Our Foreign Trade And Free Trade
( Originally Published Early 1900's )
IF anything were wanting to illustrate the great advantages of protective tariff legislation over that for "revenue only," which failed sadly in affording sufficient revenue, - the history of the United States commerce for the fiscal year ending June 30, 1898, would amply supply that evidence. The exports of merchandise for this period amounted to $1,231,311,868. This exceeded the exports of the previous fiscal year by $I80,318,312, and the exports of 1892 by $201,000,000. The excess of exports over imports, or the balance of trade in our favor, amounted to $615,259,024, or more than twice the amount ever before recorded in our commercial history. In the fiscal year in question we sold about two dollars' worth for every dollar's worth we bought, and our growing prosperity is manifested very clearly through this operation. According to the ideas of free-traders of the Cobden Club, such a balance in our favor would indicate that the country was on the way to national ruin; but it is difficult to understand this theory, so far as we are concerned, when the contrary reasoning gives us such a large balance on the other side of the ocean, and makes us to this extent a creditor nation. Such a financial position can hardly be regarded as a sign of national decay. Our wealth increases as our imports diminish, which is in direct contravention of the arithmetic of the Cobden Club. The total imports for the fiscal year amount to only $616,052,844, against $764,730,412 for the previous year. Our merchandise imports were the smallest since 1885. They fell $148,677,568 short of the aggregate for 1897, and $250,000,000 below that of 1893. It has been computed by expert statisticians, one of whom is Bradstreet's, that the centennial year of 1876 was the turning point when the balance began in our favor. Prior to that time, during eighty-five years from 1791, the balance had been generally against us, the aggregate excess of imports over exports for the period having amounted to no less than $2,215,404,610. During the twenty-three years since the centennial year the aggregate excess of exports over imports had been $3,191,268,300, or an amount greater by $510,620,431 than our national debt at the close of the Civil War, in 1865. It is worthy of note that during the latter period, which shows such a large balance in our favor, the advocates of a protective tariff have been always gaining ground, with the exception of an occasional repulse from which they soon recovered, until they achieved a final triumph in the passage of the Dingley Bill. If free-traders had had their own way during the past twenty three years, this immense balance of more than $3,000,000,000, about three fourths as much as all the gold above ground at present, and more than one fourth as much as the money of every description now existing, instead of having been spent in this country, would have gone to be spent in other countries, thus enriching them at our expense. If we had only had protection enough to retain those two odd billions which we lost through free trade in the first period of eighty-five years, we would now have, by actual trade calculation, about half the amount of all the money in the world. Though the fiscal year ending June 30, I898, was the most prosperous in the history of our commerce, and of our financial relations with other nations, the proportion of our agricultural exports was not so large as in some former years. They were only 71 per cent. of the total, whereas in r894 they were 72; in 1893 they were 74; in 1892 they were 78; in i88i they were 82; and in I880 they exceeded 83. The exports of our manufactured goods, however, far more than made up the deficiency. They amounted to almost the unprecedented sum of $300,000,000, whereas they never before this time rose to more than $100,000,000. The increase in the total exports of merchandise for the previous ten years amounts to nearly 100 per cent.; and yet some people, and among them many who were born here, pretend to think that this country has been decreasing in prosperity, and that it has seen its best days. These exports of our manufactures, under a protective tariff, have been made to all parts of the globe, thus showing that, in order to extend our markets for manufactured articles, a free-trade policy on the part of our government is not absolutely necessary. The free-trade assumption has never been so practically answered as by the figures above quoted. It will be remembered that after the passage of the Dingley Bill there was some disquieting talk in free-trade circles regarding the way our trade was going to be menaced by retaliation instead of reciprocity, especially by Germany, France, and Great Britain. The first, however, showed her spirit of retaliation in a friendly and appreciative manner by increasing her bill of goods from $50,000,000 in 1897 to $150,000,000 in 1898; the second by increasing hers from $40,000,000 to $50,000,000; and the third, our greatest competitor, by increasing hers from $362,000,000 to $540,000,000. Even Darkest Africa made an increase from $3,000,000 to $17,000,000. Japan increased her order from $4,000,000 to $2,000,000, and China her quota from $4,500,000 to $5,500,000 while Austro-Hungary, which had taken only $500,000, in 1897-98 raised her demand to $5,000,000. Belgium rose from $10,000,000 to $47,000,000, Denmark from $3,000,000 to $12,000,000, and the Netherlands jumped from $16,ooo,ooo to $65,000,000. There is nothing more agreeable in reviewing the list of these increases than to reflect upon the curious action of Great Britain, who had been preparing to wreak her retaliative vengeance upon us, on account of the tariff laws. Instead of pursuing this inimical policy, she turned around, and, in a truly Christian spirit, even before the sun had gone down upon her wrath, nearly doubled her former large order. Such enemies in commerce are our truest friends. Another large item of prosperity is shown in the commercial status of gold. The excess of imports in that precious article came within $51,000 of being $100,000,000, and if we count $5,000,000 of gold ore, an addition of $105,000,000 will appear to our balance of trade credit. When to this amount $60,000,000 from our gold mines is added, we need have no dread of gold shipments, which have so frequently been the scare of the stock market, and have often created a nervous feeling in financial circles generally. Now, we may safely arrive at the conclusion that in order to increase our prosperity further our importations may be limited very considerably. The most important of these is gold, and the others are classified in that part of the tariff schedule which includes all articles of necessity which we do not manufacture ourselves, most of