The Great Speeches and Orations of Daniel Webster / With an Essay on Daniel Webster as a Master of English Style

by Daniel Webster; Edwin Percy Whipple

Mr. Chairman, I will now proceed to say a few words upon a topic, but for the introduction of which into this debate I should not have given the committee on this occasion the trouble of hearing me. Some days ago, I believe it was when we were settling the controversy between the oil-merchants and the tallow-chandlers, the balance of trade made its appearance in debate, and I must confess, Sir, that I spoke of it, or rather spoke to it, somewhat freely and irreverently. I believe I used the hard names which have been imputed to me, and I did it simply for the purpose of laying the spectre, and driving it back to its tomb. Certainly, Sir, when I called the old notion on this subject nonsense, I did not suppose that I should offend any one, unless the dead should happen to hear me. All the living generation, I took it for granted, would think the term very properly applied. In this, however, I was mistaken. The dead and the living rise up together to call me to account, and I must defend myself as well as I am able.

Let us inquire, then, Sir, what is meant by an unfavorable balance of trade, and what the argument is, drawn from that source. By an unfavorable balance of trade, I understand, is meant that state of things in which importation exceeds exportation. To apply it to our own case, if the value of goods imported exceed the value of those exported, then the balance of trade is said to be against us, inasmuch as we have run in debt to the amount of this difference. Therefore it is said, that, if a nation continue long in a commerce like this, it must be rendered absolutely bankrupt. It is in the condition of a man that buys more than he sells; and how can such a traffic be maintained without ruin? Now, Sir, the whole fallacy of this argument consists in supposing, that, whenever the value of imports exceeds that of exports, a debt is necessarily created to the extent of the difference, whereas, ordinarily, the import is no more than the result of the export, augmented in value by the labor of transportation. The excess of imports over exports, in truth, usually shows the gains, not the losses, of trade; or, in a country that not only buys and sells goods, but employs ships in carrying goods also, it shows the profits of commerce, and the earnings of navigation. Nothing is more certain than that, in the usual course of things, and taking a series of years together, the value of our imports is the aggregate of our exports and our freights. If the value of commodities imported in a given instance did not exceed the value of the outward cargo, with which they were purchased, then it would be clear to every man's common sense, that the voyage had not been profitable. If such commodities fell far short in value of the cost of the outward cargo, then the voyage would be a very losing one; and yet it would present exactly that state of things, which, according to the notion of a balance of trade, can alone indicate a prosperous commerce. On the other hand, if the return cargo were found to be worth much more than the outward cargo, while the merchant, having paid for the goods exported, and all the expenses of the voyage, finds a handsome sum yet in his hands, which he calls profits, the balance of trade is still against him, and, whatever he may think of it, he is in a very bad way. Although one individual or all individuals gain, the nation loses; while all its citizens grow rich, the country grows poor. This is the doctrine of the balance of trade.

Allow me, Sir, to give an instance tending to show how unaccountably individuals deceive themselves, and imagine themselves to be somewhat rapidly mending their condition, while they ought to be persuaded that, by that infallible standard, the balance of trade, they are on the high road to ruin. Some years ago, in better times than the present, a ship left one of the towns of New England with 70,000 specie dollars. She proceeded to Mocha, on the Red Sea, and there laid out these dollars in coffee, drugs, spices, and other articles procured in that market. With this new cargo she proceeded to Europe; two thirds of it were sold in Holland for $130,000, which the ship brought back, and placed in the same bank from the vaults of which she had taken her original outfit. The other third was sent to the ports of the Mediterranean, and produced a return of $25,000 in specie, and $15,000 in Italian merchandise. These sums together make $170,000 imported, which is $100,000 more than was exported, and is therefore proof of an unfavorable balance of trade, to that amount, in this adventure. We should find no great difficulty, Sir, in paying off our balances, if this were the nature of them all.

The truth is, Mr. Chairman, that all these obsolete and exploded notions had their origin in very mistaken ideas of the true nature of commerce. Commerce is not a gambling among nations for a stake, to be won by some and lost by others. It has not the tendency necessarily to impoverish one of the parties to it, while it enriches the other; all parties gain, all parties make profits, all parties grow rich, by the operations of just and liberal commerce. If the world had but one clime and but one soil; if all men had the same wants and the same means, on the spot of their existence, to gratify those wants,—then, indeed, what one obtained from the other by exchange would injure one party in the same degree that it benefited the other; then, indeed, there would be some foundation for the balance of trade. But Providence has disposed our lot much more kindly. We inhabit a various earth. We have reciprocal wants, and reciprocal means for gratifying one another's wants. This is the true origin of commerce, which is nothing more than an exchange of equivalents, and, from the rude barter of its primitive state, to the refined and complex condition in which we see it, its principle is uniformly the same, its only object being, in every stage, to produce that exchange of commodities between individuals and between nations which shall conduce to the advantage and to the happiness of both. Commerce between nations has the same essential character as commerce between individuals, or between parts of the same nation. Cannot two individuals make an interchange of commodities which shall prove beneficial to both, or in which the balance of trade shall be in favor of both? If not, the tailor and the shoemaker, the farmer and the smith, have hitherto very much misunderstood their own interests. And with regard to the internal trade of a country, in which the same rule would apply as between nations, do we ever speak of such an intercourse as prejudicial to one side because it is useful to the other? Do we ever hear that, because the intercourse between New York and Albany is advantageous to one of those places, it must therefore be ruinous to the other?

