Balance of Trade
Aiton's Encyclopedia (1910)
in commerce, the difference between the value of the exports of a country and the value of the imports for the same period of time. The exports of the United States for the year ending June 30, 1908, amounted to $1,834,786,357 The imports for the same period footed 1,194,341,792 The American balance of trade for that year was the difference, or . . . . . .... $ 640,444,565 As we sold more than we bought, the balance of trade was in our favor. In 1906-7 the Japanese imports were, in round numbers, 494,000,000 yen. The exports were 432,000,000 yen. The balance of trade, 62,000,000 yen, was against Japan that year. As a matter of fact, balances of trade are not known with scientific accuracy. If imports and exports were reckoned by weight, the total exports of the world would equal the total imports, allowance being made for loss in transportation. Goods are worth more, however, after they have been carried. A higher valuation is likely to be placed on merchandise when it enters a country than was placed on it in the country where it was produced. Otherwise there would be no inducement to carry. American importers are required to enter their goods at the price paid abroad, as shown by invoices attested by a consul. If this plan were adopted by all countries, or some other universal method were followed, a much greater degree of accuracy would be possible. Down to the time of Adam Smith, a group of economists, known as the mercantile school, were wont to insist that a country is prosperous commercially only when the balance of trade is in its favor. The advocates of a protective tariff take much the same view. They hold that we should sell abroad, but that what we need should be produced at home. Free traders insist that an unfavorable balance of trade may be desirable. They do not fail to cite the case of the long continued commercial prosperity of The United Kingdom with an unfavorable balance. In 1908 for instance, the United Kingdom imported food and merchandise to the amount of $775,000,000 in excess of exports. The large balance in favor of the United States is absorbed in paying the interest on government bonds.
What Has Changed in the Last Century
Aiton's 1910 figures show the United States selling $640 million more than it bought and paying interest to foreign bondholders out of the surplus. That pattern reversed: the U.S. has run a merchandise deficit every year since 1976, reaching roughly $900 billion in goods and services in 2024, and the country is now the world's largest net debtor rather than a young borrower paying coupons abroad. Economists after the 1940s folded the trade balance into a wider balance-of-payments account, in which a deficit on goods is matched by inflows of foreign capital, so a "favorable balance" no longer counts as a verdict on prosperity. The entry's complaint that trade figures are not known "with scientific accuracy" still holds, though: the world's reported exports and imports stubbornly refuse to add up, and the IMF publishes the gap as a known statistical discrepancy.
Written for this edition, 2026.