which are on the free list. The wealthy are also free to enjoy the foreign luxuries that they may fancy by paying the tariff, though that is in every instance so much loss to our own country. There is no law against bestowing benefits and free gifts personally upon foreigners, and this may be looked upon to some extent as reciprocity. We owe some of our great institutions of learning to the free gifts of foreigners, but though we may owe them much, yet we would be overpaying our indebtedness to make a present of our industries to them, the greatest source of our wealth and increasing prosperity. It is superfluous to multiply arguments on the national wisdom of the policy of protection. The foregoing figures, demonstrating our great prosperity as the result of that policy are sufficient, and this report of our foreign trade by the Bureau of Statistics amply justifies the policy of a tariff for the protection of our industries, artisans, and laborers, as well as for government revenue, and not for revenue only. Statistics of our foreign trade in the fiscal year ending June 30, 1899, show a favorable balance of trade, not so large as in the former year, but still very considerable. In compensation for the large increase in our imports of merchandise, our exports of manufactured articles show an increase of $50,000,000 We may also study how raw material contributes to this end, and compare the commercial standing of other nations of the world with our own; we may also reflect upon our last decade's surplus prosperity, our great pelagic expansion and its wonderful possibilities, our commercial relations to other nations, and what those nations think of us in these respects. The addendum to this chapter will bring up the statistical position of our foreign trade to the end of the fiscal year ending June 30. It is worthy of note that, in the calculation of this question of foreign trade, we have the advantage of most other nations in our large possession of raw material to be worked up, as well as the material which furnishes the power for such working. Germany, for example, one of the most enterprising of our manufacturing competitors, has to import very large quantities of her raw material and a considerable part of her coal. If, in this comparison of the increase of our manufactures with those of other nations, we should take ten years instead of two, the increase for that period would probably exceed 100 per cent., perhaps 110 or more. The problem of our foreign trade would become still more interesting, and would place us in a position where, by a kind of inevitable destiny, we should become the general absorber of all the surplus business in the world, and that without any extraordinary ambition or aspirations on our part to attain the distinguished honor, but by necessity of our position. Meanwhile we are now actually doing, through the medium of a protective tariff, paradoxical as it may seem, what our free-trade friends have long been insisting that we should do under their tutelage, - capturing the world's markets in defiance of cheaper labor throughout the rest of the globe. Those ancient centers of commercial power would have stood aghast at the idea of such an achievement. Who knows but that in the future we may become not only the center of financial power and attraction, but the peaceful arbitrator of political and universal harmony among the nations, when peace conventions shall take rank as historic curiosities in the annals of a fully developed Republic of the World? In the language of Tennyson: - " Not in vain the distance beacons. Forward, forward let us range. Let the great world spin forever down the ringing grooves of change. Thro' the shadow of the globe we sweep into the younger day; Better fifty years of Europe than a cycle of Cathay." Let us improve, if possible, in our prosaic way on the Tennysonian sentiment, by taking for the periodic times of our evolution, ten years each of America, instead of fifty years of Europe or a cycle of China. The result of this retrospect of a decade shows, as I have just stated, that our increase in foreign trade has exceeded 100 per cent. How has it been during the same period with other great commercial nations? We will take the greatest of these, the British, for the purpose of comparison. Let us hear what Lord Farrar has to say upon the subject. At a recent meeting of the British Iron Trade Association, this eminent authority, speaking on the famous subject of the "open door" in commerce, said: - " The gist of the case put before me is that, while the exports of the iron and steel manufactures of Great Britain are still very large, and indeed larger than those of any other country, their proportion to similar industries in other countries, especially Belgium, Germany, and the United States, is much less than it was; that there is a large and increasing import of foreign iron and steel into the United Kingdom, and that foreign countries are rivaling us in neutral markets. From these facts it is suggested that this important branch of our industry may be in danger from foreign competition; and it is whispered, rather than suggested, that we may have to depart from the policy of the 'open door' and exclude foreign iron and steel goods by different duties." Now, while this is a thoughtful expression of a most intelligent representative of one of the most favored nations in commerce, some of our free-trade journals are attempting to prove that a nation becomes wealthier in proportion to the continued increase of its imports as compared with its exports. Let us see what that great authority of John Bull, the London Iron and Coal Trades' Review, has to say on the subject. "In I876 Great Britain was exporting to the United States from 500,000 to 1,000,000 tons of iron and steel annually, and probably the last thing that troubled our manufacturers at that time was the reflection that the United States could ever manufacture those commodities so cheaply as to be able to compete against themselves in Europe markets. But the times change. We have lived to see the day when it is not the getting into American markets, but the keeping of Americans out of our own, that is the chief source of anxiety." Now, amid a host of general conclusions that might be drawn from the premises and considerations herein enumerated, several are clearly evident; one is that our country, at the end of the century, exhibits the greatest developments in all history, and, again, that our own progress has been a thousand times greater in all respects than that of any other nation either ancient or modern. Who can venture to predict what our millennium will be? It is true, this comparison savors of self-glorification, but it seems thoroughly warranted by events, as well as by what little we can divine of future prospects.