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 III. International trade under inconvertible paper

Collection:: Economics Books

THE UNDERLYING PRINCIPLES 339 monetary systems of the trading countries simply caused the counters of exchange in each of them to be different, nothing more. The followers of Ricardo had occasion chiefly to consider trade between a specie-standard country like England and another country having depreciated paper. In such case, they argued, the country of paper money would have prices higher than it would have under specie, according to the extent by which the volume of the paper was greater than the specie which would have circulated in its absence. The normal or ordinary rate of foreign exchange on the paper country would be high in the same proportion. The mere fact of prices higher in paper, and the higher “nominal” quotations of foreign exchange, would have no effect on the sub- stantive trade. Imports and exports between the countries would move In just the same way and in the same volume as if both countries were on one and the same specie basis. It seems never to have occurred to these writers to inquire what would happen if, under paper conditions, a status quo were dis- turbed. Suppose a given situation to have been established as regards paper currency, prices, foreign exchange: paper doubled in quantity, prices twice as high as before, a corresponding rate of exchange (sterling exchange, say, twice as high as before in terms of the paper money). Suppose then that something happens to disturb this established situation: a tribute or indemnity becomes payable by one country to the other; or a loan transaction enters, tourist expenditures; or — what might most readily have occurred to the older writers — an increase of demand takes place in one of the countries for the products of the other. What then ? Would the “nominal” rate of foreign exchange remain the same ? Would prices in the several countries remain the same? Would the physical volume of imports and exports be changed, and, if so, by what process? So far as I know, these questions were neglected in the older literature of the subject and have been hardly less neglected in modern times. That the Ricardians should have ignored them is in keeping with their general treatment of mone- tary problems. They regarded monetary disturbances as of little substantive importance, whether for domestic or international

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