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

CHANGES IN VOLUME OF PAPER MONEY 387 summarily enough, on this topic. What is to be noted here is the peculiarity of the silver exchange case: that the mere rise in silver exchange, if caused by a drop in the gold price of silver, raises in itself export prices and the profits of exporters, while it does not in itself affect other prices. Exports thus are stimulated; the exporters get the bounty. The silver-exchange case, however, does point to the way on which, as it seems to me, depreciating paper money and rising paper exchange may act as a bounty on exports. If exchange rises more than prices do, the prices of exportable goods will be affected more than other prices, and the export bounty will set in. Imagine the countries to be Germany and the United States. Paper money is issued in Germany ; prices rise, but dollar exchange rises more than prices. German goods in general can be bought at prices which, tho higher, are not advanced as much as is the exchange rate. As German goods are exported to the United States, and dollar exchange is drawn against the shipments, the dollar bills sell in Germany at a comparatively high rate in marks; there is a special gain, a bounty. On the first emergence of such a situation the gain is probably shared between the producers and the various middlemen. The German exporting merchants who buy from the German producer will get some of it, and the American importers will get some. If competition is keen between the dealers, the German producer will get the lion’s share. In any case he will find business good. And he will be led to enlarge his operations and offer more of goods for export, continuing to pocket an extra profit so long as the gap continues between German prices and dollar exchange. But events may take precisely the reverse course. Exchange may rise less than prices. Then there will be a special profit on importing ; a bounty on imports; a damper on exports. There is nothing in a priori reasoning, and nothing in the history of paper money, to lead to a presumption that exchange will rise faster or slower, more or less, than prices. In the long run, the two will show roughly parallel movements; so much is in accord with general reasoning and general experience. For considerable periods there

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