234 ECONOMIC PRINCIPLES

further movements of exchange in the direction of the
changes which have rendered such shipments profitable.
When we are dealing with gold currencies, the shipment
of the money-material from one country to the other exerts
an influence on price movements which assists in setting
a limit to the volume of the movement. The transference
of the material of money from country to country increases
the money supply of the country to which it goes, and
decreases that of the country from which it goes. This
increase and decrease operate, as a stimulus and a depressing
influence respectively, on the prices of the countries concerned.
 Since the lowering of prices in the country which
loses some of its money supply is a feature encouraging
exports, and the raising of them in the other country checks
its exports, while the contrary effects are produced on the
imports of the respective countries, the balance of indebtedness
 is modified in the direction of rendering further
shipments of gold unnecessary.
The international bullion movements, which are brought
about in the way above indicated, result in distributing the
supply of money material among the nations of the world
in proportion to their respective needs. Where it is
temporarily in excess, prices are relatively inflated, and
exchange-rates move to the export specie point. Where it
is temporarily deficient, prices are relatively low, and
exchange-rates move to the import specie point. Excess
or deficiency of supply is entirely a relative question. The
business habits of the different communities determine
whether they need much or little money-metal to carry
on their trade, in proportion to the volume of that trade.
In England there is a great economy of gold, owing to the
developed banking system of the country. In France, the
proportion between the gold-supply and the annual amount
of trade is quite different, owing to differences in the mode
of conducting business. Where the circulation is more
largely made up of paper than in England, some further
economy of metal is realisable, since convertibility can be
maintained without holding a metallic backing against
circulating notes equal to the amount of those notes. The