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check and render nugatory all attempts at contraction for some time to come.

The prosts of the binks throughout the country have been very large the past year. We have compiled the following table, stowing the dividends of the New York banks for the past year, coinpared with those of the preceeding five years :

DIVIDENDS OF NEW YORK CITY BANKS. Companies.

1860. 1861. 1852, 1863. 1864. 1865. Latert. America

7 7 7

10 10 Jan., 1961..5 American.

4 American Exchange..

Oct., 1865..4 7 *3% 6

10 Nov., 1865..5 Atlantic..

9 10 Bowery, (new)..

Jan., 1866..6 Broadway

10 10 11

22 Ball's Head

Jan., 1866.12 8 8 8 11

15 Barchers' and Drovers'

Jan., 1866..4 q'y

10 10 10 10 10 15 Jan. 1866..5 Central..

6 12 Nov., 1865..6 Chatham

7 636
9 10 13

1806..7 Chemical

10 24 21

24
21

Jan., 1865..6 q'y Citizens'

8 8

8 8 14 Jan., 1866 5 City.....

8 8 8 8 12 12 Nov., 1863..6 Commerce

6 6 7

10 Jan., 1-66..5 Commonwealth

7

10 Jan., 1866..5 Continental

7

8 Jan., 18 6..5 Corn Exchange

7

10 Croton, (new).

Aug., 1865. 5 Currency

45

Jan., 1866.15 q'y Dry Dock

7%

7 Jan., 1866..3% East River

7 7

8

8 Eighth National

Jan., 1866..4

10 Fifth National

Jan., 1856..5

8 First National.

Jan., 1866..5

20) Fourth National

Nov., 1893.10

4 9 Fulton

Jan., 1866..5 10 iö 10

10 10 Gallatin (National)

Nov., 1865..5 7

6 6%

8 10 Greenwich..

10 Oct., 1-65..5

12 12 12 12 12 12 Nov., 1865..6 Grocers'.

7 7 7 8 10 10 Jan., 1866..5 Hanover.

7

6

6% 9 11 Imp. and Traders'.

Jan., 1866..6 8 7 6%

8 10 Jan., 1866..4 Irving

7 6

3% 8 5 Jan., 1866..5 Leather Manufacturers

10 10 10 10 10 10 Manhattan.

Aug., 1865..5

10 9 8 10 10 10 Manufacturers.

Aug., 1865..5

5 10 10 7 8 9 Manuf'rs & Merchants

Jan, 1866..5 6 8

10 Jan., 1866..5 6 8% 7 9 12 16 Jan., 1866.6

7 6% 6 7 8 11 Jan., 1866..6 Mechanics

8 7% 7 7% 9 15 Jan., 1866..5 Mechanics Banking Association

7

7% 8 10 Nov., 1865..5 Mechanics & Traders..

8 7

10 10 10 Nov., 1865..5 Mercantile..

10 9 8 10 10 10 Nov., 1865..5 Merchants

7 63 6% 7 9 10 Merchants' Exchange

Dec., 1865..5

6% 6 6% 7% 9 Jan., 1866..5 Metropolitan...

8 7 6 11 9 15 Jan., 1866..6

6 6% 7 8 10 Nov., 1865..5
6
7% 10 10

Jan., 1866..5 6% 6

16 New York Exchange

Jan., 1866..9

9 7 7 14 61 9 Ninth National

Jan., 1866..6

10 North America

Jan., 1866..5 3 6% 7%

8 15 Jan., 1866..5 6% 3% 7

8% 11 Jan. 18-6..6 6%

6 8 8 Oriental

Aug., 1865..4

7% 10 Aug., 1885..5

10 10 10 10 15 20 Nov., 1865..5 Park

8 8 8 9 20 22 Jan., 1866..7

7 7 7 8 9 Jan., 1866..5 7 6 7

10 Jan., 1866..4 Republic

10 9

7% 8 10 Aug., 1865..5 6%

8

7% Seventh Ward

10 Aug. 1865..5

10 10 10 Second National

5 10 Nov., 1865..5 8 8 8 8 8

Jan., 1866..5

12 State of New York..

Nov., 1865..6 7

6 6% 7% 10 10 Nov , 1865..5 Tenth Natio al

10

Jan., 1866..5

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9 Jan., 1866..5 8 7 6% 7% 11 16

Jan., 1866..7% 6 6

9 10 10 Nov., 1865..5 The dividends declared for January, 1866, are not included in the aggregate dividends given

Third National
Tradesmen's
Union

2012

for 1866.

It bas always been hitherto observed, that under the influence of a depreciate] currency, while the inflation was going on alınost all tbe banks prospered and made immense profits; but when th: reaction came, and contraction of currency brought a contraction of credits, great numbers of the bank; failed. The first half of this circle of results we see reflucted in the dividends of 15, 20, 40, and even 65 per cent recorded above. Shall we ere long see the second part of the circle ? or will our bunkers bave caution enough to foresee and provide against the evil day, which may be nearer than the most clear sighted of us suppose ? One of the most suggestive facts relative to the foregoing dividends, is that some of the banks having the largest capital and the safest, most judicious managament seem to earn the more limited profits. Of the dividends on the eighty millions of banking capital above represented, the smallest iostitutions carry off the largest prizes.

