Trade balance

“ Is not the balance of trade, according to the protection theory, to that amount in our favor? Then let the protectionist turn pirate and scuttle and sink all the vessels laden with our exports, and soon the balance of trade in our favor will be large enough to satisfy even most advocates of the American protective system. The true theory is that in commerce the overplus of the importation above the exportation represents the profit accruing to the country. This overplus, deducting the expenses, is real wealth added to the land. ”

“ The fact is, that it is only in commodities that one nation can discharge the bulk of its debts to another nation, and that if the world owes us money, and makes us its carrier and its general merchant, we must take payment in commodities. And thus you see, at a stroke we get rid of that bugbear to some people, the thing commonly called the Balance of Trade, and which, as commonly understood, is a fallacious and misleading expression.
There is one country which at the present moment stands in marked contrast to us as regards the balance of her imports and exports. I mean the United States. ”

“ The countries not possessing a native supply, could obtain it only by what was called a favourable balance of trade, that is to say, by exporting to a value exceeding that of their imports, and receiving the difference in money. ”

“ The state of the trade balance between ourselves and other countries at this moment affords grounds—I do not say for anxiety, but for serious thought. If you look at the Board of Trade returns for the first five months—that is, to the end of the month of May—of the present year—you will find, as compared with the corresponding period of last year, that our imports have increased by thirty-five and a half millions; while our exports and re-exports have decreased by seventy-three and three-quarter millions. ”

“ The balance of produce and consumption may be constantly in favour of a nation, though what is called the balance of trade be generally against it. A nation may import to a greater value than it exports for half a century, perhaps, together ”

“ For if your merchants are not permitted to re-export the surplus foreign produce to those markets where there is a demand for it, it will remain on their hands and rot in their storehouses. This would also sink the price of your own produce, as there could not be a sufficient demand for it, because your merchants would not receive in return foreign produce. Your trade must, therefore, be diminished nearly in the proportion before stated. I ask gentlemen if this trade is cut off, how your merchants are to get specie to meet the balance in favor of Great Britain of twelve millions of dollars? ”

“ If the fact be, that by allowing to foreigners a participation in our machinery, we enable them to produce any of our leading articles of export, at a lower money price than we can sell those articles, it is certain that unless we possess as great an advantage in the production of the machinery itself as we have in the production of other articles by means of machinery, the permitting of its exportation would alter to our disadvantage the division of the benefit of trade. Our exports being diminished, we should have to pay a balance in money. ”

“ If a country has as much of everything else as it wants, it will always have as much money as it wants; its stock of money or representative wealth, will always be proportioned to its stock of other and more real wealth; and no mode of carrying on trade with another country, or with all other countries,—in other words, no state, favourable or unfavourable, to use the established expressions, of what is called the balance of trade—can in the least affect the matter. ”

“ He said, "The country is going to ruin; the balance of trade is against us. How can we continue to go on in this way many more years? Our exports last year were so many millions, and our imports so many millions more, and we are poorer by the difference between the imports and exports." ”

“ The extent to which money enters into the trading transactions of two countries is governed by the same law of relative values as is the case with any other commodity. If more money goes out of a country than did previously, it simply means that relatively to other commodities it has become cheaper. But if there is such a thing as an adverse balance in the sense that commodity imports exceed commodity exports, then there arises the further question: Why do exports fall off and imports mount up? In other words, given a normal equilibrium of trade, what causes an adverse balance of trade? ”

“ International shipment of money is always just the amount needed to balance the accounts due. The proposition that in the long run the value of imports must equal the value of exports, while the fundamental truth in the theory of international trade, must be understood in a broad sense. ”

“ Such being the state of our exports under the operation of free trade, let us now look a little to the other side of the balance sheet. The duties levied at the custom-houses constitute, as every one knows, the largest portion of our revenue, and therefore cannot be made the subject of experiment, without extreme risk of defalcation. ”

