International trade

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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

THE UNITED STATES, III. AFTER 1914 317 had done. The disposal of the successive Liberty loans was accom- plished by utilizing to the utmost the credit machinery of the banks of the Reserve System. Purchases of the bonds were fostered, indeed were fairly pumped up, by great subscriptions for which the banks supplied the funds. Billions on billions were disposed of by this forcing process. The banks made loans to the subscribers, creating deposits to their credit; checks against these deposits served to pay for the bonds; the Treasury again deposited the checks to its credit, and in due time drew its own checks in payment for the war expenditures (including the loans to the Allies). The large stock of gold held by the Reserve Banks en- abled the expansion to take place without the traditional earmarks of an undue or dangerous procedure. Indeed, the one really im- portant sign of excess and the one effective check of excess — the outflow of gold — could not have taken place anyhow. No one of the traditional links of connection between price changes and international trade was present: neither an inflow of gold as a cause of rising prices, nor an outflow as a check. The Treasury and the banks were able to go their way in raising the war billions by creating deposits ad libitum. And these deposits remained a permanent addition to the effective circulating medium — per- manent, that is, in the sense of remaining in effect so long as the debts incurred by subscribers to the bonds continued to be carried by the banks. The deposits kept going round and round. First they were used by the Treasury in its various payments; and then used and spread broadcast by the contractors, merchants, manu- facturers, farmers, soldiers, into whose hands the money” flowed. As with the export of capital, so with these financial operations, the process was one of self-deception. The real efforts and sacrifices of the war were concealed. And in both cases, the really significant operations were purely domestic, quite divorced for the time being from international trade. All this could not go on indefinitely. The phenomenal excess of exports could not possibly persist. The upward movement of prices must come to an end when the Treasury’s war operations would cease. A process of readjustment was inevitable. With

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