SOME EXPERIENCES UNDER PAPER MONEY 405 
presumption that domestic prices rose more than did export 
prices. Here again we must supplement the fragmentary evi- 
dence by hypothesis and interpretation; we can do no more than 
resort to the very theories which we wish to test. 
There is, indeed, one piece of evidence which may carry us 
a bit further. It appears that the prices of exported goods did 
not advance as fast or as much as the gold premium itself. On 
general principles, they might be expected to rise precisely in 
proportion to the premium, parallel to it. The fact that they 
rose less would accentuate the repression of exports resulting from 
the failure of both to rise in accord with domestic prices. But 
other causes than those connected with the loans might lead to 
the lag of export prices. The gold prices of the Argentine exports 
(among which wool, wheat, and maize were the most important) 
were determined by world conditions, and were subject to the crop 
fluctuations which obscure the general trend of agricultural prices. 
Their special conditions might easily be such as to depress the 
prices of the agricultural products having a world market, and to 
account for the exceptional movement of export prices in Argen- 
tina. Their failure to advance as much as did the gold premium 
is hardly to be related with any certainty to the Argentine borrow- 
ings and their influence on the course of sterling exchange.! 
t In this regard, as in some others, I find myself unable to interpret all the phe- 
nomena of the Argentine episode in quite the same way as Professor Williams. He 
is inclined to the view that an issue of inconvertible paper operates in itself to 
stimulate exports and that therefore the failure of exports to swell during the years 
1886-90 needs an explanation. As stated above (pp. 385-389) paper inflation does 
not in my judgment necessarily stimulate either exports or imports. The course of 
events in the Argentine before 1890 seems to illustrate the fact that there are some 
conditions under which the effect is to give a bounty on imports, not on exports, 
while after 1890 the illustration runs the other way — that there are other condi- 
tions under which a bounty on exports arises. 
Something of the same sort is to be said of the relation between prices and money 
wages. Money wages in Argentina failed to advance in proportion to prices; and 
business profits rose. They rose, it would seem, in all industries; inflation 
served, as has been so commonly the case, to fatten profits all around, and to cut 
down commodity wages. This, however, was seemingly the outcome in industry 
at large, not in the export industries alone. While the lag in money wages appeared 
in the export industries, as it did elsewhere, the rise of profits, if I interpret the 
phenomena rightly, was here less than elsewhere. Unfortunately we lack the 
statistical evidence which would be conclusive on this point, as we do on the extent 
to which a rise in domestic prices took place. 
It must be remembered, too, that the Argentine at this time was still in the early 
stages of pioneer development and that not only are the records inadequate, but the