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- Gold. Silver. Total. Exported Bullion, $12,681 $2,591 Specie, 248,190 1,727,995
$260,871 $ 1,730,586 $1,991,457
Balance retained, $15,994,353
Of the quantity and value of gold and silver consumed in the arts and domestic manufacture, it is not easy to arrive at any sufficient data; the amount is, however, greater than would at first be imagined. From personal inquiries, we would mention the weekly consumption of gold by a single manufacturer in New York, as rising $1000. Chapter VI. treats generally of the foreign commerce of the United States, and opens with an examination of the Treasury mode of estimating our imports and exports. This leads to the vexed question “of the balance of trade,”—“which hitherto,” says Mr. P., “has so much puzzled economists as well as others, and is indeed so difficult to solve.” Now in the present state of knowledge this is hardly fair towards his inexperienced readers, still less to darken the matter further as he does, by stating one of these ordinary custom-house puzzles, with the grave question annexed—“Is this balance for or against the United States!” Now we will take the liberty to give as our answer, “neither.” The balance stated as a difficulty is but one of account, and indicates to the United States neither profit nor loss. On this point we recommend to our author the opinion of Whately, late Professor of Political Economy at Oxford, and one of the clearest-headed reasoners of the present day. “The question of the balance of trade,” says he, “has for centuries done more, and perhaps for centuries to come will continue to do more, to retard the improvement of Europe, than all other causes put together.” (Lectures, &c.) But as this seems settling the whole question rather cavalierly, we will explain in few words how this matter strikes us. (1) As a general question, taking in a series of years and all the nations with whom we have commerce, there is no such thing as a permanent balance of trade either for or against the country —it is a mere question of figures and custom-house books. If asked for proof, we refer to the essential principle of all trade, that it is an exchange of equivalents, and consequently that imports and exports must in the long run balance, and as a matter of fact we refer to the present condition of our own country, which through its whole history both colonial and independent has always had this nominal balance of trade against it. It was this fact which first startled Adam Smith, and at length opened his eyes to the true nature of this mystery. (2) As a national question, with any single foreign power, such a balance may unquestionably permanently exist, as it does in fact between this country and England, that balance being made good by our shipments to other countries. But here again we deny the propriety of the terms, and protest against the inference drawn from them, as being “for and against,” “favourable and unfavourable,” the one side of such account being fully as profitable as the other. The proof of this is also conclusive. The merchant, for instance, who ships cotton to France, and sells a bill on London, is making an equal profit, and but an equal profit, with him who imports from England and buys his neighbour's bill to pay for it. (3) Again, as a question of national imports and exports, for a single year there may be and probably always is a balance either one way or the other; but here also we deny any power of drawing an inference either “favourable” or “unfavourable,” since taken in this light it is but a mere question of credit and book account, showing a balance sometimes on the “Dr.” sometimes on the “Cr.” side of the ledger; but whichever way it lie, it is in either case a matter of mutual convenience and common interest, the balance of one year being probably reversed by the operations of the following. And lastly we would add, as the only important view of the question, that while we reject the “balance of trade” when applied to national prosperity, yet to individual interest we not only admit its existence, but maintain it is that upon which in every foreign commercial operation market prices are dependant, and consequently the merchant's profit on the transaction. But then we say, that to arrive at the knowledge of this actual balance, we must look, not at custom house returns, but at the price of bills, that is, at the comparative value of money on the two sides of the Atlantic. Bills of exchange, therefore, and not custom-house returns, are the true barometer of commerce, and they alone teach “the balance of trade,” in any rational and available sense, and that is the balance or comparative amount from week to week between exports and imports, or rather between shipments and orders—thus enabling the merchant to know into which scale he is to throw his weight for profit. Beyond this, we hold “the balance of trade” to be a mere matter of moonshine. Here, however, we must add, that this presumes a sound currency—one in which paper money rests upon so extended a metallic basis as not to be sensibly affected by a moderate shipment of specie. If the first dollar demanded from the Banks is to cause a general panic and diminution of commercial discount, why then we acknowledge the national balance becomes a more ticklish matter, and we must guard it as a man would a sore leg in walking; but still that proves, not that walking is a dangerous operation, but only that the man's leg is diseased and should be cured. The principles adopted by our government in the official returns of the custom-house, are perhaps the best of any commercial nation—certainly superior to those of England. The system, however, has been matured by degrees. Prior to 1821, the value of the exports alone was returned. Of imports, articles paying ad valorem duties, the collectors returned the value—of all others, whether paying a specific duty or free, they returned the quantity. In 1820, the Secretary of the Treasury was directed “annually to prepare statistical accounts of the commerce of the United States with foreign nations, including the kinds, quantity, and value, both of the imports and exports, and also of the navigation employed in foreign trade. The exports to be valued at their cost or real value at the place of exportation; the imports at their cost or worth at the foreign ports, from whence they were exported for importation into the United States.” Of these official returns we are far from undervaluing the importance; we only protest against conclusions occasionally drawn from them by our author, in a matter upon which they do not afford all the data; as, for instance, what (even under our accurate system) becomes of the surplus freight carried by our merchantmen in the direct trade, and the whole proceeds of the carrying trade? Here certainly is an import without a corresponding export. How, too, does the account of our fisheries stand! carrying out nothing and bringing back millions. But we must not again enter on this subject. To those familiar with the present distribution of our foreign commerce, it is curious to compare it with the earliest Treasury report of the year 1792.
