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

HE UNDERLYING PRINCIPLES 343 exchange would persist so long as monetary conditions within the two countries remained the same. Assume further, as a starting point, that goods alone are the occasion for remittances between the countries. Their transac- tions are solely on merchandise account. The sums due in London for American goods sold to British purchasers are exactly equal in money value, at ten dollars for the pound, to the sums due in Ne York for British goods sold in the United States. Now, in a situation thus simplified, suppose a new factor to enter. Something happens that disturbs the situation. Suppose there is a sudden burst of loans by the British to the United States. No other change takes place; there is a net addition to the remit- tances made from Great Britain. I assume a sudden burst, because the point to which I would now direct attention is brought out most clearly by supposing a change which takes place rapidly and on a large scale. One might choose for illustration an indemnity or tribute, or new interest payments by the one government to the other on a large debt. In practice of course it is rare that changes of this kind appear suddenly. The case of an indemnit omes nearest to being cataclysmic, and even that would doubtless give opportunity for an adjustment in some degree gradual. The modifications and qualifications that must be observed in applying the reasoning to changes that come by gradual stages ill be presently considered. For the moment, attend to the simple case of a sudden and great increase in the payments that must be made from London to New York. Suppose the increase to be 25 per cent. Suppose, too, that this goes on year after year — is not a sporadic episode, but a steadily continuing series of remittances. It begins abruptly; it goes on at the same rate for long time. The American borrowers have sterling exchange at their com- mand ; they can draw on the London bankers who finance the loans. The supply of sterling exchange offered in New York is greater than before. The amount of the loans is (say) one quarter of the amount which British importers had previously been paying to Americans (remitting to New York) for merchandise bought

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