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 III. International trade under inconvertible paper

Collection:: Economics Books

342 INTERNATIONAL TRADE and in prices that we are now to examine, but the characteristics of international trade between countries having different monetary standards, and between which no money can pass. The two countries may be imagined to be Great Britain and the United States; a paper pound in the former, a paper dollar in the latter — Bradburys and greenbacks. The range of prices in each country will be determined by the several quantities of pounds or dollars. The volumes of the respective paper money being fixed, the level of prices will remain unchanged in each so long as the volume of commodities remains the same. This states the result in the barest form of the quantity theory, the most extreme and perhaps most offensive. I will leave it to the conversant reader to make all needed corrections and qualifica- tions on the score of spending habits or rapidity of circulation, expansion and contraction of credit, changes in the volume of goods and in their marketing, and so on. Let these internal con- ditions be supposed to remain unchanged thruout.! Assume now that the quantity of paper pounds in Great Britain has not materially changed from the quantity of gold pounds previously used, and that prices in Bradburys are not materially different from what they had been under gold. In the United States, on the other hand, assume that the quantity of paper dollars has greatly changed, has doubled; and that prices in greenbacks are twice as high as they had been under gold. Assume that the rate of foreign exchange has settled down to figures con- forming to the altered price conditions. Suppose that sterling exchange is quoted in New York at the figure of ten dollars to the pound, which would be equivalent to quoting in London (if this way of figuring foreign exchange transactions happened to be adopted there) one dollar for two shillings, or approximately one penny for four cents. Such, on the reasoning of the Ricardians and also on that of the purchasing-parity school, would be the estab- lished or normal basis of foreign exchange rates; and this rate of 1 The exactness of the accordance between prices and monetary quantity is important, I think, for the argument of the present chapter. Compare what was said above, Ch. 17, p. 198.

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