Belford's Magazine, Vol 2, December 1888

This election has settled the fact that no public man can raise his hand or voice against the moneyed interests above enumerated and remain in public life. Had President Cleveland been content with the mere routine of office; had he, in addition, used the offices under him as a reward for personal services; he would have stood a good chance of re-election. He is not of that sort; and when he sought to reduce taxation on the poor man's clothes and blankets he aroused the wrath of the great national combine, and his fate was sealed.

There is not a man of average intellect in the whole length and breadth of the continent but knows that our elections are mere questions of money. From the first move of the Republican party to the last, there was nothing but assessments and expenditures in this direction. Senator Ingalls struck the key-note when he advised the selection as a candidate for Vice-President of "some fellow like Phelps, who could tap Wall Street." Senator Plumb continued the cry when he called for a squeeze of the fat manufacturers, the only class, he said, benefited by the tariff; and he added truthfully, that if he had his way he would put them on a gridiron and fry the fat out of them. This was unblushingly embodied in a printed circular. Colonel Dudley followed, in his advice to State committees to schedule the floaters and buy them by the half-dozen, assuring the instructed that means would not be wanting to carry on the corruption. What this corruption was, one word tells with more emphasis than volumes. That word is Blaine. He nominated that figure-head Harrison, and planned and openly carried on the campaign of abomination to the end.

It would be a waste of space and ink for us to recapitulate the career and character of this man. The platform which he has built under himself and which has been accepted by his party is a pillory of public contempt and condemnation. Perhaps the eloquent Governor Stevenson, himself a Republican, put it all in one sentence when he said of James G. Blaine, as presiding officer of the House, that "more property passed under the gavel of the Speaker than was knocked down by all the auctioneers' hammers of the United States."

We waste much valuable indignation in denouncing individual wrongdoers instead of attacking the system that makes such criminals possible. In no other civilized community on earth than ours would such a man as James G. Blaine be tolerated for a day. The Ingallses, Plumbs, Dudleys, and that sort are leaders only under the great Republic.

We are defeated and well-nigh disheartened. We have to remember, however, that the war is on, and that it is a campaign and not a battle. We must suffer many defeats, and we hope to enjoy many triumphs. Our people are patient under abuse, but they are intelligent, and when once aroused to a knowledge of not only their wrongs, but the source of such wrong-doing, are terrible in their wrath. The hour seems dark, but it may be the hour before dawn. We remember the millions that in casting their votes were counted for free trade and all reform. Aided by the suffering that comes of abuse we will yet win.

In all the gloom of disaster and defeat it is a comfort to know that our President stands higher in his loss of office than the incoming nonentity in his success. He leaves the Executive Mansion with the respect of a people, and will go down to history as the one President who dared offend his own party in the high discharge of his great office. The intellect and honesty of the land follow him in admiration to his retirement. No cause is wholly lost that is supported by such a statesman and such a following.

THE BALANCE OF TRADE

There is no phrase in our political discussions so little understood and so generally employed as the above. Its use and abuse serve to illustrate the strange ignorance of political leaders and pretentious journalists. When a Senator at Washington, of the length and solemnity of the Hon. John Sherman, lifts a warning voice while calling attention to the "balance of trade" against us in our trade with the Canadas, we are enabled to measure the density of the fog-bank called the Senate, and why it is that fog-horns have taken the place of the persuasive oratory that awoke musical echoes in the days of Webster.

As we reserve a corner of our magazine to the better instruction of Senators in political economy ($2.50 per year, invariably in advance: now is the time to subscribe), we requested our accomplished friend John McClung to put in brief a clear, concise, and correct definition of the phrase "balance of trade." We begged our able contributor to treat the subject as if he were preparing a lesson for the use of schools – say children of tender years – so that our Solons at the national capital might comprehend without too great a strain upon their Senatorial brains.

Here is Mr. McClung's effort at instruction, and we commend it to our law-makers and the gentlemen of the journalistic pen as an easy lesson on a subject that it is not of any great credit to comprehend, but utterly disgraceful to be ignorant of.

THE SO-CALLED "BALANCE OF TRADE."

That it is good for a country to have its exports exceed its imports is a notion that has been widely accepted among us. We have usually been in that position, and the fact has been accepted as proof that we were doing well under a policy of protection. England, on the other hand, has had an excess of imports over exports, and England is free trade; the English excess of imports has been accepted as proof of the mistaken nature of a free-trade policy.

