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The Pamphlet Collection of Sir Robert Stout: Volume 30

Chapter II. — Diminution of Imports in 1884—its Effects in Diminishing the Amount of our Exports—Buying from the World Compels the World to Buy from us

Chapter II.

Diminution of Imports in 1884—its Effects in Diminishing the Amount of our Exports—Buying from the World Compels the World to Buy from us.

So far we have only examined the decrease in our importations of wheat and other cereals during 1884. Let us now proceed to examine how far the total importations of all articles fell short, in the same year, of the average importations of the four preceding years. Here are the data by which that question may be solved:
Our total importations were in 1880 £411,210,000
Our total importations were in 1881 £396,773,000
Our total importations were in 1882 £412,002,000
Our total importations were in 1883 £425,604,000
Which sum divided by 4 gives an average of £411,397,000
Now our total importations in 1884 were £389,775,000
Showing the defalcation in the 1884 imports to be £21,622,000

Thus it appears that our aggregate Imports of all articles during the year 1884 were £21,622,000 short of the average annual Imports of the preceding four years (1880 to 1883). Now, of this defalcation in our total Imports, no less a sum than £15,719,000 arises, as we have shown at p. 7, from page 9 the defalcation in our Imports of cereals alone. As nearly as possible, three-fourths of the entire falling-off in our total Imports is at once accounted for by the falling-off in our Imports of the single article of cereals. That this falling-off in cereal importations "was the natural and necessary result of the improved and fairly good harvest" of 1884, must we think, be readily admitted, and it thus proves itself to have been by far the most potent factor in causing that depression in foreign trade into which we are inquiring.

It now becomes our business to investigate the effects which this sudden diminution in 1884 of our Imports, to the extent of 21½ millions of pounds sterling, must of necessity produce—(1) on the amount of our exports; (2) on the special industries which are connected with, and dependent upon, our foreign trade; and (3) on the general prosperity of the country. We will take these topics seriatim.

1. That the Imports of a country from the world at large are (excepting those sent to pay interest or to make loans) paid for, not in bullion, but by the export of goods to the same amount, has been so frequently shown, and is now so universally established, that it is superfluous here to do more than state the fact On that principle it is clear that a diminution of 21½ millions in the Imports of 1884 must occasion a corresponding decline in the Exports, and that our sendings abroad must be proportionately curtailed. Let us consult the Board of Trade returns, and see how far this anticipation has, in 1884, been realised by the facts. We may remark, however, that if the diminution of Imports were simultaneously accompanied, or immediately followed, by a corresponding diminution of Exports, we might expect that the 21½ millions diminution of Imports in 1884 was at once met by 21½ millions diminution of Exports within the same year. But, as we shall presently show, some interval necessarily elapses before Imports can act on Exports, and although the cause surely produces the effect, yet a few months must intervene before that effect is fully produced. We now proceed to set page 10 forth the figures which show the actual decrease of our Exports in 1884:
Our total Exports amounted in 1880 to £286,405,000
Our total Exports amounted in 1881 to £297,083,000
Our total Exports amounted in 1882 to £306,663,000
Our total Exports amounted in 1883 to £305,437,000
Which sum divided by 4 gives an average of £298,897,000
Our total Exports in 1884 were £295,372,000
Showing a diminution in 1884 of £3,525,000

Thus it will be seen that out of the expected decrease of 21½ millions in the Exports to meet the same amount of decrease in the Imports, only 3½ millions are accounted for in the returns for 1884. For the remaining 18 millions we have to look elsewhere. We ought to find them in the returns for the earlier months of the present year, 1885. And true enough, on consulting those returns, we see that, whereas the Exports from the United Kingdom for the first six months (January to June) of 1884, had been £149,440,000, the Exports for the same period in 1885 were only £133,474,000; showing a decrease in our Exports during the first six months of the present year of no less than, £15,966,000. If to these 16 millions we add the 3½ millions decrease realised in 1884, we find that out of the 21½ millions decrease which we had looked for, 19½ millions are already accounted for up to this date (July, 1885). The remaining 2 millions, plus any additional diminution in Imports that may occur in 1885, will have to be met by a corresponding decrease in Exports during the latter six months of that year. If, however, our cereal requirements should prove to be about the same this year as last, we may expect that the decrease in Imports will soon be checked, and that, in sympathy with them after a certain interval, Exports will begin to rise from the low level to which they had been reduced. We shall have enjoyed the notable page 11 benefit of a large increase in our home produce, and have passed through the temporary evil arising from the diminished foreign trade which it occasioned.

As we have already briefly stated, the influence of diminished Imports in proportionately diminishing Exports does not make itself felt immediately. The reason is obvious. The early indications of a probable good harvest in England make corn-merchants pause in their operations; and by the time that those indications are verified, and that it becomes clear that our grain requirements will fall short of those of previous years, the importations have already been checked, and have, to a great extent, adapted themselves to the contracted scale of our wants. On the other hand, it is months before Exports feel the effects, and they meanwhile go merrily on. After a little time, however, as our importations have diminished, bills on England become scarcer. A sensible rise in the rates of exchange (that unerring commercial thermometer) gives the first note of warning. The foreign buyer has to pay for the British goods which he has imported, but from the scarcity of bills and consequent adverse rate of exchange, he has to pay more of his native coins per pound sterling than he had calculated upon. This raises the cost to him of his British goods to such a point that he makes no profit, or possibly loses money, by them, and he accordingly either stops or curtails his operations. Thus do our Exports get checked and diminished until the time comes when the equilibrium between the goods imported by us and the goods exported by us is restored. Then the rates of exchange return to their average parity, and operations in English goods are resumed under normal conditions.

We hope to be pardoned if we parenthetically remark that it is Imports which govern Exports. A country can, at will, buy from the world at large to the extent of its wants or desires, for there are always sellers. But it can only with certainty export to the extent of its purchases, for buyers are not always in the humour. It depends on yourselves how page 12 much you will buy from the world at large; and, to that extent, it depends on yourselves how much they shall buy from you. Every fresh purchase you make compels a fresh purchase from you of the same value. However averse the outer world may be to buying from you, and whatever barriers they may interpose with that object, you at once break through them by the simple process of buying from them. It is only by refusing to sell to you that they can escape buying from you. If they once consent to sell to you, they are utterly helpless; the transaction must of necessity be completed by their making a purchase from you to the same amount. As an old French economist pithily expresses it "Acheter c'est vendre; vendre c'est acheter."

In treating of the foreign trade of a country, it is absurdly fallacious and misleading to look only at its separate dealings with any single other country. We must take its aggregate dealings with the world at large. We must consider not its isolated commercial relations with some particular nation, but the totality of its commercial relations with all nations. What kind of a balance sheet would that be deemed in which the trader omitted his accounts with most of his customers, and only exhibited his accounts with one or two of them? What matters it to you which it is of the hundred different countries of the earth that you may buy from or sell to? For your purpose it is sufficient to know that, by buying goods yourselves from some or all of them, you can irresistibly compel some or all of them to buy goods from you to the same amount in return, whether the sellers and buyers be the same individually or not.