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

1 Y i A 1 : INTERNATIONAL TRADE It will be convenient to turn first to the exports. Before 1890 there was a relatively low premium on gold, that is, a relatively low rate of sterling exchange. The low rate was the natural con- comitant of the heavy loans then made to the Argentine. The borrowings in London being large, large sums of exchange on London were in the market, and the exchange rate and the gold premium tended to be low in Buenos Ayres. And this in turn tended to check exports. The Argentine exporter, selling for gold in London, got for his bills on London a price which was low in relation to the increasing volume of the paper, and low (presum- ably) in comparison with domestic prices. After the crisis the situation was reversed. Loans ceased, and the exchange market was no longer burdened by the sterling bills which Argentine borrowers had hitherto been offering. The effective rates of exchange, the gold premium, went up. The exporter now got in Argentine paper a much larger return for his goods; and exports advanced, both in quantity and in money value. In other words, the substantive course of trade — the deficiency of exports during the first stage, and the excess of exports during the second — was directly affected by the foreign exchange market. It was the varying price of exchange which brought about the relation between exports and imports. Our deus ex machina was in action. Unfortunately the statistical evidence does not enable us to go much further than to reach this comparatively simple conclusion. To go beyond, one would need to know what was the course of domestic prices, and whether these advanced more than did export prices. In the last paragraph it was intimated parenthetically that one might presume they did. The gold premium failed to advance in proportion to the increasing volume of the paper, whereas prices in general, and domestic prices in particular, might be expected to do so. But this is no more than an expectation or presumption. The movement of prices under paper money inflation is always irregular, and its accordance with the rising quantity of paper is never exact or in form. There can be no certainty that full evidence, if attained, would substantiate the

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