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In the case of dutiable coffee we have an increase of over 15,000,000 pounds, with a corresponding increase in the value, which simply represents a transfer from the free to the dutiable list, through the exercise of the power conferred on the President of the United States by section 3 of the tariff act of 1890 to impose a duty of three cents a pound on coffee imported from any country which, in his judgment, imposes unequal or unreasonable "duties or other exactions" on products of this country.

In the case of India rubber there is an actual increase of 1,571,475 pounds in the quantity; but that is not quite 4 per cent, whereas the increase of $9,467,269 in the value is an increase of 48 per cent. In the fiscal year 1891-192 Brazil supplied us with nearly 64 per cent of the total quantity of India rubber which we imported, and we have already seen, in connection with the figures given in Table XI, how greatly the value of our imports from that country was exaggerated by treating the depreciated paper of Brazil as if it had been worth its par in coin. There is an increase of 17,167,812 pounds in the quantity and $3,691,129 in the value of "tin in bars, blocks, pigs," etc. The fact that under the tariff act of 1890 (Paragraph 209) this article was to become subject to a duty of four cents a pound on the 1st of July, 1893, tended to cause a considerable increase in its importation for some time before that date. The effect of this circumstance became more apparent as the date for the imposition of the new duty approached. A comparison of the imports for the nine months ending March 31, 1893, with those for the corresponding period ending March 31, 1892, shows an increase of only 6,298,135 pounds in the quantity and $1,469,075 in the value; from which it appears that nearly two-thirds of the increase in quantity and over three-fifths of the increase in value for the fiscal year occurred within its closing quarter.

Of the increase of $6,029,987 in the value of imports of iron and steel* and manufactures thereof, the increase in "tin plates, terne plates, and taggers' tin" covers $5,250,078. During the fiscal year ending June 30, 1891, the imports of these articles were extraordinarily heavy in anticipation of the increase of duty which went into effect on the first day of the next fiscal year. Their value amounted to $35,746,920, as against $20,928,150 in the preceding and $12,315,562 in the following fiscal year. The large stock laid in during the year preceding the increase in the duty sufficed to cover a large deficiency in the imports of the year following that event, and even to leave some surplus as a contribution towards the wants of the fiscal year 1892-'93; for while the imports for the year last named were over $5,250,000 greater than those of the year 1891-92, they were over $2,800,000 less than the annual average from 1887-88 to 1889-190, inclusive. Some diminution, as compared with the average for years preceding the increase in duty was, however, to have been expected, as a consequence of that increase.

*Other than ore.

The increase of $4,370,708 in the imports of leaf tobacco was mainly in the grade of leaf suitable for cigar wrappers. It may, perhaps, be regarded as being in part a reaction after the disturbance preceding and immediately following the change in the rate of duty in October, 1890; but it was also probably the effect, in greater or less degree, of conditions connected with the domestic supply of this grade of tobacco. The increase of nearly $1,500,000 in unmanufactured cotton is only a continuation of an upward movement which has been in progress for a number of years, and which is attributed to the increased use of a long staple foreign cotton that to some extent serves as a substitute for sea island cotton of native growth.

The increase of $2,139,246 in the imports of lead and manufactures thereof is in great part due to the inclusion in the figures for the fiscal year recently closed of the value of lead found in silver ore, which had not previously been included. The imports of such lead at four points along the Mexican frontier amounted during the fiscal year in question to $1,144,455.

Some part of our importation during the last fiscal year may, no doubt, be regarded as a consequence of our enormous exportation in 1891-292, since in international trade a considerable interval may elapse between the shipment of values abroad and the importation of the values received in exchange.

We have seen, however, that when allowance is made for the overvaluation of imports resulting from the reduction of depreciated foreign paper money, the adverse balance* in our account with foreign countries in respect to merchandise is reduced by $75,000,000, leaving it less than $19,000,000 instead of nearly $94,000,000, as originally reported.

OUR LARGE GOLD EXPORTS.

