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

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part II. Problems of verification

Collection:: Economics Books

330 INTERNATIONAL TRADE pra ain Even the most guarded versions of monetary and banking theory contemplate that some influence will be exerted on credit and prices by the flow of specie from country to country, while very great movements of specie are expected to bring prompt and far-reaching effects. It is true that during this particular period most of the countries from which came the imposing mass of gold were not on a specie basis. In their case it was not the circulating currencies of paper money, but dead hoards of gold that were subjected to the drain — conditions under which it is necessary to apply quite a different theoretical analysis.! The United States, however, was completely and unequivocally on a gold basis. Here it would seem that the received doctrine should prove valid. Yet nothing points that way. The outflow of nearly 300 millions in the year 1919 had no visible effect in checking the rise of prices at that time of violent speculative activity. On the other hand, the phenomenal inflow in 1921-24 — about a billion and a half of gold imported in four years — was coincident not with rising prices, but with a marked fall during the first of these years and with a stable level during the remainder. It was not the expected that took place, but quite the unexpected. The explanation of this “abnormal” turn of events is familiar enough, and in a way is easy enough. It is connected with the surprising course which the development of the banking system took, a development quite unforeseen by its founders, puzzling and even alarming to those who had to administer it. The Federal Reserve System had been established in 1913 with the express design, among others, of making the country’s cur- rency system less sensitive to gold imports and exports. Deliber- ately, it had been made insensitive rather than sensitive. During the war and the years following, legislation had been enacted for rendering it insensitive to an even greater degree than had been contemplated at the start. All the country’s banking reserves of gold were shifted into the coffers of the Reserve Banks. Much more effective toward the end thus had in view — that of accumu- lating a great reserve which should serve as a buffer against the 1 Ag is more fully set forth in Part III, below.

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