Foreign Trade No Cure for Hard Times

A VERY large number of well-meaning people believe that the only remedy for our industrial distress is to be found in foreign trade: by selling our manufactures and products of every nature in foreign markets; by manufacturing and producing for all the world; by making our country the workshop of the world, and our people the world’s providers.

Suppose it were to our interest and the interest of the world that it should be so, how can it be done? The answer quickly comes: By manufacturing and producing cheaper and better than any other people; by selling a better article, at a less price, than any competitor.

Let us see what this means, and what we have to compete with; for it is by competition only that foreign markets can be obtained. I take up the Statesman, of India, to learn the working time in their cotton mills. From that paper I quote: —

“ The Bengal cotton mills work fourteen hours per day, and the Bowriah cotton mills twenty hours per day, as well as Sundays; and some of the Calcutta mills are lit up with gas, and work day and night, as well as Sundays. Undoubtedly the machinery, working day and night, cannot last but for a very few years; consequently, the poor shareholders will have soon to renew the machinery.”

The amount of wages paid is not stated; but it is well known that wages in India, like wages in China, are very low, —about ten cents a day.

To obtain the foreign market, we must therefore compete with fourteen, twenty, and twenty-four hours a day of work, for seven days in the week, with wages at ten cents a day, or sixty or seventy cents a week.

This account of manufactures in India will answer for China, South America, Central America, and Mexico. They are all struggling for the same position, and they all have England, Germany, France, and the United States to help them onward, by supplying them with the required machinery, and experts to teach its use. A Hindoo boy or girl can run a machine as well as the AngloSaxon; and so, also, can a native of China and South America.

England, until recently, controlled the market of India, — that is, did its manufacturing, etc. It is trying to do the Same thing for the other countries named, and no doubt will meet with equal success. But India has now learned something. By the use of machinery she produces and manufactures for herself. She has driven and is driving British manufactures out of her markets, and is already seeking a foreign market for her own machine products. So it is with us, who, but a generation ago, were England’s greatest and best customers. So it will be with every other country. It is true that England has still a large foreign market, which we are trying to get by underselling her. England, to keep the market she has, is compelled to get her work done so cheap that her people are starving. With us it is but little better. We are doing all we can to make our people still poorer, to work for still lower wages, that we may undersell, not only England, but India; for to succeed we must undersell the cheapest.

No matter what it costs us, it is the price, and the only price, at which we can obtain foreign markets for our manufactures and products, and we must pay it. On these conditions, and no other, we have been able to increase our domestic exports for foreign consumption from $136,940,243, for the year ending June 30, 1865, to §680,709,258, for the year ending June 30, 1878, of which less than one hundred millions were of our manufactures, an increase, in thirteen years, of §543,769,010; but we will call it, in round numbers, six hundred millions of dollars’ worth of both raw and manufactured products, or one hundred millions of dollars of manufactured products alone. The value of the exports of manufactures of cotton is given as $11,438,660; wool and its manufactures, $542,342; iron and steel and their manufactures, $13,968,275; and boots and shoes, $468,436 ; total, $26,417,713. It is in these four products that the effort has been made to force the cost of production to the lowest possible point, by paying the smallest wages, that we may successfully compete in foreign markets.

Thus, after thirteen years of national effort, — of legislation, of subsidizing, of treaties and conventions of every nature, — and superhuman efforts at cheap production, by the reduction of wages and salaries, the substitution of machinery for muscle, and the throwing of millions into idleness, we have got so far below the cost of manufacturing and producing in India, in Brazil, in England, as to increase or make a foreign market for our manufactures to the amount of one hundred million dollars, and of our general products of six hundred millions of dollars, per annum.

Has it paid? Does it now pay ?

Let us see the cost. We have all the factors necessary for thorough examination and illustration. We have at this time, in our whole country, at least fourteen millions belonging to the gr at industrial class, — that is, those dependent on their salaries or wages for subsistence. Of this class only will we speak, excluding those persons who, as officials in civil or governmental employ, or as superintendents or foremen, or in professional or clerical positions, hold exceptional employments and receive exceptional salaries. Fourteen years ago, at the time of the close of the war of the rebellion, there were of this class, in the North alone, about seven million persons, in large part males.

The wages paid to the industrial classes are very nearly the exact measure of the amount contributed by those classes to the domestic trade. Almost certainly is that the case where the amount of wages falls within one thousand dollars a year. Even where small savings are made, and stored in savings institutions, they are soon withdrawn, and go into the volume of trade in some shape.