The idea that it is a good thing to have the imports less than the exports, to have the balance of trade "in your favor," as the phrase goes, is a relic of that "Mercantile Theory" overturned by Adam Smith. That theory was briefly, that wealth consists in the precious metals, and that for a country to remain wealthy, it is necessary to keep bullion from going out of the country. It followed from this principle that everything should be done to discourage imports, for it was thought that imports must, of course, be paid for by bullion. Modern political science teaches that wealth does not consist in gold and silver, but that these are commodities, like any other commodities, except that they happen to possess a special fitness to be a medium of exchange. It discards the old notion that imports are paid for by specie, and asserts that they are paid for by commodities. It teaches that it is not a bad thing to have the imports exceed the exports, that this excess is not "unfavorable," and that in fact there is no such thing as "a balance of trade." The old "Mercantile Theory," with its corollaries, has indeed long been abandoned, but many people still consider it matter to congratulate ourselves upon that our exports exceed our imports.

It is Bastiat who has given the most lively account of this subject. He complains in an amusing manner that the doctrine of the "balance of trade" should exhibit such practical vitality, when it is admitted that it has so long been theoretically dead. He observes that the protectionists are perfectly willing to leave him the victory in books, provided always that their idea is paramount in practice. He finds but one man, Lestiboudois, who has the courage of his convictions, and who says that, because France imports 200,000,000 francs' worth of goods a year more than she exports, she is that much in debt to foreign countries. Others are not so candid; they accept the free-trade principle, but their conclusion is protection. Bastiat is not content with obtaining the theoretical victory, but wishes to meet his opponent in the domain of business. He undertakes to prove from the books of his friend, Mr. T. of Havre, that the idea of a "balance of trade" is wrong in practice, and to this end gives sketches of two of this gentleman's enterprises.

In one of these transactions Mr. T. despatches from Havre a vessel freighted for the United States with French merchandise valued at 200,000 francs. It was at this figure that Mr. T. entered his export in the Havre custom-house. The cargo on its arrival in New Orleans had paid ten per cent expenses, and was charged thirty per cent duties. Its value was accordingly 280,000 francs. It was sold at 20 per cent profit on its original value; this, being 40,000 francs, brought the value of the cargo to 320,000 francs. This sum the assignee converted into cotton; the cotton had to pay expense of transportation, insurance, commission, etc., of 10 per cent. The return cargo, therefore, on arriving at Havre was worth 352,000 francs. This cargo Mr. T. sold at a profit of 20 per cent and made 70,000 francs. The cotton was thus sold for 432,000 francs. Bastiat offers to send the protectionist author an extract from Mr. T.'s books in which he sets down as gained two sums: one of 40,000 francs, the other of 70,000 francs. Bastiat adds that Mr. T. is perfectly convinced that he made this money. Mr. Lestiboudois, however, would have found at the custom-house that France had an export of 200,000 francs and imported 352,000 francs, and would have concluded that she had squandered on foreign nations 152,000 francs.

About the same time Mr. T. despatched another vessel, freighted also with a cargo worth 200,000 francs. But this vessel went down and never reached New Orleans at all. Mr. Lestiboudois would find at the custom-house that 200,000 francs' worth of goods had been exported, and that there was no importation to balance this entry. France has therefore in this transaction a clear profit of 200,000 francs.

So much for his friend T. Mr. T.'s case, Bastiat continues, is exactly that of the French nation. If France imports more than she exports, she does not lose the excess any more than Mr. T. did. Bastiat invites his opponents to carry his theory to its farthest limits. Let it be supposed that France only imports and does not export at all; in other words, gets everything for nothing: he still defies them to prove that France would be the poorer.

It was that very able and convincing writer, Augustus Mongredien, who showed, perhaps more clearly than anyone else, in his treatise on free trade, that where a country imports more than she exports, it is impossible that the excess should be paid in specie. Debts owed by one country to another can be paid to but a limited extent in specie. The French indemnity was paid largely in commodities. So have been paid the great sums of money which England has from time to time lent foreign countries. The French indemnity was paid largely in bills of exchange. The excess of imports over exports must be paid by commodities, for there is no other way in which to pay it. This excess in England is yearly, we will say, £70,000,000. It is out of the question that such a sum can be paid in specie, for there is not the specie to be had. The amount of specie in a country never exceeds to any considerable extent what is necessary for circulation. It is impossible that a country can retain an amount of specie much greater than that. The specie which remains after the demands of circulation have been satisfied lowers interest and raises prices, and attracts merchandise from without; it thus very quickly finds its way abroad. On the other hand, when specie is sent abroad to such an extent as to trench upon the requirements of circulation, this raises interest and lowers prices; the specie is thus quickly recalled. The action of the Bank of England familiarly illustrates this law. When it is wanted to attract gold, the rate of interest is raised and the gold quickly appears; when there is too much gold, the interest falls and the gold quickly disappears. It takes only a small sum, say £4,000,000, to produce this effect. How then is it possible that a yearly excess of £70,000,000 could be paid in specie? The payment of such balances for two years would take out of the country not only all the coin, but all the gold cups and silver pencil-cases and earrings it contains. It is computed that all the circulation, taken together with the articles of ornament and utility in Great Britain, the plate, watches, and trinkets, barely comes to £140,000,000. And yet at the end of a long period, in which there has been a steady yearly excess of imports over exports, the country still has plenty of money.