This adverse balance in our merchandise account for 1892-'93 has been cited as a reason for the magnitude of our exports of gold during the same fiscal year (see Table I); but its insignificant amount, now that it has been reduced to its true proportions by the correction just

*While the phrase "adverse balance" is convenient as a brief conventional designation for an excess of imports over exports in our merchandise account, its use must not be understood as an indorsement of the notion-a survival from the defunct mercantile theory-that such a balance is necessarily to the disadvantage of the country in whose trade it appears. Producing the precious metals as largely as we do, it is natural that in the long run we should export considerably more than we import of these metals, and unless the excess is balanced by claims against us for interest or dividends on foreign capital, or by services rendered to us by foreigners, as in the transportation of freight and passengers by sea, or by services or values in other forms received by Americans while abroad, its existence implies that, in the long run, the balance in the merchandise account must be on the opposite side-that is, that in this part of our foreign trade the imports should exceed the exports. Whether the excess, on the side of imports in the case of merchandise or of exports in the case of gold and silver, is at any given time within normal limits is a question to be determined by due consideration of the conditions affecting the particular case.

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noted,* makes it apparent that the unusually large exportation of gold must have been due to some other cause or causes.

Many of the opinions expressed in regard to the movement of the precious metals in international trade seem to imply a belief that this movement is entirely dependent on the movement of merchandise. The assumption seems to be made that, if our exports of the precious metals exceed our imports of them, it must be because our imports exceed our exports in respect to merchandise, and rice versa. There is, no doubt, in the long run, an interdependence between the movement of merchandise and that of gold and silver; but that is a very different thing from invariable dependence of the latter upon the former. It has been shown in an earlier part of this article that in the fiscal year 1891-292 there were special causes, such as our abundant harvest in 1891 and the scanty crops of Europe the same year, which operated directly on the movement of merchandise; and so also it might be shown that within the last few years there have been other causes which operated just as directly on the movement of the precious metals; and as this latter movement must have been affected indirectly by the former class of causes, so must the former movement have been affected indirectly by the latter class. Indeed, in international trade, the precious metals are merchandise in their essential economie quality; for the legal-tender laws of the different nations are inoperative outside of their respective limits, and their coins are valued against each other grain for grain, or gram for gram of the pure metal which they respectively contain. All the goods exchanged, gold and silver as well as others, are exchanged under the same law of supply and demand; and each article, whether it be gold, wheat, or what not, tends to go where the effective demand for it is at the time the strongest, or in other words, where its value is at the moment highest.

It is obvious that the adoption of a single gold standard by one nation after another which had previously used a silver or bimetallic one, and the preparations for its adoption now in progress in nations still nominally on a silver basis, have caused an extraordinary and ever increasing demand for gold in the world at large; and it is equally obvious that our increasing issues of money which is legally a substitute for gold had a tendency to reduce the demand for that metal in our own country. Under these circumstances it was natural that gold should be exported from the United States in unusual

*It is not unlikely that the overvaluation of imports amounted to considerably more than the $75,000,000, at which it is conservatively estimated by the Chief of the Bureau of Statistics.

It is true that American silver dollars casually taken to Europe by travelers and accumulated in the hands of brokers would have a greater value than so much silver in the form of bullion, because by sending them to the United States more could be obtained for them; but foreigners would have no motive for importing them at more than their bullion value, because the only way in which to obtain more than that value for them would be to send them back.

quantities, as, in fact, it has been. The excess of exports over imports during the last fiscal year was larger than that for any other fiscal year, with the single exception of 1863–264. That was the year which witnessed the culminating struggles of the war, and it was one which made unprecedented drafts on our national resources; and yet our net export* of gold for that year was only 24 per cent greater than that for the fiscal year recently closed. So also, if we take the last five fiscal years, we find that only in one other period of that length, namely the five years extending from July 1, 1863, to June 30, 1868, have our net exports of gold been larger. Their total amount during the five-year period ending on the 30th of last June was $210,130,999, forming an average of $42,026,200 per annum, or a sufficient sum to take the entire product of our gold mines and over one-fourth as much more drawn out of our preëxisting stock;† this, too, in spite of the fact that in one of these years, namely, the fiscal year 1891-92, the outflow of gold was temporarily checked by the powerful counteracting influence of an enormous foreign demand for the abundant supplies of breadstuffs then at our disposal.