Upon the basis here laid down we will see how our foreign trade pays as compared with our home trade.

Before the close of the war, and for some time afterwards, all who found employment received as compensation, upon an average, at least two and one half dollars, gold value, a day, or Seven hundred and fifty dollars for a year of three hundred days. At this rate, the seven millions belonging to the industrial class in the North contributed, in the first half of 1865, at the rate of five and one quarter billions of dollars per annum to the home trade of consumption.

At the same rate, with our present fourteen millions, our home trade should swell to the enormous amount of ten and one half billions of dollars per annum. But it is only about one quarter that amount.

Among these fourteen millions there is an amount of idleness that equals the time of six million persons, leaving full employment for but eight millions. At this time the average wages paid to workers, when employed, is less than one dollar a day; but we will estimate at one dollar a day, or three hundred dollars a year, which, for eight million persons, gives trade of two billions four hundred million dollars per annum.

This must be the measure of that part of our home trade now derived from the industrial classes, because it is not possible that they should contribute anything more to trade than the wages they receive.

Here is shown an annual loss to the trade of home consumption by the industrial classes, caused by their increasing idleness within the last fourteen years, that amounts to the enormous sum of over eight billions of dollars per annum, and an absolute decrease of two billions eight, hundred and fifty millions of dollars per annum during the same period, though the number of consumers during that time and in those classes has fully doubled.

That is, that seven millions of fullyemployed, well-paid persons, fourteen years ago, created more than double the amount of trade that is now created by fourteen millions of persons, of the same Character and capacity, when only partially employed and but poorly paid.

But if it be insisted that the whole of the great industrial class must enter into the computation, and be considered as contributing something to trade, as nearly all do some work at some time, and consume something, then sixty cents a day is the utmost that can be allowed for the average earnings of all, which gives substantially the same showing.

This great contrast between two billions four hundred millions and ten billions five hundred millions is just the difference, in dollars, between the home trade of fourteen millions of partially employed, poorly paid persons, and their dependents, and the same persons when all are employed and well paid, leaving altogether out of the account the amount of destitution and misery in the one case, and the comfort, happiness, and development in the other.

The contrast in the quantity of products consumed at home by each individual now and thirteen and fourteen years ago may be determined by learning the number of furnaces, forges, factories, mills, and workshops of every nature now standing idle, or but partially employed; the immense stocks of products now on hand, for which there is little or no demand; the great falling off in the consumption of foreign products; the large exportation of home products; and the difference in the number of consumers in the two periods. The factors that enter into this contrast are too many and too complicated to be satisfactorily considered in a limited space; I therefore simply call attention to the point.

A home trade, through consumption by the industrial masses of our people, amounting to ten and one half billions of dollars appears to be an object worth striving for and cultivating and sustaining by all the power of our government and people. Not so think or teach many of our would-be statesmen and political economists. At this time the idleness in our country causes a loss in the home trade of consumption of over eight billions of dollars per annum. “ But,” reply our statesmen and political economists, “have we not gained in our foreign export trade to the amount of six hundred millions of dollars? Have we not the foreign - trade balance in our favor? What do eight billions lost to home trade and the comfort and wealth of the people signify, when we can get an increase in our foreign trade of six hundred millions of dollars, with a favorable foreign-trade balance? ”

But if we add this six hundred millions of foreign trade we have gained to the two and one half billions we have saved, we shall find that it gives a total trade at the present time, both home and foreign, of three billions of dollars, against five and a quarter billions in 1865, and ten and one half billions we should now have, if all our people were employed. Does it pay ? Every dollar of foreign trade that we have gained, if because of the cheapness of the manufactures exported, has been at the cost of at least eighty dollars of home trade; or, if because of the cheapness of the whole export, raw and manufactured, it has been at the cost of more than thirteen dollars of our home trade, with the incalculable poverty and misery brought upon our people by idleness and low wages, whilst in the pursuit of this maddest of all follies, — foreign markets for the consumption of our manufactures. In this pursuit we have found a foreign consumption for those products which, merely because of their cheapness, — the manufactures of cotton, wool and its manufactures, iron and steel and their manufactures, and boots and shoes, — can be sold to the amount of $26,417,713 per annum. This is substantially our only offset for the loss, in and through cheap production, of fully eight billion dollars per annum of the home trade — an amount equal to nearly twice the whole cost to the nation of the war of the rebellion; for no doubt our food products and raw cotton, our petroleum, our agricultural and other machinery, with most of our smaller products, would find a foreign market, even if the most liberal wages were paid in their production.

