The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1894-06-12
THE BALANCE OF TRADE-IIs
SIGNIFICANCE

mereiaI Bsslletia, which has received spe-
cial notice IN consequences Of Its wide err
cuiation in Public OpiBioa. claims that
the record OF foreign commerce Tor the
current fiscal year is fatal 70 the balance ca
trade theory that regards maximum ex-
ports and minimum imports as the most
prosperous and desirable conditions OF for-
eign trade" This claim Is sustained py
an array Of figures which show the I'M
ports and exports Of merchandise eacn
year since ls77, and the conclusion Is
reached by . single leap. which COM
pietely clears all the data from 1877 TO 1871,
into the midst OF the incomplete record OF
1894. that the pubic mind viii De more
disabussd Of the balance OF trade theory
by the results thus obtained than by any
amount of argument"
If the ingenious author OF this editorial
had taken the trouble 10 examine crii-
callv the record Of Cur foreign commerce.
as affecting the exports OF gold and the
welfare Of the people, he would have seen
evidence OF q very intimate relation be-
tween them. He would have discovered
that large trade balance in our favor Is
attended by large imports OF gold and
by national prosperity, and that small or
ports of gold and hard times.
Referring to the years covered by the
editorial of the journal Of Commerce and
Commercial Bulletin We find that the high
est point reached IN our favor by the trade
balances was in the year 1879. The next
highest was in 1881. In the former year
it amounted to SOS, ooO,0 900 and in the lat
ter to $3.50 900 COO. At this time We also
G~4 al, = nl.. - - ha ant s7a
reached by the annual net amount OF i'm
ports Of gold. So. 00o, COO, in the yevr end
ing June 80, 1881 And what Is most
significant. we find the year OF the highest
national prosperity, as shown by the num-
Der of business failures-nine for every
loo, 600 population. the smallest in the
whole term-was the year 1880. The year
1852 shows q tremendous decline OF the
favorable trade balance, which for the
fiscal year was only s25.0o0,oO0. The net
imports of gold fell to less than 81, 10000
and the number of failures increased
to thirteen per 100. 600. nearly so per cent.
increase since 1880. This increase con-
tinued with startling rapidity until in 1854
it had reached its highest point, twenty
per 100000 population. more than twice
the number in 1850, a point never gone be-
yond during this period until 1888, when
the mum Der of failures reached twenty-five
per 10000 population.
In 1888 the trade balance improved, fell
off slightly in 1884 and again improved in
1885. The imports of gold followed these
movements with great distinctness, rising
in 1883, declining to an adverse balance IN
1881, and rising again to a favorable bal
ance in 1886. The tide of advancing pros
perity rose in the summer of 1884 and
continued slowly but steadily rising until
the summer OF 1887 Our failures for that
year were down to sixteen per 100000.
Meanwhile our favorable trade balance
began to decline, and in the summer OF
1888 reached its lowest point in an adj
verse balance of SIS, 10000 The imports
of gold, which had been going on with
some fluctuations, chiefly due to the ef-
forts of Austria TO establish its currency
upon gold basis, suddenly fell of under
this decline of our trade balance, until in
1850 we exported nearly $50, 000. 600 gold IN
excess of our imports.
These adverse movements of trade and
gold were attended by decline of pros
perity. From sixteen per 100000 in 1887.
the number of failures increased to
eighteen in 1888, diminished TO
seventeen in 1890, when our trade
balance recovered to $63,000.000 and
our exports of gold fell off TO S4,-
100000. The favorable trade balance
was too small to enforce imports of gold.
but Ii was attended by largely decreased
exports and by an improvement in ma
tional prosperity.
The year 1891 showed decline of our
ia vorable trade balance to s40.0oo,0 600.
large adverse movement of gold, the ball
ance of exports reaching S6s, 900. 600, and
sharp decline of prosperity, the number of
failures increasing to twenty per 100000
population. the same as in 1854.
The year 1892 was the reverse of 1891.
Our trade balance advanced to 5000, O00, 900.
our balance of exports of gold fell from
$6s, coo, 600 10 less than $500, 600. and the
number of failures decreased TO sixteen
per 10000 population.
But if 1882 showed favorable results
with all three of the movements in the
same direction. associated together in the
Advancement of prosperity, the year 1888
on the other hand showed all three move
nfents in the contrary direction. Simulta-
neousiy our trade balance fell till il be-
came an adverse balance of $4,000. 900.
Our balance OF gold exports increased to
more than So, 600. coo. and the number of
failures increased to twenty-five per l00,-
600. the worst condition reached during
the whole fourteen years under review.
As TO the present year 1904, ending sta
tistically June 80. We have no statistics
sufficiently complete 10 justify any posi-
tive and final conclusions. IL is, how
ever, evident that the volume of our trade
balance Is very largely in our favor; that
our imports of gold have largely exceeded
our exports, and, as We might expect from
the experience of previous years, the num-
Der of failures has very largely dimin-
ished.
If experience is of any value as a basis
on which to form expectations. We have a
right 10 conclude that the condition of
our people has greatly improved since last
year, and is tending rapidly towards pros
perity.
We also submit, with ell the respect due
10 the ancient and venerable Journal Of
Commerce. galvanized into new vigor by
the British blood of its youthful spouse.
the Commercial Bulletin, that the statistics
which IL has adduced 10 disabuse the pub
lie mind Of the balance of trade" theory
have signaliy failed of their pnrpose. On
the contrary they have demonstrated,
when taken in connection with other
facts bearing on the subject, that there is
an intimate and persistent association be-
tween the movement of our trade balances,
the flow of gold and the national pros
perity. The tendency Of these three move
menis, though they are distinct, Is with
substantial uniformity in the same diree-