The morning call., 1894-01-11
THE COURSE OF FOREIGN TRADE

A little information regarding the course
of tie foreign trade Of the United States
during the year ending June 30, 1898, is
supplied by Washington Ford of the Blu
reau of Statistics in a pamphlet Just issued
Tie shape which trade took in 1892 80
was due to the operations of the two pre-
vious years. In 1891 the United States
harvested enormous grain and cotton crops,
while simultaneously there was a partial
failure Of the food crop in Europe. Thus
our EXPORT trade in 1892 was the largest
ever known. This opened the door for
Increased imports, and we consequently
find that the volume Of trade in 1892 90
amounted to S1.714.066, coo, figure without
precedent. The food and cotton which
Europe required were paid for in goods
and the import Of these shot ahead of the
export from this country and led to a net
export of S87, SOC, 600 of gold. The thing
worked in a circle. a European crop
failure conceded in time with a super
abundant crop in this country. and we
were able to food Europe with food and
cotton to such an extent that prices re-
NAMED stationary. Our copious export
enabled US to be more liberal in our pur-
chaSes Of foreign goods. We bought so
many of them that the balance of trade
turned against Us and we were compelled
to pay it in gold, Of which the outward
movement was i'll excess of that of any
year since 1864.
simultaneously with the shipment of
goods, Europe began in 1892 to return
to this country a portion Of the Secu-
rites it held for investment. Many
attempts have been made in the past
twenty years TO arrive at estimates of the
ebb and flow of securities between this
country and Europe. but the information
has been difficult to obtain. Mr.. Ford
procured figures from leading bankers
which induce him to reckon that between
January 1, 1888. and August l, 1888
500, O00, 600 Of European capital was with
drawn from this country by sales of bonds,
shares and interests, and that from June,
1892, TO June. 1893. the withdrawal
amounted to twice as large sum. Against
this must be ffset new European invest
ments, which Mr.. Ford is induced to
reckon at S1oo, C000Qp, so that the net loss
in the fiscal year 1693-94 may be set down
at 500, 10000
il is not easy to decide how sound this
calculation is, nor to verify the inf0rma-
ton Ford got from the bankers, but if he
is right ana his infOrmants have been
accurate, we arrive. first, at one of the
causes Of the present business depression.
and secondly, at reason why it broke out
when it did 1t is matter of common re-
mark that the financial epidemic DOW pre-
vailing in Great Britain, Continental
Europe and the United States originated
in Australia. 1t was there that CONNER
cial failures and labor stringency began.
The cause was obvious. The colonfsts
had discounted the future too rapidly
and mad run into debt without
means TO pay. 1t has been figured
that the amount Of money drawn
from England to pay the debts of English
banks and English companies in Austria
liza was not less than S500,000,000. Moth
ing is palmer than that such drain must
have created a scarcity of money in the
United Kingdom. and must have involved
the withdrawal of English capital from
other places where it was employed, as,
for instance, the United States. 1t can
further be readily understood that with
drawal of 100000, 600 Of English money
from the channels OF finance and COM
merce in this country must have operated
TO hamper trade and check industry
Such an incident would naturally cramr
the Eastern banks and compel general
curtailment of business with its inevita.
bic consequences. diminution in the de.
mand for labor.
1t is commonly stated that the present
crisis Is a sentimental crisis, caused by
sympathy with other countries which had
real grounds for trouble. This is so in a
measure; but If hundred millions OF
European money have been taken away.
IL had real cause as we'll All financial
crises are largely matters of sentiment
There are always in all countries, and
especially in the United States, traders
and manufacturers who are carrying or
business on credit though they are insol
vent, and hanging Oh to business after
1t has ceased to be profitable. When
gale comes these people blow overheard
and their fate is trumpeted far and wide