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

SPECULATION 377 So it is when there are other changes that prove to affect the exchange rate permanently but operate by slow stages, such as tourist remittances, or a series of loans made from time to time by the people of one country to those of another. Just how much the needed remittances amount to, how rapidly they will follow one or the other, how soon cease, is usually a matter for guesswork. Spread over a season, a year, even a couple of years, they gradually bring their pressure to bear on the exchange market, with ups and downs but none the less with a movement which persists in the same direction. Underneath the fluctuations and speculations there is the inevitable: the balance of payments must be met, and the first step in the settlement, the only one that is effective, is the readjustment of the exchange rate. Where, on the other hand, new factors enter suddenly and on a large scale, the exchange market feels a great wave of influence at once. The rates move suddenly, yet move irregularly. This sort of thing happens, for example — to refer again to a case already used for illustration — when crop fluctuations cause abrupt shifts in agricultural exports. It happens, too, when remittances of a political or military nature have to be made once for all at a stated date. A quasi-catastrophic effect ensues, and, as need hardly be said, is accentuated if additional paper money issues are made or are expected. In all such cases the altered relation of offerings and takings in the market reflects itself at once in the exchange rates. And when sharp fluctuations are repeated and seem to have become habitual, the outside public is drawn in more and more. Speculation becomes rampant; fluctuations are intensified ; the market may be rigged ; the day-to-day quotations become quite unpredictable. Commonly enough, when this stage is reached, the speculation which has resulted from the disturbances is regarded as their cause, and there ensue legislative inquiries and government interventions. Buthere too, underneath all the irregu- larities, there is a steady trend, induced by the altered relation of the supply of bills to the demand; a trend which may be mis- understood but cannot be reversed or long checked. Speculation 1s caused bv the new situation. and in turn causes the situation

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