May I be allowed, Sir, to read a passage on this subject from the observations of a gentleman, in my opinion one of the most clear and sensible writers and speakers of the age upon subjects of this sort?[4] "There is no political question on which the prevalence of false principles is so general, as in what relates to the nature of commerce and to the pretended balance of trade; and there are few which have led to a greater number of practical mistakes, attended with consequences extensively prejudicial to the happiness of mankind. In this country, our Parliamentary proceedings, our public documents, and the works of several able and popular writers, have combined to propagate the impression, that we are indebted for much of our riches to what is called the balance of trade." "Our true policy would surely be to profess, as the object and guide of our commercial system, that which every man who has studied the subject must know to be the true principle of commerce, the interchange of reciprocal and equivalent benefit. We may rest assured that it is not in the nature of commerce to enrich one party at the expense of the other. This is a purpose at which, if it were practicable, we ought not to aim; and which, if we aimed at, we could not accomplish." These remarks, I believe, Sir, were written some ten or twelve years ago. They are in perfect accordance with the opinions, advanced in more elaborate treatises, and now that the world has returned to a state of peace, and commerce has resumed its natural channels, and different nations are enjoying, or seeking to enjoy, their respective portions of it, all see the justness of these ideas,—all see, that, in this day of knowledge and of peace, there can be no commerce between nations but that which shall benefit all who are parties to it.

If it were necessary, Mr. Chairman, I might ask the attention of the committee to refer to a document before us, on this subject of the balance of trade. It will be seen by reference to the accounts, that, in the course of the last year, our total export to Holland exceeded two millions and a half; our total import from the same country was but seven hundred thousand dollars. Now, can any man be wild enough to make any inference from this as to the gain or loss of our trade with Holland for that year? Our trade with Russia for the same year produced a balance the other way, our import being two millions, and our export but half a million. But this has no more tendency to show the Russian trade a losing trade, than the other statement has to show that the Dutch trade has been a gainful one. Neither of them, by itself, proves any thing.

Springing out of this notion of a balance of trade, there is another idea, which has been much dwelt upon in the course of this debate; that is, that we ought not to buy of nations who do not buy of us; for example, that the Russian trade is a trade disadvantageous to the country, and ought to be discouraged, because, in the ports of Russia, we buy more than we sell. Now allow me to observe, in the first place, Sir, that we have no account showing how much we do sell in the ports of Russia. Our official returns show us only what is the amount of our direct trade with her ports. But then we all know that the proceeds of another portion of our exports go to the same market, though indirectly. We send our own products, for example, to Cuba, or to Brazil; we there exchange them for the sugar and the coffee of those countries, and these articles we carry to St. Petersburg, and there sell them. Again; our exports to Holland and Hamburg are connected directly or indirectly with our imports from Russia. What difference does it make, in sense or reason, whether a cargo of iron be bought at St. Petersburg, by the exchange of a cargo of tobacco, or whether the tobacco has been sold on the way, in a better market, in a port of Holland, the money remitted to England, and the iron paid for by a bill on London? There might indeed have been an augmented freight, there might have been some saving of commissions, if tobacco had been in brisk demand in the Russian market. But still there is nothing to show that the whole voyage may not have been highly profitable. That depends upon the original cost of the article here, the amount of freight and insurance to Holland, the price obtained there, the rate of exchange between Holland and England, the expense, then, of proceeding to St. Petersburg, the price of iron there, the rate of exchange between that place and England, the amount of freight and insurance at home, and, finally, the value of the iron when brought to our own market. These are the calculations which determine the fortune of the adventure; and nothing can be judged of it, one way or the other, by the relative state of our imports or exports with Holland, England, or Russia.

