but the vessels under the American flag, being burdened by higher capital costs, found difficulty in competing with foreign ships. A fundamental reason for the decline in the American carrying trade engaged in the foreign trade was the opening of more profitable fields for investment. Many manufacturing, agricultural, mining, and railroad enterprises attracted investors. The growth in the American coastwise marine and the investment of American capital in foreign ships indicate that this rise of new enterprises was not solely responsible for the decline in the deep-sea marine. They, however, afforded fields for investment which were more favorable than were American vessels which were obliged to compete with the ships of foreign nations. As was explained in Chapter XXV, the Civil War resulted in a severe loss in vessel tonnage, and this loss came at a crucial period in the history of the American merchant marine. Congress for many years did little to promote the American carrying trade: (a) Vessels which adopted foreign flags during the Civil War were refused permission to return to American registry; (b) the heavy war-revenue taxes were retained until 1868; (c) imports of ship-building materials for use in the construction of wooden vessels were not admitted free of duty until 1872 and those for use in building iron and steel vessels not until 1890; (d) liberal mail pay was not provided until March 3, 1891, but three unimportant mail contracts being approved from the close of the Civil War until that year; (e) the American navy was neglected during a period of over twenty years. The operating costs of American vessels were in many instances higher than those of competing foreign vessels. Various foreign countries, notably Great Britain, France, Japan, and Germany, encouraged their respective merchant marines by carrying out definite policies of government aid. CHAPTER XXVII. THE FOREIGN TRADE IN THE EARLY YEARS OF THE TWENTIETH Extraordinary growth in foreign trade, 86. The balance of trade in favor of Though the conditions existing during the closing years of the nineteenth century foreshadowed many of the changes which have since occurred in the foreign trade, they did not foretell its extraordinary growth. The annual exports of merchandise grew from a value of $1,394,483,000 in 1900 to $1,744,985,000 in 1910, and the import of merchandise from a value of $849,941,000 to $1,556,947,000. From 1910 to 1913 the value of the country's exports and imports of merchandise advanced, respectively, to $2,465,884,000 and $1,812,978,000, and to the unprecedented aggregate of $4,278,862,000. The increase of 25 per cent in the value of exports and 83 per cent in the value of imports during the first decade of the twentieth century and of 76 per cent and 113 per cent, respectively, during the years from 1900 to 1913, was partly due to a general rise in the prices of commodi The index numbers of the United States Bureau of Labor show an increase of 14.4 per cent in wholesale prices during the decade 1900 to 1910, those of Bradstreet 12.6 per cent, those of the London Economist 13.7 per cent, and those of Sauerbeck 4 per cent. The average level of prices according to these index numbers advanced approximately 13.5 per cent in the United States and 8.8 per cent in Great Britain. For the period 1900 to 1913 Bradstreet's index numbers record an increase of 17 per cent and those of the London Economist an increase of 27 per cent. The value of the entire foreign trade of the United States advanced 47.1 per cent during the first decade and 90 per cent during the first thirteen years of the century. If these increases are reduced in accordance with the above-mentioned index numbers so as to eliminate the effect of the rise in prices, it will bring them into substantial accord with the growth in the shipping engaged in the foreign trade. The total entrances and clearances of vessels advanced from 56,444,000 tons in 1900 to 79,942,000 in 1910 and to 101,799,000 in 1913, an increase of 41.6 per cent during the first decade and 80 per cent during the first thirteen years of the century. The balance of trade in favor of the United States, using the term as it is commonly understood by exporters and importers, was far greater than during any previous ten or thirteen years in the history of the foreign trade, but it was subject to great fluctuations. The excess of exports over imports of merchandise was greatest in 1908, when the mild depression which then afflicted the country caused a decline in imports but did not affect exports unfavorably. From $666,432,000 in that year the excess of imports fell to $188,037,000 in 1910, and then rebounded to $652,906,000 in the fiscal year of 1913. The excess of exports, including gold and silver movements as well as merchandise, fluctuated from $679,625,000 in 1901 to $273,330,000 in 1910 and $691,820,000 in 1913. The term "balance of trade" as used in monetary circles refers to the ability of a nation to import supplies of the precious metals and depends not only upon the excess of exports over imports, but also upon the remittances for interest, tourist expenditures, sums sent to friends, and freight paid to foreign ocean carriers. The net sums sent out of the United States for these purposes in the fiscal year 1909 have been estimated as follows: Interest, $250,000,000; tourist expenditures, $170,000,000; remittances to friends, $150,000,000; freight, $25,000,000; total, $595,000,000. The excess of exports over imports in that year was $410,347,000, leaving a difference of approximately $184,000,000, which was liquidated by the investment of foreign capital in the United States. CHANGES IN NATURE OF EXPORTS. The extraordinary increase in the foreign trade since the beginning of the twentieth century has been accompanied by clearly defined changes in the nature, sources, and markets of the commodities imported and exported. The shift in exports from foodstuffs to manufactures, which became perceptible during the last decade of the previous century, now proceeded with astounding rapidity. The value of food exports, in spite of rising prices, declined from $545,474,000 in 1900 to $369,088,000 in 1910, and it was $502,094,000 in 1913. Relative to the value of all exports they declined from 39.8 per cent of the total in 1900 to a minimum of 19.13 per cent in 1911, and to 20.67 per cent in 1913. There was an