Exports to Spain and her dominions, $2,005,907
Imports from the same countries.
The imports of 1833, the last reported by our author, stand thus: Imports, $108,118,311; Exports, $90,140,433—Exhibiting, according to the “balance of trade” reasoners, the alarming amount of debt against us of near eighteen millions of dollars. Of these worthy gentlemen we are sorry still further to increase the fears, by adding that the recent Treasury report of 1834 gives a still more melancholy picture, viz.,
Our increase of imports being $14,101,541; of exports, only $6,655,321. Of the commerce of the port of New York an estimate may be formed from the following items:
1833. 1834. Increase. Imports. $60,944,400 $76,875,365 $15,930,965
Estimated return of year now closing, $100,000,000; giving a further increase of more than $23,000,000.
In the scale of our foreign commerce, that with Great Britain ranks first, both in extent and value. From 1783 this trade was unregulated by treaty, until 1794. The commercial part of that compact expiring by its own limitation in 1804, it again stood without any permanent provision until 3d July, 1815, when an equalization of duties, for which the British government had long been pressing, between the United States and their dominions in Europe, was finally on our part acceded to. The wealth mutually resulting from this good understanding, and the enormous interchange to which it has led of mutual labour, greater unquestionably than the world has ever before seen between two independent nations, must make every lover of his country and of man pray for its long continuance. The dependence created by it is mutual as the benefit is equal, and woe, we say, betide him, who through rashness or ignorance would break that golden bond. Of the sum total of our exports Great Britain and Ireland take about one-third, while of the sum total of our imports they furnish even more than that proportion. We are, in truth, their best customers, as they are ours. Of their manufactured exports, on an } average of the years 1827, 1828, 1829, the United States were the purchasers of one-fifth of their woollen, one-third of their linen, one-fifth of their hardware, (in 1832 of one-half) one-fourth of their silks, and one-tenth of their cotton goods. This last item may from its smallness excite surprise; still more perhaps that we are far from being in cottons her greatest customer. In 1829, Brazil purchased to more than double what we did. Of all the exports of British produce and manufacture, full one-half in value consists in fabrics of cotton, and of that raw material we supply three-fourths of the quantity she consumes.
With the British East Indies we continue to carry on a large but not increasing intercourse. The opening of that trade in 1788 deserves to be recorded to the honour of our rival, for the noble forgetfulness it displayed of past animosities. The ship Chesapeake, one of the first vessels that unfurled the American flag in the Ganges, was exempted by the Supreme Council of Bengal from all government custom; and orders were immediately issued by Lord. Cornwallis, then governor-general, that American vessels should be treated at the Company’s settlements in all respects as the most favoured foreigners. (Macpherson's Annals of Commerce.) Until the law of minimums in 1816, our imports from India consisted principally of low-priced cottons, and since that time of indigo and silks; the account being settled by bills, or paid on the spot in specie. Prior to 1821, the specie not passing through the custom house left the export returns almost a blank, as the adoption of bills is now doing a second time; and yet the trade as to profit is evidently unaffected by it. The entry of specie in 1821 mounted up our exports to India from $200,000 to more than $2,000,000; while the substitution of bills for specie, which commenced as a general system in 1823, as suddenly depressed them from $1,930,376 to $283,052.
As these changes illustrate some of the mysteries of “the balance of trade,” we digress a moment to show their simplicity when fairly stated. Our trade with India and the East generally was long carried on by an export of specie, not, as most persons supi. because there was a peculiar demand for the precious metals,
ut simply because there was nothing else our country could furnish for which there was there any demand. Specie they would take, because they could exchange—cotton, rice, &c., they would not take, having more than enough of their own; therefore, we sent them specie. The cessation again of the shipment of specie and the substitution of bills arose, not as such reasoners think, because India and China had enough of specie—for like other people they would be glad to have more, and as much as they could get—but simply again because their increasing consumption of British goods, especially of woollen cloths and of cottons, after the power loom had enabled the British manufacturer to underbid their neighbours, threw upon the East Indies a debt payable in London, being the surplus of British exports to the East beyond their imports from it. Under these circumstances, bills drawn by us payable in London became to the Calcutta or Canton merchant more acceptable than specie itself; because they paid the very debt for which such merchant would otherwise have to provide by a shipment of specie ten thousand miles off. Therefore it is that we now pay in bills.
There is something beautiful in the simplicity of thus maintaining and equalizing national exchanges by a few slips of commercial