The Washington times., 1901-10-08
Circulation Statement.
The Philosophy of Trnde.

which the knowledge Of the average
man is more imperfect and superficial
than that of international trade. This
statement applies as well 20 those who
are popularity termed business men,"
as to any other class. Even among So
called statesmen, there is much confu-
sion OF thought, and failure to draw
correct conclusions from demonstrated
facts. In his last great speech at Buff
falo the late President Mckinley eX-
posed scme Of the time-honored falla-
cies of the statesmen of his own party
His declaration that we must not re
pose in fancied security that we can
forever sell everything and buy little
or nothing" embodies a principle long
understood by students of poIitila al
economy. but it is one to which the
leaders Of the Republican party seem
TO have been, in general, total strangers.
in the form given to it by Mr.. McKialey
it viii henceforth stand as one of the
truisms Of political economy.
In the last analysis trade is merely
an interchange Of commodities. the
passing OF money back and forth,
whether between individuals or nations
is only a part of the mechanism. When
a sells an article to B and receives
the money for it, the transaction be-
tween them is complete. But this is
only one item in the general trade of
the community. A having received the
money proceeds at once 10 buy other
things that he wants, pays for them,
and thus the money moves on from
hand 10 hand. But j small proportion
Of the worlds money is entirely with
drawn from business and boarded
away. The remainder is continuously
in use as an agent whereby goods and
property of all kinds are transferred
What is true of individuals is equally
true of nations. The main purpose of
commerce is the exchange 1f products.
Trade balances are mere incidents-im-
portant ones, it is true, but still not the
main thing.
Speaking generally, the worlds ex-
changes OF goods must balance each
other At the same time particular
countries will sell either more or less
than they buy, thus creating trade bal
ances, favorable or unfayoraole. We
sell more than we buy, because of the
cOuntry's enormous productive capaci-
ty. We have a favorable balance of
trade. The United Kingdom buys much
more than it sells, because in that ccun
try population has outrun productivity
Hence. our British cousins have what
is usually considered an unfavorabIe
trade balance. Looking at trade bal
ances only, we would naturally conclude
that England was rapidly losing wealth
and that we were gaining with even
greater rapidity. But the fact is that
both nations are increasing their wealth
at a tremendous rate, our increase be
ing, Of course, the greater, for obvious
raesons apart from the trade balances.
This shows that there are other i'm
portant elements which come ilto play.
The truth is that the Dalances in our
favor on trade account have contribut-
ed nothing directly to our Increase Of
wealth for during the last twenty years
we have not only sent out Of the coun-
try more goods than We have brought
in, but we have also exported more
specie than we have imported. AS has
has been absorbed ~ foreign demands
against US. of various kinds. StDI, the
balances have been AN advantage, for
had they been smaller We must have
parted with stin more specie, which
would have created monetary stTin-
gency and depressed bus,ncs But 1t
must be borne in mind thar these for
eign demands against us have had
much to do with our huge .xprrt Is ade.
Foreigners could get our pIv,IEcts With
out sending over tie money 10 pay for
them. Hence, then purchases have
been large. As soon as corhi::cLs so
change that they must paw tGsh for
what they buy in this country, we may
look for a neavy falling CT in our ex-
port trade. The force of this sugges-
tion will be seen at once when it is
considered that if the trade balance
should continue, as it is now, say six
hundred millions a year in our favor,
and Europe had to meet it in gold. at
the end OF six years that continent
would not have a gold coin left-a CON
dition which is economically impossi-
BILE
On the other hand, England is not
impoverished by her adverse balance.
She simply goes on accommodating in
spite Of it. She is enabled to do this by
the circumstance that her exports of
commodities and the income derived
from her foreign investments, together
amount 10 more than her purchases,
which upon the final adjustment of ac-
counts. leaves a balance In her favor.
All OF this goes to show the folly of
the idea which Mr.. Mckinley so force
fully combatted at Buffalo. In the end.
II we do not buy with some degree of
freedom, it will necessarily diminish our
sales. Countries which cannot sell
cannot buv. save SO far as they may
do 50 with the income derived from out
side investments, as England now does
in part. But, standing by themselves,
such incomes would amount 20 very lit
tie in tbs economy Of a great nations
life. They must be supplemented by
earnings II home. IL England had
nothing but her outside income. she
would be the poorest of all the lead
ing nations. Instead of the second rich
est, as she is. Industrially she has
fallen behind us. but ner manufactures
and trade ara still the main sources Of
her wealth and prosperity. Blot them
out and her purchasing .ocwer in other
countries would be destroyed.
1t Is 4 fact worthy of careful study
that the richest nations of the Old
World are also our best customers.
They buy because they are able to. and
their ability will last as long as their