Rensselaer Semi-Weekly Republican, Volume 40, Number 38, Rensselaer, Jasper County, 17 January 1908 — TO KEEP OUT OF DEBT [ARTICLE]

TO KEEP OUT OF DEBT

importance of a national TRADE BALANCE. - ii .10. On* of the Function* of a Protective Tariff la to Restrict Imports as to Enable the County to Pay AU Its Obligations .. “If it had not been for this balance of trade in .our favor, constantly liquidating our obligations, our debts would have become insupportable long before now.’’ > 1 This remark by the New York Press is of weighty Importance, and should receive from our financiers far more attention than they habitually give to the question of favorable trade balances. The fact is that our moneyed magnates are for the most part either Ignorant of or Indifferent to £he part played by the trade’balance in maintalning our supply of money and money metals. It must be that they are Ignorant, for If they were informed they could not be indifferent. They ought to realise the part played by a protective tariff in so restrictingxcompetltive imports as to insure an excess of exports, and therefore a trade balance —money coming to us faster than it goes away from us. Yet if you should scratch the back of an eminent financier it is ten to one you w’ould tickle either a freetrader or a man who knows little and cares less about the tariff question. The habit of depreciating the consequence of favorable trade balances is quite common ariaong the “superior thinkers” turned loose by our free trade institutions of learning. They point to Great Britain, a free trade nation, with an average excess of imports over exports amounting to about $800,000,000 a year, as a shining exampleof how a country can grow richer in spite of adverse trade balances. This contention is well answered by the Press, as follows: “England is a creditor nation. The British adverse trade balance does not represent what England owes at the end of each year. It represents the payments on-account by the debtor nations that owe interest and principal to England, creditor of the World. England’s adverse trade balance is the same as the pawnbroker’s. The lender whose trademark is the three gilded balls over the door of his money shop advances his capita) to the borrower, who must pay over to the pawnbroker a share of the debtor's product as long as the debt stands uncanceled. The debtor exports to the pawnbroker incessantly; he imports from the pawnshop nothing—bnt receipts. Unless the debt is liquidated, that sort of adverse "balance of trade against the pawnbroker leaves_him with all the money in the end. So long as. Canada or any other country remains a debtor nation an adverse balance of trade piles up a growing debt each year moredifficult to discharge, since more of the resources of the debtor are required to pay the mere interest.” One of the most important functions of a protective tariff is to bar the door against competitive iitaports. Not only does this wise policy enable the United States to cancel its debits for goods and materials purchased abroad and have something left with which to make good for some heavy outgoing amounts of American money not visible in the record of exports, but It has in the past eleven years actually added some billions of dollars to the supply of money and money metals. Still more important, it has provided work and wages for millions of Americans. Great Britain has kept solvent because of Income derived from money loaned and invested In .other countries and from the earnings of her merchant marine. But for those sources of income there is no need to say what woald happen to a country which bought $800,000,000 a year more than it sold. The United States has neith?r an oversea carrying trade nor any income from money Invested abroad. To n country so situated a large favorable trade balance becomes an absolute financial necessity if .national bankruptcy is to be avoided. Such a surplus of Income over outgo can only be obtained by the restriction of imports. This is why our eminent financiers should give more attention to the protective tariff.

A Currency Bill. A bill amending the currency laws following the lines of the recommendation contained In the President’s message—providlug for an emergency currency on which the tax will be so high that bankers will avail themselves of it only as conditions Justify, It is believed. will meet the approval of the senate, and will not have much opposition In the house. There seems a public demand for currency reform, and as there nre fewer fundamental objections to this plan than to other* suggested. It will probably be enacted Ils a makeshift. It might be called a compromise between the central bank proposition and the asset currency. Both senators and representatives agree that It would be futile to undertake at tills session, to thresh out the entire subject of the currency, and if the President's suggestions tide over the present situation, it will save much polltlehl embarrassment. And a practical test may demonstrate a permanent value.