exports together is always absurd, and generally misleading. It is commonly used to cloak a fallacious argument. If a man who last year earned £600 ($2,919.90) and spent £500 ($2,433.25) added these amounts together and produced £1,100 ($5,353.15), his arithmetic would be excellent, but the total would be meaningless. If a brass founder, having sold £10 ($48.66) worth of doorknobs to a Canadian merchant, and having also bought 20s. ($4.86) worth of Canadian cheese on his way home, were to enter the two transactions together as "dealings with Canada, II ($53.55" the entry would have no statistical value whatever, and the addition would have entirely destroyed any statistical value that belonged to the two separate items.

our over

It should also be evident without argument that this method of lumping everything together conceals differences in real value between different transactions having the same volume in terms of money. When Mr. Chiozza writes sea trade is valued at" instead of "amounts to" £800,000,000 ($3,893,200,000), the substitution of the less-accurate phrase covers a mistake of vast importance. Would any reasonable man, wishing to compare the value-whether to the owners, to the persons employed, or to the nation-of two different commercial undertakings, be content merely with the one datum of the annual turnover? More persons may be earning a livelihood and a larger addition may be made to the national wealth by an undertaking with a turnover of £100,000 ($486,650) than by another with a turnover of £250,000 ($1,216,625).

VALUE DOES NOT VARY WITH VOLUME,

Or, again, there are important differences in value between the exportation of manufactured goods and the exportation of raw materials, or, among raw materials exported, between those which represent the surplus of a harvest or annual yield— e. g., raw cotton, or wheat, or wool-and those which represent a deduction from a store which can not be replenished-e. g., coal or china clay. These differences are neglected so long as we deal with gross totals.

These remarks will suffice to justify the preliminary observation that, in comparing our colonial with our foreign trade, we must take into account the kinds of trade as well as the volume of trade.

COMPARATIVE VALUE OF COLONIAL AND FOREIGN TRADE,

Bearing these things in mind, let us consider the following statistics. They are derived from the Board of Trade returns of British export trade in 1902:

The reader is asked to keep these percentages in mind and compare them with the percentage figures given below in respect of the several classes of exports that will be mentioned,

The following table is a classified summary of exports:

Even without further analysis the table exhibits at a glance the essential difference between our foreign and our colonial trade-a difference which is, from our point of view, entirely in favor of the colonial trade. Foreign countries take nearly all our exportation of raw materials; the colonies take far more than their share of manufactured goods.

The reasons for regarding the export of manufactures as of more value to us than the export of raw materials are obvious. In the first place, to export raw materials is to export the means by which foreign manufacturers will compete with British manufacturers. This is not given as a reason in itself for prohibiting or even checking such exportation, but it is a reason for assigning less value to this exportation than to exports of manufactured goods. A similar qualification should be made in the case of ships, the exportation of which represents a provision for enabling foreigners to compete with our export trade.

In the second place, speaking generally, a smaller proportion of the value of raw materials is value created by labor; or, in other words, a given amount in value of raw materials means less in employment and wages than the same amount of manufactured goods. This rule has many exceptions, but those exceptions do not apply to our trade. Raw cotton is an exception, for cotton is a crop of which the cost of production is largely labor cost. Only whereas cotton is the largest item in

Coal,

the exportation of material to the United Kingdom from the United States, by far the largest item in our exportation of material to the United States is coal. coke, and fuel contribute no less than £27,580,000 ($123,848,800) to the £31,198,000 ($151,622,800) value of raw materials in the classified summary.

If England took all the cotton crop this year, the crop could be repeated next year. If we want more cotton, the crop can be increased, more labor employed, and more mouths fed by the export trade. The coal we export is drawn from a store which is limited, diminishing, and irreplaceable. The same consideration applies to pig iron and china clay. Hence the significance of the following sta

The mention of china clay suggests a digression which will be pardoned because it treats of a matter of great importance to the North Staffordshire industry.

Exports to the United States of unmanufactured clay and earthen and china ware.

Between 1892 and 1902 our exportation of china ware to the States declined from 100,506 to 48,198 crates. Thus, America (1) puts a tax of 60 per cent on English pottery, (2) attracts our skilled workmen by the larger wages that are possible under protection, and (3) gets year by year a larger helping of the limited supply of potter's clay; and so a once prosperous industry is approaching starvation point. Having no tariff, we are helpless to check these proceedings.

Such important facts and considerations are studiously concealed by the method of neglecting differences, lumping everything together, adding exports to imports, exhibiting the total, and calling upon us to rejoice in our commercial prosperity. It is an impressive and exhilarating method, but it is not likely to bring much consolation to the Staffordshire potter.

To return to the comparison of foreign and colonial trade. The raw-material class contains only two other items of importance.

It is also worthy of notice that the colonies take less than their share of those goods, entered in the manufactured classes, which are material for other manufactures. For example:

It is hardly necessary for the present purpose to add many detailed examples of the comparative trade in special manufactures. The following examples are selected as being of local interest:

These statistics are sufficient to prove and illustrate the important difference in the prevailing character of our colonial as compared with our foreign trade. The distinction would have been still more marked if protective foreign countries had been taken separately from those eastern and South American countries in which we can still find an open market.

It has been shown that the colonies are incomparably our best customers for that division of our export trade to which prudence bids us assign the higher value. If, then, we admit the two assumptions of Mr. Chamberlain's critics (1) that the proposed encouragement of our colonial trade will entail a diminution of our foreign trade, and (2) that the decrease will be proportionate to the volume of trade, it by no means follows that the decrease-assumed but unproven-in the total volume of trade over seas will impair its true value to the nation. On the contrary, we find in the statistics a very strong reason in support of the policy of fostering and enlarging our trade with the colonies.

MARSHAL HALSTEAD,

BIRMINGHAM, ENGLAND, July 20, 1903.

Consul.

CHANGE IN CHARACTER OF BRITISH EXPORTS.

In my report of July 20 I inclosed a copy of one of the series of articles on "Trade preference and reciprocity"* which the Birmingham Post is printing as an "authoritative exposition of the views held by Mr. Chamberlain" on this subject. In the article the claim was made that the export trade of Great Britain to its colonies was proportionately more valuable than that with foreign countries because of its character, the colonies purchasing more largely of manufactured goods and buying a smaller proportionate quantity of raw materials, such as coal and other irreplaceable materials. Supplementary to that report, I forward another article. to which the caption is given "Change in character of our export trade," and containing statistics intended to demonstrate that British foreign trade has been subject to a change in character which is unsatisfactory, because in export percentages raw materials had increased and manufactured goods decreased, the one "highly significant exception" being machinery-"the equipment of foreign manufactories "-while in import returns "the changes have proceeded in exactly the reverse direction."

The article printed to-day reads as follows:

CHANGE IN CHARACTER OF OUR EXPORT TRADE,

[From the Birmingham Post of July 22, 1903.]

It has been shown that our trade with the colonies is of a more satisfactory character than our trade with foreign countries, because it includes a far larger proportionate exportation of manufactured goods and a far smaller proportionate exportation of coal and other irreplaceable materials.

The following statistics are intended to demonstrate that our trade, regarded as a whole, has recently been subject to a gradual change which is in the same sense and for the same reason unsatisfactory. If this be so, a change in our commercial policy is indicated by the symptoms.

The following calculations of the percentage of different classes of exports and imports to the total value of exports and imports, respectively, are derived from

* See preceding report, "Foreign and colonial trade of the United Kingdom."