The Board Of Trade Returns

The condition of trade may be deciphered in various ways.

The Board of Trade Returns of the extent and values of exports and imports present the magnitude and vigour or the restriction and inactivity of our commerce in their larger or lessened totals. A prominent index is thus gained to the prosperity or adversity of the nation as a whole.

The Board of Trade statistics must be considered in respect of totals as well as values.

In examining these statistics for guidance as to the commercial condition of the country, it is necessary to regard the quantities of goods, and not simply their values, since the import of a particular commodity may be greater in bulk at one time than another, but its value may be less, or, in other words, the articles have been bought at a diminished cost. Or the quantity imported may be smaller but has entailed an increased price. We may be importing or receiving a more augmented supply than usual of raw materials for conversion into finished products in our manufactories, for exportation or sale in turn, and the significance is that our industries, power of consumption, labour, wages, the more extended employment of capital, and the profits upon capital are in vigorous and hopeful exercise.

The Perplexity Arising From The Excess Of Imports Over Exports

But the fact that we import or buy a larger volume and value of goods than the quantity and price of those which in exchange we export or sell forms a constant perplexity to many minds. If the purchases of the nation always exceed its sales in value, the nation, it is often alleged, must be constantly incurring debt and pursuing the path to financial embarrassment and even bankruptcy. If a tradesman who makes shoes sells them to other tradesmen in exchange for food, clothes, and other forms of necessity and comfort, we can see that through the instrumentality of money he is really bargaining (or exporting) shoes for these different commodities (or imports) which he receives. Similarly with a nation: the payment for the imports it needs and procures is settled, not in cash, but in the exports of goods to other countries of, on the whole, an equivalent value. The two exchanges should therefore be approximately equated. But when the amount of purchases surpasses the amount of sales, surely, argues the bewildered critic, an accumulating debt is being incurred whose settlement, when it arrives, must strain the national resources!

The Excess Of Imports Over Exports Has Existed For Prolonged Periods

The fact that, notwithstanding this continuous excess of imports over prolonged periods, we are still prosperously existent and full of enterprise, with unrivalled means to support our efforts, should in itself furnish an ample and conclusive reply.

Britain The Largest Carrying Nation In The World

But the simple explanation will be more effective upon the troubled and untutored mind. England is the largest carrying nation which history has ever known, and its vessels form the principal mode of sea-conveyance for the goods of other countries, not simply to England, but to every port the globe possesses. Hence we earn a very substantial sum in freight (or cost of conveyance) for this predominant and international service. To this annual total we must add the very considerable amounts received by our shipping-merchants, agents, and banks for the acceptance of foreign bills, in the form of commission, brokerage and charges, which constitute an appreciable and continuously recurring debt owing to this country by foreign lands.

British Investments Abroad

The people of England, further, have invested enormous sums in the purchase of the securities of foreign countries, and the interest upon the capital thus employed is in constant course of payment to the holders here. All these debts are not paid in gold - for this device would prove too cumbrous and costly - but in goods (or imports) whose proceeds discharge this annual aggregate indebtedness in money. Thus the registered imports are necessarily, on these accounts, considerably in excess of the actual and visible exports. But the balance is maintained.

This can readily be shown. It might first be mentioned as a fact to be remembered when minutely examining the Board of Trade statistics, that the Imports are entered as to value with the addition of the charges for their shipment to our ports; but the Exports are recorded without the inclusion of similar charges. Hence in any detailed inquiry the Exports must be increased by the earnings of British shipping engaged in the commerce. Moreover, some items are omitted in the Returns from both sides of the account; such, for example, as the Exports of ships themselves which have been largely manufactured by this country and sold to foreigners. But we leave out these minor points and adopt a broad view. If the actual Exports recorded in the Returns be represented by £x, and the total Imports by £x + y, the National Commercial Balance Sheet would be thus expressed: -

It is thus observed that the "y" portion of the amount which we pay for imports is simply the total of the sums which we receive from different countries for the kinds of remuneration mentioned, and the interest upon our capital invested abroad. This balance-sheet is not a fanciful picture or surmise: skilled investigators have from time to time (each confirming the other) made close estimates of the amounts which the country receives for shipping and other services, and for interest upon our foreign securities; and although, of course, in so difficult and intricate a question an equality of the account cannot be established to a pound, the figures are sufficiently exact to prove that when all items are taken into consideration the two sides of the balance-sheet very approximately agree.