“ I do think we should be conscious of the fact, of course, that the balance of trade has been substantially in our favor in the last year, but we are continually concerned about those imports which adversely affect an entire industry and adversely affect the employment of a substantial number of our citizens. ”

“ But, above all, they will keep a watchful eye over the balance of trade in general, and never suffer that all the foreign commodities together, that are imported in one year, shall exceed in value what of their own growth or manufacture is in the same imported to others. ”

“ Under the first, the country which wants more imports than its exports will pay for, must offer its exports at a cheaper rate, as the sole means of creating a demand for them sufficient to re-establish the equilibrium. When money is used, the country seems to do a thing totally different. She takes the additional imports at the same price as before, and as she exports no equivalent, the balance of payments turns against her; the exchange becomes unfavourable, and the difference has to be paid in money. ”

“ It is, indeed, a general law of prosperous commerce that the real value of exports should by a small, and only a small, balance exceed that of imports, that balance being a permanent addition to the wealth of the nation. The extent of the prosperous commerce of the nation must be regulated by the amount of its exports, and an important addition to the value of these will draw after it a corresponding increase of importations. It has happened in the vicissitudes of the seasons that the harvests of all Europe have in the late summer and autumn fallen short of their usual average. ”

“ Emphasis is laid instead on the fact that in the last analysis the trade is of goods for goods, not of money for goods, and that a tariff on imports reduces, not only imports, but exports also,—that it merely interrupts temporarily the virtual barter between nations. ”

“ Suppose that a country should be opened to our merchants, disposed to buy from us in abundance, but which can sell to us scarcely anything, as every commodity which it affords could be got cheaper by us from some other quarter. Nevertheless, our trade with this country will enable us to obtain from all other countries their commodities at a lower price. At the first opening of this commerce of mere exportation, we must have received in payment a large quantity of money; for which our customer will have been indemnified by other countries, in exchange for her commodities. ”

“ Thus, the weight of my criticism is directed against the inadequacy of the theoretical foundations of the laissez-faire doctrine upon which I was brought up and which for many years I taught;3⁄4against the notion that the rate of interest and the volume of investment are self-adjusting at the optimum level, so that preoccupation with the balance of trade is a waste of time. ”

“ When this is the case, if a change were not made in the prices, there would be a perpetually renewed balance to be paid in money. The imports require to be permanently diminished, or the exports to be increased; which can only be accomplished through prices ”

“ Although then the rise in the price of most of our own commodities, would for a time check exportation generally, and might permanently prevent the exportation of a few commodities, it could not materially interfere with foreign trade, and would not place us under any comparative disadvantage as far as regarded competition in foreign markets. ”

“ It is of greater importance to take notice, that these effects may be entirely obviated, if foreign countries can be prevailed upon simultaneously to relax their restrictive systems, so as to create an immediate increase of demand for our exports at the present prices. It is true that exports and imports must, in the end, balance one another, and if we increase our imports, our exports will of necessity increase too. But it is a forced increase, produced by an efflux of money and fall of prices ”

“ Three things, however, are clear;— First, that till the suffocating restrictions were removed, trade could not expand; when exports were prohibited, imports could not be plentiful; when imports were taxed, the demand at enhanced prices could not be great. ”

“ In the case of England and Germany, as well as many other prosperous countries whose foreign-trade sheets show an excess of imports over exports, this excess represents the profit on trading abroad, and the inflow of returns upon capital invested abroad. ”

“ The excess of the value of imports over that of exports, which is regarded by some as an adverse and alarming symptom in British trade, is in large part readily accounted for on the ground of shipping receipts, insurance returns, interest on capital employed in foreign trade, merchants' profits, and the income derived from foreign investments. ”

“ If the magnitudes in the equations of exchange in other countries with which the United States is connected by trade are constant, the ultimate effect on M is to make it less than what it would otherwise have been, by increasing the exports of gold from the United States or reducing the imports. ”