Foreign Commerce of the United States

FOREIGN COMMERCE OF THE UNITED STATES Comparison with Domestic Commerce.-It is difficult to make an adequate and equitable comparison between domestic commerce and foreign commerce. At best, statistics are apt to mislead because of the failure to include all necessary qualifica tions. A few comparisons are hazarded, nevertheless, as throwing some light on this phase of United States commerce.

Since many commodities produced in the United States cannot enter export trade at all, estimates have been made of the propor tion of movable goods exported.

Estimates of the proportion of movable goods exported for se lected years since 1899, are as follows: Census Year Per cent Exported Census Year Per cent Exported 1899 12.8 1927 9'9 I9o9 9.6 1929 9.8 1914 10.2 1931 7'4 1919 16.o 1933 6.8 1921 12.8 1935 1923 8.9 1937 1925 1o• 1 1938 9.o A more equitable comparison lies in the figures for individual commodities because the overall figures conceal the very great importance of export markets for some of the more important products of the United States. Thus in 1933, 66% of all raw cot ton produced in the United States was exported. This ratio had fallen to 3o% by 1938. In the latter year exports of the gum rosin production amounted to 38%. In 1937, 43% of the prunes, 29% of the sardines, 19% of the production of tractors and parts, 43% of the borax, and 36% of all dried fruits were exported. Furthermore industries which export but a small fraction of their total output sometimes find that the foreign sales enabled them to step up production to a higher point with resulting reductions in unit costs of production. Export sales may indeed account for a substantial part of the net earnings of a company, even though they make up but a fraction of total sales.

Balance of Payments.

Widespread misunderstanding of for eign commerce arises from the overemphasis which has been placed on exports and imports of commodities. Tangible mer chandise transactions are more easily observed than are other per haps equally or even more important but less obvious transac tions, which are fully as much a part of foreign commerce as is the traffic in physical goods. When service items, capital trans fers, and gold and silver movements as well as commodity trade are taken into account, the resulting balance of payments, as dis tinguished from the balance of trade, shows necessarily an equal ity between total export, or credit, items and total import, or debit, items. Thus in 1938 the aggregate of all trade in goods and

services between the United States and the rest of the world amounted to approximately $7,500,000,000, of which merchandise exports and imports comprised but two-thirds. Shipping and freight services, travel expenditures, interest and dividends, and "immigrant" remittances were among the important types of service transactions which accounted for the other third. The in ternational movement of securities and the transfer of properties involve large amounts which in sum often exceed the value of merchandise exports and imports. Movements of gold and silver are set apart because of their especial monetary significance. (See Table XIII.) One reason for the widespread ignorance of the true nature of international trade has been the fact that data have not been available for all transactions until rather recently. Estimates of the balance of international payments for the United States have been compiled only since 1919 and other nations are gener ally behind the United States in the issuance of similar data. In sharp contrast are the statistics on merchandise exports and im ports which, for the United States, have been compiled since 1790 and are available in very great detail.

Merchandise Trade.

The exports of merchandise from the United States averaged $42,000,000 annually during the last dec ade of the 18th century. By the corresponding period of the 19th century, the average approached $1,000,000,000 and that figure was exceeded in each of the three last years of that century. A rapid expansion followed which carried the total value of exports of commodities to the all-time record of $8,228,000,000 in 1920, a figure, however, which reflects the price inflation of the war era. The $5,241,000,000 value for exported goods in 1929 prob ably represented a larger physical volume of merchandise since the price level in 1920 was some 62% above that prevailing in 1929. The depression years which followed saw exports drop sharply to $1,611,000,000 in 1932 with 1933 showing very little improvement. Thereafter a steady recovery was registered to $3,349,000,000 for 1937, followed by a set-back in 1938 to $3,094,000,000.