We give below the returns of the Banks of the three cities the past few weeks, omilling the returns previous to this month.

NEW YORK CITY BANKS. Date. Loans. Specie. Legal tender. Circulation, Deposits. Clearings. Dec.., 229,197,814 13,431,103 48,221,803 15,867,400 115,523,814 487,145.569

9, 227,839,344 16,622,780 48,271,787 16,570,513 176.480,562 420,105,063 16, 227,814,336 16,981,435 48,887,556 16,724,726 167,217,251 601,690,863

24, 228,572,034 16,165,037 63,8:1.520 17,629,125 183,021,870 507,237,904 Jan. 2, 229,445,780 15,891,76971,134,996 17,990,689 189,224,861 39,281,042

8, 238,185,689 16,778,171 71,617,437 18,588,428 195,482,251 370,617,52% The following are the returns of the Puiladelphis Bloks :

PHILADELPHIA BANKS. Date.

Loans.

Specie. Circulation. Deposits. November 27,...

45,416,940 003,181 7,065,275 34,050, 109 December 4,...

45,662,762 891,993 7,084,286 34,995,138 11,...

46,596,327 896,141 7,123,240 34,310,272 18,

46,598,293 937,833 7,141,389 31,272,551 28,

45,4 30,301 898,665 7,169,293 81,117.482 January 2,....

45,941,001 890,822 7,226,359 86,342,306 The statement of the Boston bapks the last three weeks, shows the following results :

BOSTON BASKS.
Jan. 1.
Dec. 25.

Dec. 18. Capital..

$41,91 0,000 $41,900,000 $41,900,000 Loans..

91,421,477 88,481,640 86,917,722 Specie..

801,415
657,005

657,831 Legal tender notes.....

19,807,800 19,865,928 18,900,074 Deposits ..

38,451,794 38,481,794 36,987,613 Circulativo (cational)..

21,497.354 21,146,721 20,812,878 Circulation (state).

1,404,721 1,480,718 1,550,230

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18

CONTENTS OF JA NU A RY NUMBER. ART.

1. Mercantile Biography: Hiram Walbridge.... 2. Finances of Cincinnati... 8. Analyses of Railroad Reports. No. 4.. 4. Our Resources. By H. O. Carey.... 6. Commercial Law.- No. 29. Marine Insurance. 6. Abstract of the Report of the Postmaster General. 7. Report of the Secretary of the Treasury.. 8. The United States Debt. 9. Commercial Chronicle and Review... 19. Journal of Banking, Currency, and Finance........

61 76

S5

THE

MERCHANTS MAGAZINE

AND

COMMERCIAL REVIEW.

FEBRUARY, 1866.

OF THE BALANCE OF TRADE.

BY 0. H, CARROLL.

In our zeal to maintain the principle of human freedom, we must not overlook important errors which are being extensively advocated, and bid fair to become permanently a part of the government policy. One of these is the doctrine of the “balance of trade” teaching that an excess in the currency value of exports over imports, is an aggregate of commercial balances of account against foreign countries; while an excess of imports over exports is an aggregate of commercial balances in favor of foreign countries. The former, it is argued, should be increased, and the latter prevented as much as possible by legislation. Hence we find a high tariff maintained with the view of checking imports.

Yet, if this method of calculating increasing wealth is reliable for a nation, why is it not equally reliable for an individual? If the nation gets rich by parting with more value than it receives, why should not the individual get rich whose expenditure exceeds his income? The philosophy of the balance of trade, as set forth by its advocates, comes to this ridiculous conclusion, that a cargo exported, costing $100,000 according to the Custom-house records, which returns only $80,000 in the imports, gives a national gain of $20,000. What does the mercbant owner think about it? By the same rule were the cargo sunk in the ocean, it being an excess of exports altogether, it must be reckoned as $100,000 clear profit to the country!

One of the advocates of this doctrine states that he finds the balance of trade in favor of the United States in the excess of exports for a series of years to be as follows:

Total exports. Total imports. Excess of exp'ts. 1854-65

$275,156,846 $261,468,620 $13,608,326 1855-56

326,964,908 314,639,942 12,324,966 1856-56..

302,960,682 360,890,141 2,070,541 1857-58..

324,644.421 282,613,150 42,031,271 1858-59..

356,789,462 338,768,130 18.021.332 1859-60..

400,122,296 362, 163,941 37.958,355 1860-61..

410,856,818 352,075,535 58,881,283 1861-62.

229,790,280 205,819,823 23,970,157 1862-63....

331,809,459 252,187,587 79,621,872 Total excess of exports..

$288,568,403 VOL. LIV.-NO. II.

