Smith, Stephen; Wilkinson, J. Grains for the Grangers, Discussing All Points Bearing Upon the Farmers' Movement for the Emancipation of White Slaves from the Slave-Power of Monopoly . Philadelphia: John E. Potter and Company, 1873. [format: book], [genre: essay; history; letter; narrative; poetry]. Permission: Northern Illinois University
Persistent link to this document: http://lincoln.lib.niu.edu/file.php?file=smith.html

In his sophisms of protection, the apostle Bastiat runs a tilt against prevalent ideas in regard to the balance of trade. He says:

"The profits accruing to a nation from any foreign commerce should be calculated by the overplus of the importation above the exportation."

His theory that a nation is enriched rather than impoverished by having the balance of trade against it is hardly one that will commend itself to Protectionists, though they are now engaged in supplying farmers with copious extracts from Bastiat's work. They have been busy heretofore in trying to prove that manufacturing in this country has so prospered under the protective system that we can now compete with European manufacturers in many articles which were not made in this country a few years ago. In a speech made in Congress by member Kelly, in the winter of 1869, the gentleman presented a long list of articles which are manufactured in England, France, Belgium, and Prussia, and also in the United States, claiming that our products in the articles named are driving the others from the market, even in the districts in Europe where the manufacture of those articles had been carried to the

greatest extent. Whether the Bastiat theory be right or wrong, it does not affect the arguments of Prohibitionists concerning the effect of protection upon production and imports.

"Protection stimulates industry," they say, — furnishes goods and wares which otherwise would be imported for home consumption, and, in many cases, furnishes articles for export to European markets, thus helping to prevent "the balance of trade" from turning heavily against us. There is a plausibility about this reasoning which is well calculated to deceive; but, unfortunately for the gentlemen who rely upon it, a comparison of the exports of 1860 with those of 1869 show a great decline in the shipments of many important articles of commerce. The following carefully prepared table will explain:

It will be observed that with the exception of hides, skins and living animals, the articles named are all manufactured articles, and that our exports of them, have decreased, as custom duties have been more heavily piled on. After the enactment of the Morrill tariff in 1861, the exportation of wheat and corn largely increased for several years, a fact tending to show that our home markets for agricultural products had not been enlarged and strengthened by that tariff. The falling off of exports in the articles named in the above list, did not cause such an increase of their consumption, as to create a demand among our farmers, in exchange for their products, which prevented the swelling of our exports of breadstuffs.

It is absurd to claim that protection swells the aggregate of our exports. The system increases the cost of production and prevents the exchange of our products for those of other nations. Commissioner Wells has shown that the decline in American shipping was due mainly, not to the depredations of rebel cruisers, or the heavy duties laid on ship-building materials, but to laws, which in effect prohibit trade between the United States and other countries with which we had large and profitable commercial transactions a few years ago. We cannot expect to sell to other people while keeping our markets closed to them. They have only their own products to offer in exchange for ours.

This "balance of trade" alarm is in truth mere fallacy. It adjusts itself between nations. Each can take no more than it can pay for, and each will send no more than it receives payment for. Then there is

no such thing as "balance" between the amount of a nation's exports and imports, save the literal balance that makes both equal. Does the "balance" lie, then, between the amount of our productions and the amount of our consumption? No: the amount of these productions, whatever they may be, are consumed immediately at home, or mediately through what we received in exchange from other nations, and this is likewise made the literal equal balance. Then there is no such thing as a "balance of trade."