International trade

Bibliographic data

Monograph

Identifikator:: 1758394757

URN:: urn:nbn:de:zbw-retromon-136209

Document type:: Monograph

Author:: Taussig, Frank William http://d-nb.info/gnd/120199459

Title:: International trade

Place of publication:: New York, NY

Publisher:: Macmillan

Year of publication:: 1927

Scope:: XXI, 425 Seiten; graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part II. Problems of verification

Collection:: Economics Books

208 INTERNATIONAL TRADE follow, not precede, an enlargement of the circulating medium and a rise in prices. So it may be, at least, for a short time, even for a period of many months. Indeed, if there be further forces at work than those merely monetary, it may remain so for years. This apparently anomalous sequence of events results from the looseness of the connection between deposits and reserves; a cir- cumstance which leads in so many directions to caution in making hard and fast statements. Deposits, to repeat once again, are not dependent on reserves in any automatic or mechanical way. In times of buoyancy, loans and deposits expand, and prices tend to rise. Unless the margin of cash happens to be at the very mini- mum, there will always be some play for an upward movement without immediate pressure on the cash in hand. And if at the moment the banks happen to have reserves not merely adequate but abundant, the upward movement can go on for a considerable time without strain of any kind. But as bank operations reach the full amount which the cash reserves can easily support, the rate of discount rises and money becomes tight. The expansion of loans and deposits is not thereby necessarily checked at once, still less does it cease entirely. The banks sail closer to the wind and keep a sharp look-out, but they still find business good, and do not cut their customers down. Thereupon specie begins to flow in from abroad, tempted by the higher rates of interest on current funds. The inflow thus follows the general expansion, does not precede it. True, this is not the invariable order. The flow of specie is dependent on conditions in other financial cen- ters, and it will take place most easily and abundantly if there is quiescence elsewhere, or less activity. But often enough its inflow of specie will be proximately the result rather than the cause of expansion. This, however, is but a first stage, and by no means definitive. Just as the tight money market attracts specie imports, the rising prices attract commodity imports. Rising commodity imports bring increasing obligations to make payments to foreign coun- tries; and they tend to a reverse movement — a drain of specie.

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