Does foreign trade pay, at the cost at which we purchase it? Are six hundred millions of foreign trade, which we have gained, worth more, in dollars and cents, than eight billions of home trade, which we have lost ? This is the question, squarely put, with the evidence on which it is based.

The truth is, there can be no greater folly perpetrated by our nation than that of seeking to employ, or to benefit, our own people by producing or manufacturing for any other people. The reasons why it is so are abundant and obvious. I will give a few: —

(1.) No people without industries can possibly be permanent or profitable purchasers of foreign products. It is with a nation as with individuals,—by and through its industries only can it become a profitable purchaser in the world’s market.

(2.) Every nation that sustains an industry must and will employ that industry in producing that which enters directly into the consumption of its own people. That nation which is compelled to depend on the foreigner for food, clothing, or lodging is wanting in some of the elements of permanent prosperity.

(3.) Every country advanced in its civilization has the elements within itself for self-support; and if it be wanting in any of the mechanical appliances of the age necessary to develop its resources, those appliances will be obtained and utilized.

(4.) There is no large market for our manufactures with any advanced people; all Such manufacture for themselves, and are seeking foreign markets for their own products. Whenever our manufactures or products, or those of any other people, come into serious competition with their own products, they are sure to be heavily taxed or excluded. The law of self-protection compels it.

(5.) Our present effort is to find markets with those populations which are not yet fully developed in their use of the latest mechanical methods of production. All such are either too poor or too exclusive to become profitable consumers of the products of our civilization. It is only by developing advanced industries in the midst of those peoples that their condition can be changed or improved; and that will be done to the exclusion of any considerable foreign consumption.

We read in a London paper that the Chinese government have purchased machinery, and engaged experienced engineers and spinners in Germany to establish cotton mills in China, so as to free that country from dependence upon English and Russian imports. Though China is somewhat tardy in her action, we maybe certain that she will be thorough. Not only the English and Russians, but all others, will find that market closed not to cottons alone, but to everything that that people consume. More than this: the time is not far distant when the textiles from the Chinese machine looms, iron and steel and cutlery from the Chinese furnaces, forges, and workshops, with everything that machinery and cheap labor can produce, will crowd every market. The four hundred millions of China, with the two hundred and fifty millions of India, — the crowded and pauperized populations of Asia, — will offer the cup of cheap machine labor, filled to the brim, to our lips, and force ns to drink it to the dregs, if we do not learn wisdom. It is in Asia, if anywhere, that the world is to find its workshop. There are the masses, and the conditions, necessary to develop the power of cheapness to perfection, and they will be used. For years we have been doing our utmost to teach the Chinese shoemaking, spinning and weaving, engine driving, machine building, and other arts, in California, Massachusetts, and other States; and we may be sure they will make good use of their knowledge; for there is no people on earth with more patient skill and better adapted to the use of machinery than the Chinese.

What the Chinese government is doing for China, Dom Pedro is doing for Brazil, though in a different form. That Country, like every other country, in order to prosper and develop, must do its own work; this fact its intelligent ruler thoroughly understands and acts upon.

We have our own work to do, and no other. It is the only work we can control, and is our only dependence. Is it wise to neglect or sacrifice, it for the purpose of grasping what we cannot hold, even if we could once get it? We have our own market to supply and our own trade at home, and there is no other over which we Can by any possibility have control. This market and trade may be almost indefinitely extended. Is it wise to destroy it in the pursuit of an ignis fatuux ?

With our industries and home trade rehabilitated, there can be no doubt that our foreign trade would largely increase. But it would be of a character very unlike the present, and based on a very different foundation. It would be a trade based on the wealth of the people, and not living upon their poverty, — a trade that Would add to our comfort, and not increase our miseries.

Our own best consumers and customers are at home. It is our home market that furnishes, or that can be made to furnish, an inexhaustible source of wealth and comfort for all; whilst a general foreign market for our products can be obtained only at the cost of more than ten dollars of home trade for one of foreign, with the pauperizing of our people and the destruction of our institutions. The ruin will he so wide-spread that even the foreign trader himself cannot escape it.

W. G. M.