I would not be understood to deny, that it may often be our interest to cultivate a trade with countries that require most of such commodities as we can furnish, and which are capable also of directly supplying our own wants. This is the original and the simplest form of all commerce, and is no doubt highly beneficial. Some countries are so situated, that commerce, in this original form, or something near it, may be all that they can, without considerable inconvenience, carry on. Our trade, for example, with Madeira and the Western Islands has been useful to the country, as furnishing a demand for some portion of our agricultural products, which probably could not have been bought had we not received their products in return. Countries situated still farther from the great marts and highways of the commercial world may afford still stronger instances of the necessity and utility of conducting commerce on the original principle of barter, without much assistance from the operations of credit and exchange. All I would be understood to say is, that it by no means follows that we can carry on nothing but a losing trade with a country from which we receive more of her products than she receives of ours. Since I was supposed, the other day, in speaking upon this subject, to advance opinions which not only this country ought to reject, but which also other countries, and those the most distinguished for skill and success in commercial intercourse, do reject, I will ask leave to refer again to the discussion which I first mentioned in the English Parliament, relative to the foreign trade of that country. "With regard," says the mover[5] of the proposition, "to the argument employed against renewing our intercourse with the North of Europe, namely, that those who supplied us with timber from that quarter would not receive British manufactures in return, it appeared to him futile and ungrounded. If they did not send direct for our manufactures at home, they would send for them to Leipsic and other fairs of Germany. Were not the Russian and Polish merchants purchasers there to a great amount? But he would never admit the principle, that a trade was not profitable because we were obliged to carry it on with the precious metals, or that we ought to renounce it, because our manufactures were not received by the foreign nation in return for its produce. Whatever we received must be paid for in the produce of our land and labor, directly or circuitously, and he was glad to have the noble Earl's[6] marked concurrence in this principle."

Referring ourselves again, Sir, to the analogies of common life, no one would say that a farmer or a mechanic should buy only where he can do so by the exchange of his own produce, or of his own manufacture. Such exchange may be often convenient; and, on the other hand, the cash purchase may be often more convenient. It is the same in the intercourse of nations. Indeed, Mr. Speaker has placed this argument on very clear grounds. It was said, in the early part of the debate, that, if we cease to import English cotton fabrics, England will no longer continue to purchase our cotton. To this Mr. Speaker replied, with great force and justice, that, as she must have cotton in large quantities, she will buy the article where she can find it best and cheapest; and that it would be quite ridiculous in her, manufacturing as she still would be, for her own vast consumption and the consumption of millions in other countries, to reject our uplands because we had learned to manufacture a part of them for ourselves. Would it not be equally ridiculous in us, if the commodities of Russia were both cheaper and better suited to our wants than could be found elsewhere, to abstain from commerce with her, because she will not receive in return other commodities which we have to sell, but which she has no occasion to buy?

Intimately connected, Sir, with this topic, is another which has been brought into the debate; I mean the evil so much complained of, the exportation of specie. We hear gentlemen imputing the loss of market at home to a want of money, and this want of money to the exportation of the precious metals. We hear the India and China trade denounced, as a commerce conducted on our side, in a great measure, with gold and silver. These opinions, Sir, are clearly void of all just foundation, and we cannot too soon get rid of them. There are no shallower reasoners than those political and commercial writers who would represent it to be the only true and gainful end of commerce, to accumulate the precious metals. These are articles of use, and articles of merchandise, with this additional circumstance belonging to them, that they are made, by the general consent of nations, the standard by which the value of all other merchandise is to be estimated. In regard to weights and measures, something drawn from external nature is made a common standard, for the purposes of general convenience: and this is precisely the office performed by the precious metals, in addition to those uses to which, as metals, they are capable of being applied. There may be of these too much or too little in a country at a particular time, as there may be of any other articles. When the market is overstocked with them, as it often is, their exportation becomes as proper and as useful as that of other commodities, under similar circumstances. We need no more repine, when the dollars which have been brought here from South America are despatched to other countries, than when coffee and sugar take the same direction. We often deceive ourselves, by attributing to a scarcity of money that which is the result of other causes. In the course of this debate, the honorable member from Pennsylvania[7] has represented the country as full of every thing but money. But this I take to be a mistake. The agricultural products, so abundant in Pennsylvania, will not, he says, sell for money; but they will sell for money as quick as for any other article which happens to be in demand. They will sell for money, for example, as easily as for coffee or for tea, at the prices which properly belong to those articles. The mistake lies in imputing that to want of money which arises from want of demand. Men do not buy wheat because they have money, but because they want wheat. To decide whether money be plenty or not, that is, whether there be a large portion of capital unemployed or not, when the currency of a country is metallic, we must look, not only to the prices of commodities, but also to the rate of interest. A low rate of interest, a facility of obtaining money on loans, a disposition to invest in permanent stocks, all of which are proofs that money is plenty, may nevertheless often denote a state not of the highest prosperity. They may, and often do, show a want of employment for capital; and the accumulation of specie shows the same thing. We have no occasion for the precious metals as money, except for the purposes of circulation, or rather of sustaining a safe paper circulation. And whenever there is a prospect of a profitable investment abroad, all the gold and silver, except what these purposes require, will be exported. For the same reason, if a demand exist abroad for sugar and coffee, whatever amount of those articles might exist in the country, beyond the wants of its own consumption, would be sent abroad to meet that demand.