ABSENCE OF ADVERSE BALANCES IN MERCHANDISE.

Nor can it be said that, taking the period as a whole, this heavy drain of gold from our shores was due to adverse balances as regards our imports and exports of merchandise; for in each great division of our trade-gold, silver, and merchandise-the exports for this five-year period (July 1, 1888, to June 30, 1893) largely exceeded the imports. The aggregate excess on our total trade, as shown by the corrected official figures, was somewhat more than $566,000,000; and it is not unlikely that an adequate allowance for the overvaluation of imports under the customs regulation of February 13, 1892, would so reduce the figures on importation as to increase this excess to $600,000,000 or

even more.

This can, no doubt, be in great part accounted for by the interest, dividends, freights, and other sums paid to foreigners-sums which are represented in our exports by merchandise or treasure, and against which there is no equivalent in our imports. But it has been a matter

*

The excess of the exports over the imports.

† Allowing an average of about $14,000,000 per annum as the value of the gold consumed in the arts during this period, the reduction in our stock of monetary gold within the last five years is about $115,000,000; to which, however, gold brought into the country by immigrants forms, at least, a partial offset.

We have seen that the imports during the three months from April 1 to June 30, 1892, must have been considerably overvalued and that their overvaluation has not been allowed for by any correction of the official figures for the fiscal year 1891-'92; and it has also been pointed out that, of the $75,000,000 allowed by the Bureau of Statistics for the overvaluation of imports during the last fiscal year, by far the larger part is required to correct the overvaluation of the coffee and India rubber received from a single country.

of common remark that within recent years, and especially within the last fiscal year, American securities held abroad were returned in considerable amounts to be sold in our own markets; and the excess of exports over imports in our total trade for the last five years would seem to have been large enough to leave a margin for which such a return of our securities would offer the most reasonable explanation. And, indeed, this would be only what might have been expected under the circumstances existing at the time, since it was natural that foreign investors, if doubtful of our ability to keep our large and growing mass of silver, and of paper based on silver, at par with gold, should wish to realize on their holdings while the proceeds could still be converted into gold without paying a premium.

But even had foreigners had none of our securities to return, the demand for gold abroad, under the conditions already pointed out, must have been so much larger and more urgent than the demand at home as to make it reasonably certain that our exports of that metal would, on the whole, largely exceed our imports. The more our currency was reënforced with silver, and with paper based on silver, the smaller was the quantity of gold for which there was room in our circulation without such an increase in its volume as would disturb the equilibrium of prices by making their general level-after allowing for costs of transportation-higher in this country than abroad,* which is only another expression for making the value of money lower here than there and so offering a virtual premium on its exportation. This remark, however, applies only to that portion of our money which retains its full purchasing power after exportation, and in the present state of monetary affairs this is the case only with gold. Silver is, of course, exported, and the exports steadily exceed the imports, but only to the extent corresponding to the ordinary commercial demand; whereas the exportation of gold within the last few years has undoubtedly been much increased as a result of the conditions above described.

Within the last few months the outward flow of this metal has met with another check. In June last the excess of exports over imports was only $1,701,544, and after the beginning of the present fiscal year-especially during the month of August-there was a large excess of imports; but this change occurred under conditions which made the excess of imports as striking an illustration of the connection between the gold movement and the state of the currency as was furnished by the previous excess of exports. A general feeling of apprebension and distrust caused an enormous curtailment of credit and a withdrawal of money from the channels of trade, amounting practi cally to a tremendous contraction of the currency. The great shrinkage in prices which naturally followed was tantamount to a corresponding increase in the value of gold in this country, and a condition thus

*Even though prices were falling in this country, providing only that they fell less than abroad, this disturbance of equilibrium might take place.

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