International Transactions of the United States. by Ray Ovid HallReview by: George Jackson EderJournal of the American Statistical Association, Vol. 32, No. 197 (Mar., 1937), pp. 237-240Published by: American Statistical AssociationStable URL: http://www.jstor.org/stable/2279892 .

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REVIEWS 237

the authors stand on firm ground amply supported by the statistical ma- terial of the report.

When, however, the authors turn to the solution of the unemployment problem, their position appears less tenable. Emigration of labor is recog- nized as a possible solution but an unsatisfactory one. This view fails to see clearly the full implications of the problem. If unemployment is "partial," i.e., confined to certain industries or industrial centers, labor transference is the only permanent solution. If, on the other hand, unemployment is "general," i.e., if the demand for labor at the general level of wages is such that the unemployed would not be fully reabsorbed, even though an opti- mum redistribution of labor supply among industries and industrial areas exists, the unemployment problem is national in character and involves changes in either the incomes or the productivity of the factors of pro- duction. The slowing up of population growth, the absolute decline in manu- facturing employment, and the migration of gainful workers to other in- dustrial states suggests that a significant part of the unemployment problem in Massachusetts is "partial" in character and therefore can be solved only through a movement of surplus labor to new industries and industrial areas where employment opportunities are greater.

The apprehension of the authors over the possible adverse economic effects of migration of the surplus labor upon Massachusetts could be justi- fied only if it is assumed that the movement became so pronounced as to reduce the potential power of the state to produce. The unfavorable com- petitive position of Massachusetts in respect to taxation and advanced labor legislation possibly lends support to this view. There are, however, grounds for a more hopeful outlook. Mounting taxation in other industrial states, together with increasing Federal regulation of labor, suggests new elements in the situation which are favorable to Massachusetts. The adoption of Federal legislation on the subject of maximum hours, minimum wages, and child labor would do much to improve the competitive position of the state in this respect.

JAMES W. HOWELL Carnegie Institute of Technology

International Transactions of the United States, by Ray Ovid Hall. New York: National Industrial Conference Board, Inc. 1936. xv, 230 pp. $3.00. In this work Dr. Hall has given us a survey of the international balance

of payments of the United States from 1922 through 1935, the value of the work being enhanced by the fact that the author has been primarily re- sponsible for the compilation of the Department of Commerce annual bul- letins on the subject and may be given full credit for having raised the status of balance of payments compilations from guess work to a science.

The present work may be considered a textbook in the compilation, pres-

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238 AMERICAN STATISTICAL ASsOCIATION*

entation, and interpretation of balance of payments estimates that should serve as a guide to statisticians in this and other countries. The art of ac- cumulating and auditing the vast amount of statistical material entailed in these statements of international transactions has developed so greatly dur- ing the past 14 years, owing chiefly to the work of Dr. Hall, that no one can be considered competent to discuss the related national and international financial questions nor to pass judgment on such controversial matters as war debts, transfer problems, tariffs, exchange restrictions, etc., who has not mastered the many facts and concepts set forth in this volume and in the previous annual compilations of the author.

There are a few shortcomings in the present work, and it is to be regretted that in the final table the 1935 figures, which could have been assembled at the time of publication, were not included. Chapter XI gives signs of hav- ing been loosely edited and contradicts itself in parts. For example, although admitting that "the worst blight which the depression visited upon interna- tional trade, shipping and finance is the great body of new tariffs and ex- change restrictions," Dr. Hall nevertheless comments rather disparagingly on the United States policy of reciprocal trade agreements which have been the most effective, in fact the only effective, force now operating to rid the world of these encumbrances. On the whole, however, the editing has been well handled, although bearing signs of having been cut down drastically from what must have been a considerably greater mass of original material.

There are some echoes of the once famous dispute between Dr. Hall and the Commerce Department authorities, culminating, unfortunately, in the severance of Dr. Hall's connection with the Government. A minor instance is in the omission of the term "Jones invisibles," named after Dr. Hall's f or- mer division chief, and in faint traces of spleen which the editors have not completely eradicated. For example, Dr. Hall waxes vehement in his insist- ence on prorating 60 per cent of all errors and omissions amongst certain conjectural items and denounces the Commerce Department for not fol- lowing this practice since his departure. Much is to be said however, for refusing to force figures to balance, and the reviewer believes that users of the balance of payments items in practical financial work would be better served if balance of payments compilations contained both the adjusted and the unadjusted totals. On the whole, the reviewer is inclined to agree with Dr. Hall that errors would be minimized if apportioned in this way, but his book really brings out forcibly the impossibility of leaving these adjustments in the official figures to the judgment of a single individual.

Interestingly enough, Dr. Hall suggests, as one justification for the Com- merce Department compilations, that "it was of some public service to have unbiased estimates of liquor smuggling," but actually, it was the suppres- sion of these estimates by the Commerce Department that served as one of the reasons for Dr. Hall's quarrel with authorities.

