100 
INTERNATIONAL TRADE 
a 
MHL 
pili ry 10 Vig 
So far as concerns Great Britain, there is of course much less 
occasion to turn to an explanation based on the theory of dislocated 
exchanges. The gold standard having been maintained in Great 
Britain, and most of the country’s trade conducted with other 
countries also having the gold standard, the mechanism of specie 
flow and specie prices was in operation for the larger part of her 
international mechanism. It is comparatively simple in theory, 
even tho, as we have seen, by no means without its complications in 
actual operation. At all events it is different from that of paper 
exchanges. Professor Graham has noted, to be sure, certain 
tendencies in the prices of British goods during the period in ques- 
tion which are quite in accord with the tendencies in the United 
States. They are in accord, that is, in that they show inverse 
movements of the kind to be expected under dislocated exchanges. 
The relations in Great Britain between her domestic prices and the 
foreign or international prices indicate a congruence (mutatis 
mutandis) with the analogous relations in the United States. But 
the evidence on this score is meager, and in interpreting it one can 
easily be led to discovering that which one has set out to find. It 
ts the American phenomena which may be fairly said to verify the 
conclusion of theory. 
Finally, it should be borne in mind that the episode covers a 
comparatively short period, and that only the earlier and transi- 
tional effects of changes in the balance of payments (in this case 
from the borrowing operations) are illustrated. There was no 
long-continued steady succession of loans; merely two marked 
stages of opposite character — unusually heavy borrowing during 
the first, abrupt cessation of the borrowing during the second. 
When loans set in afresh after 1879, the paper régime had come to 
an end. The features characteristic of dislocated exchanges are 
hence observable only for a scant decade. We are able to discern 
them for a period of transition only. Nothing can be made 
out as regards the eventual outcome. We do find that the transi- 
tional effects are such as the theoretical analysis has led us to 
expect ; the price of foreign exchange is low, for example, during the 
stage of heavy borrowing, and the prices of export commodities are