abrupt decline in wheat exports from nearly 102,000,000 bushels in 1900 to less than 5,000,000 bushels in 1905, and to 46,680,000 bushels in 1910, and of flour exports from 18,699,000 barrels in 1900 to 8,826,000 barrels in 1905 and 9,041,000 barrels in 1910. The value of the total breadstuffs exported fell from $262,744,000 in 1900 to $133,191,000 in 1910. In 1913 breadstuffs were no longer the principal group of American exports, but were exceeded by cotton, iron and steel manufactures, and provisions. The 'Paish, "The Trade Balance of the United States," in Publications of National Monetary Commission, Senate Doc. No. 579, 61 Cong., 2 sess., p. 197. exports of provisions were more generally maintained, but they also fell from a value of nearly $184,500,000 in 1900 to $130,633,000 in 1910, and $155,666,000 in 1913. The number of cattle shipped abroad fell from over 397,000 in 1900 to less than 25,000 in 1913. The astounding decline in food exports was due to the fact that the domestic consumption of food increased at a more rapid rate than production. The increase in the wheat crop did not keep pace with the growing demand for flour in the United States, and the number of beef cattle in the country steadily declined after 1907.1 Almost as rapid as the decline in food exports was the growth in the exports of manufactures. With but slight interruptions they rose from a value of $484,846,000 in 1900 to $1,186,990,000 in 1913. The conditions of the manufacturing and food-producing industries were completely reversed, the former having a constantly growing and the latter a greatly reduced surplus output. The increase in the output of the leading manufacturing industries and of the minerals upon which they depend was phenomenal. During the decade 1900 to 1910 the output of coal grew from 232,583,000 to over 431,000,000 tons, iron ore from 27,553,000 to 56,889,000 tons, copper from 270,588 to 482,200 tons, and petroleum from 63,338,000 to 209,556,000 barrels. The value of the annual output of the country's iron and steel works and rolling-mills grew from $597,212,000 to $985,756,000. The annual output of agricultural implements advanced from a value of $101,207,000 to $146,329,000, of cotton goods from $339,223,000 to $628,392,000; leather from $204,038,000 to $327,874,000; lumber and timber products from $761,000,000 to over $1,156,000,000, and refined petroleum products from less than $124,000,000 to nearly $237,000,000. For the prosperity of these and other manufacturing industries the development of foreign markets became a necessity, not merely as a convenient dumping-ground for occasional unmarketed wares, but as a permanent outlet for a portion of the annual output. Iron and steel exports, including an even wider range of wares than was sold abroad during the decade from 1890 to 1900, made the remarkable advance from a value of $121,914,000 in 1900 to a value of $304,606,000 in 1913, in the latter year leading in value all other American exports except cotton. During this period, also, the exports of lumber, timber and wood manufactures grew from $45,578,000 to nearly $81,000,000; refined mineral oils from $68,247,000 to $129,667,000; cars, carriages, automobiles, etc., from less than $10,000,000 to $54,586,000; agricultural implements from $16,000,000 to $40,572,000, and refined copper and copper products from $57,852,000 to $140,165,000. The exports of cotton goods underwent wide fluctuations. They grew from $24,003,000 in 1900 to nearly $53,000,000 in 1905, then declined to 'See chap. xviii. slightly over $25,000,000 in 1908, and again increased to $50,770,000 in 1912, the latest year for which complete data are available. Progress was also made in the exportation of leather and leather goods, naval stores, chemicals, drugs and dyes, rubber goods, and many less important manufactured commodities. Exported manufactures as a whole comprised 48.84 per cent of the country's entire export trade in 1913 as compared with 35.37 per cent in 1900. Next to manufactures the largest group of exports during the period from 1900 to 1910 consisted of crude materials for use in foreign industries. Contrary to the trend of food exports, the exports of this group of raw products advanced in value from $325,244,000, or 23.73 per cent of the total export trade, in 1900, to $713,758,000, or 30.13 per cent, in 1913. The leading raw material was cotton, which regained its position as the principal export of the country. The volume of cotton exports grew from 6,806,572 bales in 1900 to 10,675,445 in 1912 and 8,724,572 in 1913, and its annual value grew from $241,883,000 in 1900 to $547,357,000 in 1913. Even though the cotton textile industries of the United States made excellent progress, there was no perceptible increase in the proportion of the total cotton crop retained for home consumption; 66.8 per cent of the crop was exported alike in 1900 and in 1910. Though the annual crop advanced from 10,246,000 running bales in 1900 to over 16,109,000 in 1911 and 14,091,000 in 1912, the prices received gradually rose to a higher level because of greatly increased requirements alike in the cotton mills at home and abroad. Exports of raw materials also included leaf tobacco. The leaftobacco crop rose from 814,345,000 pounds in 1900 to 984,349,000 pounds in 1910, and 953,734,000 pounds in 1913.1 The quantities shipped abroad increased less rapidly than the total crop, but they advanced from 344,656,000 pounds in 1900 to 418,797,000 pounds in 1913, an increase in value of from $29,422,000 to $49,354,000. Raw materials exported also included 20,709,000 tons of coal valued at $65,000,000 in 1913 as compared with but 7,188,000 tons valued at $19,500,000 in 1900. The most significant movement in the entire export trade was the shift from agricultural to manufactured products. Although, as was stated above, there was an increase in the value of agricultural exports from $844,616,000 in 1900 to $1,048,434,000 in 1912, this represented a surprising relative fall from 61.6 to 48.3 per cent of the total domestic exports. The Bureau of Foreign and Domestic Commerce has ceased to classify all exports according to their sources, but it reports that during this period the exports of domestic manufactures rose from $484,846,000 to $1,020,417,000, and from 35.37 'Estimate of U. S. Department of Agriculture in the "Agricultural Outlook," Farmers Bull., No. 615, p. 28. |