THE ALLEGED EXCESS OF IMPORTS.
[To ma EDITOR OF THE "SPECTATOR."' SIR,—In spite of numerous letters in the Spectator and else- where, there are still many who are scared by what may be termed one of the Protectionists' minor bogeys, and with your permission, I should like to draw attention to the clearest statement of the case I have yet seen. In the first place, an initial difficulty can be cleared up by remembering that in most calculations exports are reckoned f.o.b. (free on board) at the port of export, while imports are reckoned c.i.f. (cost. insurance, freight). This is, of course, a difficulty that pre- sents itself rather to the controversialist in everyday life than to the correspondent to well-known journals ; but it is one that must be borne in mind. The passage to which I would refer occurs in a speech by Mr. J. K. Cross in the House of Commons on August 12th, 1881, in a debate on the French Commercial Treaty (Hansard, 3rd Series, 264). In this be traces the mechanism of trade in three distinct transactions. In the first, £1,000 worth of cotton.goods is sent to Bombay; the freight costs £50, and the gocidEi are sold for £1,050. This is laid out by an agent in raw cotton, on which £70 freight is paid, so that the purchase figures in the return of imports for £1,120, an excess of £120, no one being one whit the worse for the exchange. Heavier and more bulky articles naturally show the discrepancy to an even greater extent. In the next case, £1,000 worth of pig-iron is exported, freight amounts to 2500 ; jute is imported in exchange, on which the freight is £300, and the imports figure as £1,800. The third case is still more significant, and may be summarised as follows :-
Coal (f.o.b.) ... £1,000 Wheat bought in U.S.A. £2,500 Freight to U.S.A. ... 1,500 Freight to England ... 1,500 Selling price in U.S.A. £2,500 Price in imports ... £4,000 To prove that these hypothetical cases are justified by actual practice, Mr. Cross showed that in 1880 coal valued here at £265,000 sold in India for £900,000. This purchased sixty- nine thousand tons of jute, which figured among imports to the tune of £1,080,000. When one remembers the pre- ponderance of the British carrying trade, and of the insurance effected in London, it can at once be seen to which side of the balance-sheet of national prosperity such transactions should
be placed.—I am, Sir, &c., F. HERBERT TOYNE. 2 Harcourt Buildings, Temple, E.C.
[Our correspondent's letter is most valuable. It is astonishing that we should propose to base a policy on figures so entirely inadequate as those supplied by our export and import statistics.—ED. Spectator.]
Previous page
