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

274 INTERNATIONAL TRADE quences of a sudden remittance of very large sums? of a great subsidy, for example, by one country to another? of a heavy indemnity ? How are payments of this kind effected, what are their consequences ? There is a well known passage in the Wealth of Nations in which Adam Smith refers to the subsidies which England made to Prussia and her other allies during the Seven Years War (1756-63). The remittances, he says, could not have been in specie, for the sums exceeded the total specie circulating at home. They must have been effected by sending out goods against which bills of exchange were drawn by the exporters and then sold to the British Govern- ment. And according to Adam Smith the actuating force which caused the resort not to money but to goods was simple enough. The “merchant” who is engaged in foreign business makes a profit on the exportation of goods, but makes none (or a very narrow one) on the exportation of specie; he is naturally led to “exert his ingenuity’ toward selling goods abroad ; and thus the transactions are wound up thru an exportation of goods, not thru an outflow of specie. All this of course must cause the Ricardians to shake their heads. In the language of the younger Mill they “applied to Smith’s more superficial view of political economy the superior lights of Ricardo.” ! These superior lights would have led them to analyze in quite a different way the successive stages in great payments for subsidies or like operations. First there would be a sale of bills on the foreign countries by the “merchants” (bankers) to the Government; then a rise in foreign exchange to the specie export- ing point. Specie flows out; prices fall in the remitting country, and rise in those that receive its specie; then goods begin to be exported ; and so on, until equilibrium is again reached. It is not necessary to follow the several steps into every detail, or to point out the difference between a single great payment, like that of the Franco-German indemnity, and a series of heavy payments spread over many years. Essentially the same question arises in any case where an extremely large remittance has to be made in short order: 1 J. 8. Mill’s Autobiography, Ch. 1, p. 28.

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