6

After giving this table, the writer encourages the country with the consideration that “the scale of excess of exports established in 1854–55, rises gradually and steadily to 1863. Its

average

for the last two years, the worst of the war, is $51,800,000 each year. Its average for the two years preceding the war, 1858-59 and 1859-60, was $28,000,000 each year only.” This statement includes the mutual exchanges of gold. And, being desirous to make the largest admissible exhibit of the excess of exports, he repudiates the idea that the paper prices of exports affect the result, and furthermore maintains that the export commerce is babitually returned short; the inference being that if strict accuracy were obtained, the “ favorable talance of trade” would be considerably more than the above figures.

To all such reasoners the question should be put, when, where and how is this continually extending balance of trade to be collected and discharged. Is it sufficient for the nation to have it constantly accumulating, and never get anything for it?

In England the account and the argument are directly the other way. For example, the British imports in 1854 amounted to £152,380,053; exports £115,821,092, the excess of imports being £36,567,961. In 1860 the imports were £233,626,830 ; exports £191,205,421 ; excess of im. ports £42,421,418. In 1863 the imports were £248,980,942; exports £146,602,409; excess of imports £102,278,533, while in 1864 the imports were £209,246,000, and the exports £160,809,698, making an ex. cess of £108,809,698 of imports. Thus in these four years there is an excess of imports amounting to about twenty hundred millions of dollars ; or about five tiines the total of the exports in auy one year from the United States to all the world.

Now can any one be so mentally blind as to suppose that Great Britain is running in debt to other countries at this rate, or that she is pursuing her foreign commerce at a prodigous loss? A more probable argument might seem to be that Great Britain imports raw material to a great amount, augments its value by her industry, exports the manufactured article, and finds her profit in the returns.

Thus we see that this whole matter of the balance of trade is very much of a delusion, as it is generally presented and understood. Its sig: mificance is in the international value of money and in restraints upon commerce. Cheap money means high prices. Duties on imports operate in the same direction, and the nation afflicted with these disabilities works to a disadvantage, except in the case of money cheapened by mining, which, being capital, is exported (when in natural excess) in exchange for other capital, and is thus a source of national wealth like every thing else produced cheap for foreigbn commerce, that is to say, in excess of the home demand. California and Australia produce money cheap because of their natural advantages for its production; and as cheap capital they supply their wants with the excess of money as our. Western States supply their wants with their cheap capital in the excess of Wheat. The great affair is to produce cheap capital of the most desirable and exchangeable character. It matters little whether it be money or merchandise.

The community possessing the most capital in relation to population will have the cheapest capital, and the lowest general prices, unless their value are disorganized by a false currency, or artificial arrangement and restrictions of trade, and they will have the advantage of all the rest of the world in foreign commerce. With lower general prices they will produce cheaper than other communities; their foreign adventures will cost less, and bring greater profits; and these profits will appear in an excess of imports. This is the true balance of trade; it is no debt, but a balance of profits; an accumulation of capital in foreign trade.

England has this “ balance of trade” in her favor ; hence her continued excess of imports, and this excess will continue to increase under the free trade system and limited currency ; while under our high tariff exclusive system and expanded currency we shall have the “balance of trade" the wrong way in excess of exports, giving England the advantage in international commerce continually.

A relative of the writer travelling in Europe at this time says he has purchased four suits of clothes for ninety dollars in London which would have cost him two hundred dollars in New York or Boston, as he took particular pains to ascertain the prices here before be left home. This, allowing 50 per cent for the premium on gold, is obtaining a value of one hundred dollars by our gold measure, for sixty-six and 70 dollars in England. Suppose this to be the average rate at which the necessaries and conveniences of life can be obtained in England, as compared with the United States, then it is not merely possible but probable, that a cargo for export may be obtained in England for sixty-seven thousand dollars that would return the value of one hundred thousand dollars ; yielding thirtythree thousand dollars profit in the excess of imports over exports; while a cargo of the same relative value here. would cost one hundred thousand dollars in gold, and return simply its cost. Hence England would make a profit of thirty-three per cent in foreign trade where the United States would make nothing at all. Yet if the Custom House records even exhibit an excess of exports it does not follow that there is any absolute loss to this country in the business, since we export overplus products only, and whatever we obtain for them, more or less, is in a national point of view clear gain. That is to say, we support ourselves, pay all our expenses of living and of production, and have these surplus products left. They are of no value except for export, and the returns they bring us are therefore, national accumulation and profit.

An explication will make this point clear, and show the fallacy of this doctrine of the balance of trade. Let us suppose that by an expansion of currency through banking, or government paper issues, we make general prices here fifty per cent higher than they are in England; it would follow that the same quantity of labor and capital which would produce a barrel of flour in ths country for six dollars would produce the same value in broad cloth, say a yard, in England for four dollars; in other words there would be this difference in prices for the same value in the respective countries of all commodities. Then suppose England sends us an invoice of 1000 yards of board cloth wbich is entered in our Custom House records at the aggregate price of $4,000, and, being sold here under our inflation so as to produce the net suin of $6,000 we return an invoice of 2,000 barrels of sour at the aggregate price of $6,000; where and what is the balance of trade! There is no such thing. The 1,000 barrels of English broadcloth costs the United States 1,000 barrels of flour, aud the 1,000 barrels of United States flour costs England 1,000 yards of broad

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