256 
INTERNATIONAL TRADE 
is of importance not so much by way of indicating that the figures 
are to be suspected, as for the purpose of illustrating further the 
distinction between the gross and the net barter terms. 
Turn now once more to the chart. The movements which it 
shows — the changes in the terms of trade — are in clear accord 
with what is to be expected on grounds of theory. That the gross 
barter terms should vary as they do, becoming more favorable 
until 1900, thereafter less favorable, is indeed easily in accord 
with theory. They will naturally fluctuate in the same direction 
as the balance of payments. When the balance of money pay- 
ments due from other countries to Great Britain becomes larger, 
more goods move to Great Britain. As need hardly be said again, 
this increase in the physical quantity of the imports is not the same 
as the excess (or enlarged excess) of the money values of the 
imports, or in proportion to that excess. But it is in the same 
direction; it is but another phase of the same movement. We 
can easily understand, therefore, that the gross barter terms became 
more favorable during the period 1880 to 1900, when the excess 
of imports over exports was enlarging, and became less favorable 
after 1900, when the excess was declining. 
More significant in its relation to theory, however, is the fact 
that the net barter terms move in the same direction. On grounds 
of deductive reasoning we have argued that when a country has 
payments to receive for other items than merchandise, the direct 
and simple exchange of goods for goods is also affected, and is 
affected to the country’s greater advantage. Not only does it 
get a special and additional inflow of goods on the invisible account, 
but the main stream of goods, so to speak — that which comes 
in exchange for its own merchandise exports — reaches it on better 
terms. The course of prices for imports and for exports, and the 
physical volume of imports got for the exports, are such that it 
obtains a larger share of the total divisible gain from the inter- 
national barter. And so it proves in this case. The net barter 
terms of trade are modified to the advantage of Great Britain 
during the period from 1880 to 1900, while the tendency to gains 
of this kind is checked from 1900. An elusive set of facts, of a