THE BALANCE OF TRADE.

Auckland Star, Volume LVIII, Issue 167, 18 July 1927, Page 4

THE BALANCE OF TRADE.

HOW IT WORKS IN U.S.A

A CREDITOR'S PROBLEMS

The publication of the overseas trade -eturns in the United States for the first six months of the present year inevitably focuses attention upon America's special position as a creditor of Eui opeaff nations. It is pointed out that since the war the United States has been lending upwards ot a billion (thousand million) dollars a year to other nations. This continued lending has enabled the country to send out more than it has taken in. This state or affairs can go on for a while, but not tor ever. As the "Commerce Monthly" of Sew 1 ork savs: "1 he hasis ot trade is the exchange of gooffo, and for a nation to be a large seller of goods she must also be a large buyer, but our money system sometimes obscures the former fact. If the L nited States was to go on lending to the present extent for ever her people would never enjoy the fruits of their investment, which, after all. are nothing more than the tangible goods to which they are entitled by their bonds and money. The L nited States must realise that there is nothing necessarily favourable* about a net surplus of exports or 'unfavourable' about a surpuls of imports. It is stated that a tendency may be expected in the latter direction in the future. The United Sates net surplus of exports, which averaged o-er three i billions (thousand millions) of dollars from 1910 to 1020, and dropped as low as 79 millions in 1923, was reduced from 800 millions in 1924 and 102."! to 300 millions last year by a substantial increase in imports of merchandise and gold. A strong and practical objection to the heavy importation of any commodity above and beyond the tariff wall always is that the country is flooded and home industries rus.ed by foreign products. The logical courst open to the United States whereby she may avoid this objection is the heavier importation of rawmaterials wholly or largely non-com-petitive w«ih her own There has already been a noticeable increase as a natural result of industrial development. Goods ranking highest among imports into the L'nited States in 1926 were rubber, silk and coffee, none of which she produces, and further down the list and of interest to Australia were furs, wool tin, hides, and copper. Substantial imports of luxury goods or highly individualised art relatively unsuited to mass production by machine, may also be expected from Europe. In conclusion, the hope is expressed that, as in domestic trade competitive business men have been getting beyond the notion that only a limited volume of business exists, with the result that whole industries have cooperated in a harmonious effort to create a market for their products, tliev will, in time, perceive that the receipt of wealth from abroad in payment of debts due does not diminish the people's buying of domestic goods, but actually tends to increase it."