Balance Of Trade

Our adversaries have adopted a system of tactics, which embarrasses us

not a little. Do we prove our doctrine? They admit the truth of it in

the most respectful manner. Do we attack their principles? They abandon

them with the best possible grace. They only ask that our doctrine,

which they acknowledge to be true, should be confined to books; and that

their principles, which they allow to be false, should be established in
/> practice. If we will give up to them the regulation of our tariffs, they

will leave us triumphant in the domain of theory.

Assuredly, said Mr. Gauthier de Roumilly, lately, assuredly no one

wishes to call up from their graves the defunct theories of the balance

of trade. And yet Mr. Gauthier, after giving this passing blow to

error, goes on immediately afterwards, and for two hours consecutively,

to reason as though this error were a truth.

Give me Mr. Lestiboudois. Here we have a consistent reasoner! a logical

arguer! There is nothing in his conclusions which cannot be found in his

premises. He asks nothing in practice which he does not justify in

theory. His principles may perchance be false, and this is the point in

question. But he has a principle. He believes, he proclaims aloud, that

if France gives ten to receive fifteen, she loses five; and surely, with

such a belief, nothing is more natural than that he should make laws

consistent with it.

He says: What it is important to remark, is, that constantly the amount

of importation is augmenting, and surpassing that of exportation. Every

year France buys more foreign produce, and sells less of its own

produce. This can be proved by figures. In 1842, we see the importation

exceed the exportation by two hundred millions. This appears to me to

prove, in the clearest manner, that national labor is not sufficiently

protected, that we are provided by foreign labor, and that the

competition of our rivals oppresses our industry. The law in question,

appears to me to be a consecration of the fact, that our political

economists have assumed a false position in declaring, that in

proportion to produce bought, there is always a corresponding quantity

sold. It is evident that purchases may be made, not with the habitual

productions of a country, not with its revenue, not with the results of

actual labor, but with its capital, with the accumulated savings which

should serve for reproduction. A country may spend, dissipate its

profits and savings, may impoverish itself, and by the consumption of

its national capital, progress gradually to its ruin. This is

precisely what we are doing. We give, every year, two hundred millions

to foreign nations.

Well! here, at least, is a man whom we can understand. There is no

hypocrisy in this language. The balance of trade is here clearly

maintained and defended. France imports two hundred millions more than

she exports. Then France loses two hundred millions yearly. And the

remedy? It is to check importation. The conclusion is perfectly


It is, then, with Mr. Lestiboudois that we will argue, for how is it

possible to do so with Mr. Gauthier? If you say to the latter, the

balance of trade is a mistake, he will answer, So I have declared it in

my exordium. If you exclaim, But it is a truth, he will say, Thus I have

classed it in my conclusions.

Political economists may blame me for arguing with Mr. Lestiboudois. To

combat the balance of trade, is, they say, neither more nor less than to

fight against a windmill.

But let us be on our guard. The balance of trade is neither so old, nor

so sick, nor so dead, as Mr. Gauthier is pleased to imagine; for all the

legislature, Mr. Gauthier himself included, are associated by their

votes with the theory of Mr. Lestiboudois.

However, not to fatigue the reader, I will not seek to investigate too

closely this theory, but will content myself with subjecting it to the

experience of facts.

It is constantly alleged in opposition to our principles, that they are

good only in theory. But, gentlemen, do you believe that merchants'

books are good in practice? It does appear to me that if there is any

thing which can have a practical authority, when the object is to prove

profit and loss, that this must be commercial accounts. We cannot

suppose that all the merchants of the world, for centuries back, should

have so little understood their own affairs, as to have kept their books

in such a manner as to represent gains as losses, and losses as gains.

Truly it would be easier to believe that Mr. Lestiboudois is a bad

political economist.

A merchant, one of my friends, having had two business transactions,

with very different results, I have been curious to compare on this

subject the accounts of the counter with those of the custom-house,

interpreted by Mr. Lestiboudois with the sanction of our six hundred


Mr. T... despatched from Havre a vessel, freighted, for the United

States, with French merchandise, principally Parisian articles, valued

at 200,000 francs. Such was the amount entered at the custom-house. The

cargo, on its arrival at New Orleans, had paid ten per cent. expenses,

and was liable to thirty per cent. duties; which raised its value to

280,000 francs. It was sold at twenty per cent. profit on its original

value, which being 40,000 francs, the price of sale was 320,000 francs,

which the assignee converted into cotton. This cotton, again, had to

pay for expenses of transportation, insurance, commissions, etc., ten

per cent.: so that when the return cargo arrived at Havre, its value had

risen to 352,000 francs, and it was thus entered at the custom-house.

Finally, Mr. T... realized again on this return cargo twenty per cent.

profits; amounting to 70,400 francs. The cotton thus sold for the sum of

422,400 francs.

If Mr. Lestiboudois requires it, I will send him an extract from the

books of Mr. T... He will there see, credited to the account of

profit and loss, that is to say, set down as gained, two sums; the one

of 40,000, the other of 70,000 francs, and Mr. T ... feels perfectly

certain that as regards these, there is no mistake in his accounts.

Now what conclusion does Mr. Lestiboudois draw from the sums entered

into the custom-house, in this operation? He thence learns that France

has exported 200,000 francs, and imported 352,000; from whence the

honorable deputy concludes that she has spent, dissipated the profits

of her previous savings; that she is impoverishing herself and

progressing to her ruin; and that she has squandered on a foreign

nation 152,000 francs of her capital.

Some time after this transaction, Mr. T... despatched another vessel,

again freighted with domestic produce, to the amount of 200,000 francs.

But the vessel foundered after leaving the port, and Mr. T ... had only

farther to inscribe on his books two little items, thus worded:

Sundries due to X, 200,000 francs, for purchase of divers articles

despatched by vessel N.

Profit and loss due to sundries, 200,000 francs, for final and total

loss of cargo.

In the meantime the custom-house inscribed 200,000 francs upon its list

of exportations, and as there can of course be nothing to balance this

entry on the list of importations, it hence follows that Mr.

Lestiboudois and the Chamber must see in this wreck a clear profit to

France of 200,000 francs.

We may draw hence yet another conclusion, viz.: that according to the

Balance of Trade theory, France has an exceedingly simple manner of

constantly doubling her capital. It is only necessary, to accomplish

this, that she should, after entering into the custom-house her articles

for exportation, cause them to be thrown into the sea. By this course,

her exportations can speedily be made to equal her capital; importations

will be nothing, and our gain will be, all which the ocean will have

swallowed up.

You are joking, the protectionists will reply. You know that it is

impossible that we should utter such absurdities. Nevertheless, I

answer, you do utter them, and what is more, you give them life, you

exercise them practically upon your fellow citizens, as much, at least,

as is in your power to do.

The truth is, that the theory of the Balance of Trade should be

precisely reversed. The profits accruing to the nation from any

foreign commerce should be calculated by the overplus of the

importation above the exportation. This overplus, after the deduction of

expenses, is the real gain. Here we have the true theory, and it is one

which leads directly to freedom in trade. I now, gentlemen, abandon you

this theory, as I have done all those of the preceding chapters. Do with

it as you please, exaggerate it as you will; it has nothing to fear.

Push it to the farthest extreme; imagine, if it so please you, that

foreign nations should inundate us with useful produce of every

description, and ask nothing in return; that our importations should be

infinite, and our exportations nothing. Imagine all this, and still

I defy you to prove that we will be the poorer in consequence.