If this excess is not paid for in specie, neither is it obtained on credit. Merchants nowadays do not give and take the long credits that were formerly the custom. There are certain imports, indeed, that are paid for before the goods come to hand. A cargo of wheat from California, for instance, takes from four to five months to reach England. But it is paid for by drafts on England at 60 days sight, which, sent forward by rail and steam, mature a month or more before the arrival of the wheat in England. It is probable, indeed, that the whole excess is paid for before it is received. The excess is certainly not a debt owed by England; it is rather the payment of a debt owed to England. It is sent in payment of interest and dividends on English money invested abroad.

Mongredien shows that so far from its being an indication of debt when the imports of a country exceed the exports, it is an indication of wealth. Such a condition is a matter for congratulation. But many people still cling to the early notion. While all are agreed that foreign commerce is a good thing, and while the world is unanimous in thinking that it is well to have the exports as large as possible, many people still cherish a dislike to large imports. It is forgotten that you must have imports to pay for the exports, and that, if you limit the imports, you of necessity limit the exports. The exports must be paid for by importing commodities and not by importing specie. The case has been supposed of a protectionist Paradise, in which goods only were exported and nothing but bullion received in return. Would a country be richer for such a state of things? It would certainly not be richer, for there would be an over supply of bullion, and it would fall in value in comparison with other commodities. The workingman might receive twice his former wages, but he would have to pay twice as much for everything he consumed. Indeed, prices would rise much more rapidly than he could induce his employers, by remonstrances and by strikes, to raise his wages. Bullion would thus become very cheap. It would be worth about half its price in foreign countries. The result would therefore be that those holding it would send it abroad. But it would of course be sold for goods, since the only other thing for which they could exchange it would be bullion. The country would at once cease to receive nothing but bullion. There would be great exports of bullion and great imports of goods. Protected interests would be ruined, and everything would be upside down, until the superfluous bullion would be worked off. Of course a country which imported nothing but bullion and exported nothing but goods would be impossible, since no prohibitory measures can prevent the transfer of specie from the country in which it was worth less to that in which it is worth more. But the hypothesis may serve to show that such a condition of things would be productive, not of good, but of harm.

The volume of "Commerce and Navigation" for 1877 shows that our total exports for that year were $703,022,923, while our total imports were $692,319,768. The countries to which we exported more than we received from them were England, Belgium, Holland, Spain, Peru, etc., while the countries to which we exported less than we received from them were Brazil, Germany, France, Switzerland, Mexico, Cuba, Japan, Venezuela, Roumania, etc. It does not appear that the countries having the balance of trade "in their favor" as regards ourselves are more fortunately situated than we. It will be seen that, regarding our whole foreign commerce, the balance "in our favor" is something like $10,000,000. These figures, it may be remarked, are by no means exhaustive and exact. The freight is largely carried in British vessels, and this great sum goes to England. Large sums are sent out from this country to Americans living in Europe. These people, of whom there are many thousands, must live, and they live upon money sent out from here. Then no account is taken of the great quantities of stuff brought to this country by travelling Americans. These are, of course, not put down among our imports. The returns of the United States and England are no doubt more exact than those of other countries. Before 1854 the value of the imports of England was given in the official valuation, supposed to represent the prices of different articles in 1699, but of course having no kind of relation to their recent value. From 1854 to 1871 the value of imports was estimated upon the average prices of goods as reported by the brokers and the various Chambers of Commerce. Since 1871 it has been the habit to trust completely to the values as given by the merchants themselves. The exports from the beginning of the century have been reckoned upon the values entered by the exporters at the custom-house. The returns of imports and exports are of course less trustworthy in other European countries than in England. It is far easier to smuggle across a frontier than to smuggle in ships, and it is difficult for governments to watch the traffic of railways. It does not appear that there is much to be learned from an examination of the custom-house returns of Continental countries.

Of course few persons could now be found to defend the ancient superstitions of the "Mercantile Theory." But there yet remain among us many who have a dislike to large imports, and who think an excess of exports a fortunate condition and one which furnishes evidence of the advantage of a protective policy. The considerations set forth in this paper, which have been more elaborately represented in the writings of Bastiat, Mongredien, and Leone Levi, show clearly that an excess of imports is not paid for in specie, but in goods; that it does not represent a debt owed by the country, but the payment of a debt to it; that instead of being a bad condition, it is a good one, because it is good both for individuals and for countries that debts owing to them should be paid; and that in fact there is no such thing as the once famous "balance of trade."

