The Ohio Democrat. (Logan, O. [Ohio]) 1886-1906, 1902-03-13
THE BALANCE OF TRADE
A Popular Misconception About
Imports and Exports.
THE MORAL OF wEBsTER's STORY


portnnt Corrections In Figures.
Fallacy of an Impression Repub-
licans Try to Create.
Administration organs have been
giving such undue prominence to the
reported excess of exports over i'm
ports that there is need for the public
not to confuse this fictitious balance Of
trade with the status of custom values
and their relation to our prosperity,
says the st. Louis Republic. In round
figures, according to government re-
ports, we have exported during the
past twenty eight years goods to the
value of $5,500,000 900 in excess Of our
importations.
One and a quarter billions of this
amount is reported as the favorable
balance of trade which accumulated
during the years 1900 and 1901. Does
this mean that If we continue sending
out $600,0O0,000 worth more of stuff
each year for fifteen years longer
we shall have all the available gold
supply of the world?
Yet nothing can be further from the
truth. The Free Trade league has en-
deavored to correct the tables which
have been prepared by the treasury de-
partment in dealing with imports and
exports. For instance, the correction
proves that there should be reduction
of at least 10 per cent in the values
given to American goods sent abroad
because of the notorious fact that
many of our exports are sold in Euro
pean markets below home prices. This
is especially true of iron steel, copper,
coal, lead, salt and number oe patent
ed articles.
Importers must pay duties, and for
eigners are not averse to taking ad-
vantage of the privilege of quoting the
prices of their goods at less than cost.
This item would amount to 10 per cent;
also imported goods had to pay freight
charges amounting to about $5O,OOO,OOO
last year, according to the government
statistics. The tariff tax aggregated
$23S, 7S6,741 in 1901. OF course these
were added to the cost of imported ar
ticles.
So that for last year 10 per cent
should be taken off the $1,605, ,219,S14
which is given MS the total value of our
exports, thus making 81, ,444 697,897 as
the actual cost to foreigners of goods
bought from us. On the other hand
10 per cent should be added to the re-
ported cost price Of articles imported
by us. Adding the ocean freights and
the tariff tax, we have an actual value
Of $1,3O6, ,405,8O9 for imports in place
of 1926, los, ,244, the sum given by the
treasury reports. With these deduc-
tions and additions the Favorable"
balance of trade shrinks to $13S, ,292,-
OSS.
Where does this balance go? Part to
foreigners from whom we have Dor.
rowed money, part is spent abroad by
tourists, part In repayment of foreign
loans, part in investments abroad, part
in credits allowed to stand abroad and
another part in payment of ocean
freights to owners of foreign bottoms.
There can be no such thing as ia
vorable balance Of trade. Values must
be equalized. Because we export is
| rather an evidence of past extrava-
gance or of Indebtedness which we are
| trying hard to cancel. If we could i'm
port instead of export, we would have
more money, because we would be
clear of debt.
1t was Daniel Webster who declared
in his great free trade speech in the
congress of 1924 that the excess of i'm
ports over exports in truth usually
shows the gains, not the losses, Of
trade. He illustrated this remark by
the example of merchant vessel
which, with cargo worth $4,000,
sailed from Salem, Mass. to Asia Mi
nor, there sold it and invested the pro-
ceeds in the merchandise of that coun-
try, then voyaged through the Mediter-
ranean and sold her new cargo in the
ports of Europe for $170,000 in money
and goods, with which she returned to
Salem, and, having sold the latter, de-
posted the entire sum in the very bank
which furnished the $4,000 to pur-
chase the original cargo, thus showing
clear profit on the voyage of $780,
900. Yet in this case the balance of
trade was against the country, be-
cause there was an excess of imports
over exports.
Said Webster in conclusion: "If the
return cargo were found to be worth
much more than the outward cargo,
while the merchant, having paid for
the goods exported and all the ex.
penses of the voyage, finds a hand.
some sum yet in his hands, which he
calls profits. the balance of trade is
still against him, and. whatever he
may think Of it, he is in very bad
way. Although one individual or all
individuals gain, the nation loses;
while all citizens grow rich, the coun.
try grows poor. This is the theory OF
the balance of trade"