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

360 INTERNATIONAL TRADE will appear only under our supposition that both articles are produced and sold for export alone; that is, only if all the American cotton is marketed in Great Britain and all the British steel is marketed in the United States. If part of the American cotton is sold and used at home, there will be a change of price in the same direction, but not of the same extent. The fall in the price of cotton will attract domestic purchasers and increase domestic consumption; some cotton will be withdrawn from export. Similarly, in Great Britain, the full rise in the price of steel just figured out (from 4.8d. to 6d.)will appear only if the British production of steel has been for export only. If there has been a domestic market for part of it, the rise in price will check domestic purchases, and a larger proportion of the output will be exported. The way in which the first impact of the new conditions of foreign exchange will be transmitted to domestic prices will thus depend on two factors: the extent to which the commodities are directed to the export market, and the extent to which there is extensibility of the domestic market — the elasticity of the domestic demand. It was remarked a moment ago that the barter terms of trade remained unaltered in this first stage. So far as concerns the substantive trade, neither country seems to lose or gain. But there are the changes in prices, and these involve substantive effects of no small consequence. They entail losses to American producers, gains to British producers. Perversely enough, some British — the sellers of steel — gain from the fact that payments have to be made to Americans; and their gain is secured at the expense of the unfortunate American producers of cotton. Something analogous, it will be recalled, happens under specie conditions. There the British send specie to the United States; an apparent loss, not a real one. The Americans receive specie; an apparent gain but after all an illusory one. More or less specie is in circulation, prices are higher or lower — this in itself does not alter the wealth of nations. Whether under paper or specie, a remitting country seems to lose nothing in the first stages. (4) Proceed now to follow the operations thru their subsequent course. For the purpose of concentrating attention on the particular matters here under consideration — the rates of foreign exchange, prices in the two countries, the barter terms of trade — we may continue to set aside for the moment the effect on domestic purchases and domestic consumption, and treat the case as if the two commodities were produced and sold for export only. The price of cotton then will fall from $0.20 to the bottom figure of $0.16 in New York ; the price of steel rise from 4.84. in London to the top figure of 6d. Evidently under these conditions the price of cotton is unattractive to cotton producers in the United States, while that of steel is attractive to steel makers in England. The tendency will be for the production of cotton to diminish in the United States, and for that of steel to increase in England. Eventually the output of both articles will be such as to make the position of the American

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