A PLEA FOR THE PARENT

It is somewhat strange that while our social structure trembles with affright at the bare mention of communism, one of the most popular institutions in our midst is as pure an instance of communism as ever human ingenuity devised. We refer to our common-school system. It was invented not only to give the State control of the children, but so arranged, the authors thought and its supporters teach, to force the rich through taxation to educate the children of the poor.

To put it in a more homely fashion, it is a process through which Jacob Thomas, being with or without children, but viciously possessed of property, shall be made to educate the children of John Smith, who has virtuously a large family of children, and is poor.

It is claimed that wealth owes this to the government for the protection which popular education gives to property: and so the government robs in one direction to prevent robbery in another.

There are, however, two well-known truths that make this conclusion erroneous. The first is, that it is not property that pays taxes or, indeed, aught else, but labor. It is through labor that all values are developed. The other truth, not so generally recognized, but yet a truth, is that education does not make property more secure. On the contrary, it adds to the insecurity complained of.

Instead, then, of having the rich pay for the education of the poor, the wage-worker not only pays for the so-called education of his own children, but that of his more fortunate neighbor. This is so evident, when once seen, that it is not necessary for us to offer any argument in its support. Law-makers have, for a thousand years, been elaborating laws through which capital in lands, tenements, and other forms of fixed values shall be made pay its share of the public burthen. They are no nearer the desired end than when they began. It is a vain attempt to reverse the pyramid and make the base stand on the apex.

The other error is not so patent. It comes of confounding intelligence with the popular process of education. If the mass of men could, through any process, be made more intelligent, we are prepared to admit that there would be a moral gain. The gain, however, would not be so positive or so great as many believe. Intelligence is not necessarily moral, nor is morality necessarily intelligent. The rules that govern moral conduct are few and simple, and, after all, it is more a matter of training and habit, more the result of kindly feeling and religious belief, than any intellectual process based on an accumulation of facts.

This grows plainer as we look more carefully into this thing called popular education and realize its constituent parts. The true definition of education is, that exercise and development of the intellectual faculties which teaches and trains the mind to think. This presupposes intellectual faculties. They are not general. The inequality, in this respect, of the human family is well marked and universally recognized. Through all the avocations of life, we find here and there at long intervals men so blessed in this respect that the masses look up to them, select them to be teachers and leaders. It is the foundation of our hero-worship, and formulates the habits on which we live socially and politically.

The popular idea of the common school is not this. It is based on a proposition that the masses can be educated; that is, taught to think. This conclusion is got at through a most ludicrous process. The mind is reduced to a memory. Facts are crowded into the pupil, and as the facts accumulate the education is supposed to proceed, and in possession of these facts the graduate comes forth the superior of Plato, Bacon, or Herbert Spencer.

This is simply an idiotic exercise of the memory, and as the memory grows perfect the intellectual faculties weaken and disappear. It is now recognized by the more thoughtful that an abnormal memory is evidence of idiocy. The net result, then, of all the labor is to graduate a learned ass.

The proof of what we assert is found in the result after the pedagogues have completed their work. The millions are considered taught; the masses take the level of unthinking multitudes, and look about among themselves for their teachers and leaders. The schoolmasters have held all to a dead level; but once out in the world, and nature asserts her rights, and the truly educated, the strong minds that have taught themselves to think, move to the front and take command.

If this thing were harmless, we could be content to let the popular craze wear itself out. But it is not harmless. In our insane desire to have this monstrous system prevail, let the cost be what it may, we lose sight of the grave fact that, while we cannot educate the people, we can train the people up to that moral condition so necessary to a safe and healthy condition of a Christian community.

In our idiotic belief that in a cultivation of the memory we are elevating and purifying the mind, we make our schools not only godless but positively immoral, for the untrained mind is trained in iniquity. And this pernicious result is strengthened by another crotchet of the popular mind – the habit we have fallen into of regarding the human race as a continuous whole instead of being the individual. We fail to realize that when one is born the world begins, and when one dies the world ends. We are like the notes of the piano: each key has its own separate and distinct sound, and while they may be made to harmonize with each other, the melody that melts through a flute or flows in endless eddies from a violin can never be reached. That government approaches human perfection which cares for the citizen and not the majority; and that moral religious training given us by our Saviour is the watchful care of the one soul. To this end the Church was organized: to this end was marriage instituted and made sacred. This means the home – the only school, public or private, that has an unalloyed good in its composition.

The wrong being done our people cannot be overestimated. The child in being put to school has been expelled from home. The parent is taught that the State has intervened and relieved God's responsible agent of all responsibility. This strikes a death-blow at the agency for good found in the parent. We all recognize the fact that from the home comes all that is sound in the State. By the hearth-stone grow, not only moral impulse, but true religion and all the patriotism that gives a love of country, and stability and power to the State. Anything, then, that saps the foundations of the household takes from under us the solid earth. This, we maintain, is what our common-school system as now organized and controlled is doing.