If the merchant is Brazilian has th
. country, or any body in 1t, got this $40
0002
! An American merchant sends fou
valued here at 100000 to Brazil. H
finds fat market, and can get but 600
600 worth of coffee valued there) fe
II. Here 10 balance of exports oy'