The morning call., 1893-06-17
THE BALANCE OF TRADE.

1t is stated in publication issued by the
| statistical bureau of the Treasury Depart-
ment that during the nineteen years and
nine months from July, 1873, to March.
| 1888, the exports of merchandise from the
| United States exceeded their imports by
S1,S07, 155, $50. Add TO this S221, 130, ,4S4 for
the excess of our exports of silver over our
imports and the "balance of trade" in our
favor will foot up s., 32S. .2S6 434. Accord
ing 10 the general notion that the balance
OF trade must be settled in gold we should
have imported two billions of gold during
the period under review, but in effect we
have during that period exported $40,000,-
600 more gold than we imported. What
have we got for the two billions worth of
portable property which we have sent
| abroad? That is a question which it is
not easy to answer. When a man ships
| 500, coo worth of wheat or other merchan-
disc to Liverpool or Hong-Kong he has
something to show for it-either money or
other merchandise. Why should it be
different with nation?
Thirty or forty years ago the balance of
trade was reconciled with the excess of
exports over imports on the theory OF Eu-
ropean investments in American bonds.
A considerable amount of European money
was In effect invested in American rail-
road bonds and after the war in Govern
ment bonds, though the investments were
never as large as people imagined. When
Americans pressed for payment for their
| cotton and their wheat Europeans paid
| them in their own securities. OF late
| years little European money has gone into
American securities. and such OF those
securities as are held in Europe are so
! firmly held that they do not return to this
country when the exchanges turn against
! Europe. Yet the price of the English
sovereign shows that Europeans are pay
ing as they go and that they do not owe
the United States two billions or any such
sum. How, then, have they paid it?
1t has been done in various ways. First,
an enormous sum has been paid to Euro
peans for ocean transportation. Nine
tenths. of our cotton, wheat. iron, provis-
ions and other produce go to Europe in
European steamers and sailing ships, and
the freight which they pay constitutes
considerable proportion of their value.
According to the British trade tables of
1891 ont of 43.741 steamers which entered
British ports during that year 81. S74 car
ing ships 54S9 were British. In the same
year 80 American steamers and SO Ameri-
can sailing ships entered British ports. In
twenty years the freight money earned by
English ship-owners must have paid for
many hundreds of millions worth of
American produce.
1t is of course impossible 10 estimate the
amount of money spent by American trav-
Il L l..
that they will average one year with an
other $4,000 in number. and that each trav-
eler will spend on an average $500. This
would Imply yearly transfer of S30,000,-
600 of American money to European pock-
cts. or 5000, 100000 in twenty years. Such
a sum would pay for large quantity of
American produce.
Finally Europe, and especially England,
is the clearinghouse of the world. Sur
plus funds from all parts of the world,
including the United States, drift to Lon
don and Paris for safe keeping, just as in
our States pOssessors of ready money de-
posit it in bank where it shall be avail
able for employment when required. How
much foreign money is temporarily lodged
in England by people who want to draw
against it in case of need no one has any
means of guessing; but the amount must
be large. Most of our 5000 banks will
draw exchange on London if required.
They must have something to draw
against.
If these three items are added together
the sum which we pay to England tor
freight money. the sum which we spend
in Europe for pleasure travel and the sum
which is lodged in England for safe keep
ing and to be in readiness for investment
it is possible that the product may not fall
far short of the two billions which repre-
sent the excess of our exports over our
imports.
Looking into the future it seems un-
likely that England will continue to derive
from them the means of paying for the
food and cotton she requires. American
expenditure for pleasure travel will be
likely to increase rather than fall off But
we are going to make a fight for the ocean
freight business. and as this country
grows its cities will dispute with London
the claim of being the banking house of
| tha UOrld