Dr. Hall's study reveals conclusively the superficiality of the pseudoscien- tific reports in account form, prepared by George N. Peek, which attempted to prove that our international transactions over a period of years had re-

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REVIEWS 239

sulted in a net loss to the nation and concluded therefore that foreign trade was detrimental to the national interests. Dr. Hall comments: "that our nation has lost a few billions from its private long-term lending to foreigners could have been better established directly, by studying the investments themselves, rather than resorting to a crudely compiled Balance of Pay- ments . . . certainly it was unnecessary to compile a Balance of Payments to prove that America has lost much of the war debts."

Emphasizing that no economist can have any proper conception of the importance of any single item in the balance of payments without knowing the total turnover, debits plus credits, Dr. Hall demolishes the Brookings Institution's studies of Germany's capacity to pay and the transfer problem and their later reports on the war debts question, which, "viewed separately by persons unfamiliar with the astronomical dimensions of America's total international dealings, seemed unmanageably bulky"; actually, they were "never more than about one-eightieth of our total foreign transactions and were often less."

The reviewer, from daily experience in analyzing foreign balances of pay- ments for the practical purpose of determining transfer problems and ca- pacities to pay foreign obligations, can testify that net figures of tourist trade, freight charges, or any item (except balancing items) are worth- less. Dr. Hall brings out the fallacies entailed in pairing off one item against another, even in pairing off the debits and credits under the same category, such as using a net import or export surplus or a net tourist or credit expenditure. In analyzing "Promotions and detractions," a study originated by Dr. Hall, the author showed that it is only exceptionally that items can be paired off one against the other; that, whereas some interna- tional transactions are largely passive, others actively promote increased or decreased expenditures in one direction or the other. Foreign purchases of American merchandise do not necessarily promote American purchases of foreign goods, and there is no necessity that the two should balance; pur- chases of American goods by foreigners may, on the contrary, cause Ameri- cans, enriched thereby, to spend more money as tourists abroad, or add to charitable or emigrant remittances, or any one of a score of other items.

Discussing tariffs, Dr. Hall points out that "tariff reductions would in- crease our imports very much less than is popularly supposed." This is true. Our dutiable imports are only about 40 per cent of our total imports and approximately 25 per cent of our aggregate trade and service (invisibles) im- ports. Nevertheless, in correcting a popular fallacy, Dr. Hall goes to the other extreme and thereby fails to point out, in this part of his discussion, the fact that high tariffs (and more particularly quotas, exchange restric- tions, and other trade barriers) are seriously detrimental to the interests of consumers in the countries imposing these restrictions and have at the same time been a major factor in the past depression through their depressing influence on world commodity price levels and through the curtailment of the actual volume of trade.

In analyzing the question as to whether "trade follows the loan," Dr. Hall

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240 AMERICAN STATISTICAL ASSOCIATION-

shows that this has not been true, as a matter of fact, in the United States. He fails to point out, however, that the experience of other countries has not been analogous. England has been particularly careful to see that its foreign loans and investments have been earmarked for the purchase of English goods, not merely at the time of the original investment but for decades thereafter, so that English trade with many parts of the world is largely pred- icated upon preferential purchases in the English market by British-owned enterprises in foreign countries.

From the viewpoint of the technical expert, the 84 pages of auditing notes contained at the end of the book should be invaluable to compilers in foreign countries; likewise, the explanation of the "complete stub policy" which pre- cludes overlooking any important item by listing all potential transfer en- tries, whether or not statistics are available at the time of compilation. Dr. Hall's division of the transfer entries is convenient and intelligible, viz. (1) commodity trade; (2) miscellaneous invisibles; (3) long-term capital movement; (4) short-term capital movement, and (5) pure cash. In connec- tion with this division, Dr. Hall emphasizes that the balancing item in the balance of international payments is not gold but the entry "Net Change in International Bank Accounts."

In sum, Dr. Hall's work may be set down as one of the most important contributions to the study of international financial transactions that has been compiled and should be compulsory reading for all economists who completed their academic education prior to 1922.

GEORGE JACKSON EDER

Standard Statistics Co. New York City

A Graphical Survey of the Canadian Textile Industries, by J. A. Coote. Mc- Gill Social Research Series: No. 4. Montreal: McGill University. New York: Oxford University Press. 1936. 248 pp. $1.75.

As the title implies this study provides a graphical picture of economic conditions in the Canadian textile industries. It covers for the most part the period 1917-1933, although data are given in certain charts and tables for earlier years and for 1934. According to the author, the study is an at- tempt to present in chart form the statistical information available in the publications of the Canadian Government about the textile industries of Canada. It is intended to encourage the use of these statistics through pre- senting them in a form that enables the reader to study the more important trends and relationships without the labor of assembling the necessary data from a great number of official reports and tables.

The trends and relationships for six industries are treated in detail, namely for the cotton yarn and cloth, woollen cloth, woollen yarn, silk (in- cluding artificial silk or rayon), hosiery and knitted goods, and carpets, mats, and rug industries. Charts and tables are given for each industry showing growth in terms of such measures as capital employed, number of em-

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