350 
a 
INTERNATIONAL TRADE 
The general index numbers will register a rise. As time goes on 
and readjustment is accomplished, the advance in prices of exported 
goods will cease; they will relapse to the same level as at the 
outset. The advance in import prices will continue and will be 
accentuated. The general price level will thus show a rise, tho 
not so marked a rise as during the period of lag. 
All these propositions rest on the premise that nothing happens 
to change the quantity of money in either country, or to change 
the velocity of circulation, the use of credit substitutes, and so on; 
nothing happens, either, as regards the general effectiveness of 
labor and the output of goods. I would lay stress again on the 
assumption of stability in the quantity of the paper money. In 
most discussions of international trade under inconvertible cur- 
rency attention has been given chiefly to the consequences of 
changes in the amount of the money; most of all, when these are 
connected with the fiscal needs of the issuing government. I am 
concerned here with the other question, comparatively neglected : 
how the matter lies in its essence, so to speak — how it lies apart 
from the fluctuations and perturbations which the history of paper 
money so frequently shows. 
A word further now as regards the assumed stability of domestic 
prices. That they remain unchanged may seem to have been 
laid down in the preceding paragraphs without sufficient considera- 
tion, let alone proof. It results from the fixity of the total money 
income of the population, from the fact that total spending power 
remains the same thruout (and also, we assume, the way in which 
the spending power is exercised remains the same). The whole of 
the goods, be there more or less of them, must sell for the same 
money sum. If then the output of goods remains constant, the 
price level will be unchanged; and moreover, in the absence of 
any cause affecting one article peculiarly, each individual article 
will remain likewise the same in price. 
If indeed something happens to increase the total output of the 
goods, or the total output of any individual good, prices will be 
affected, even tho total money income remains unchanged and the 
income of each several producer unchanged. If, for example,