{44 
INTERNATIONAL TRADE 
al 
abroad decline; and they will soon begin to buy somewhat more 
of the taxed goods themselves, as these show a decline from the 
enhanced price which appeared on the first imposition of the duty. 
On the other hand, consumers abroad will buy less of American 
articles than before. Their money incomes have been lowered, 
while they are faced by higher prices of the American goods. 
Exports from the United States will decline from the volume at 
which they stood at the outset. The movement of specie, and 
the consequent changes in prices and money incomes, will go on 
until the money value of the total imports again equals the money 
value of the total exports. Then new conditions of international 
trade will have been established; and these new conditions will 
become definitive; that is, will persist, other things remaining 
the same, as long as the duties persist. 
Eventually, then, equilibrium will be restored. American 
imports will be less, exports also less; the total volume of inter- 
national trade will be diminished. But when the new equilibrium 
is reached, the terms of trade will have been altered to the advan- 
tage of the United States. Her people will have higher money 
incomes, and will be buying foreign goods which are lower in prices. 
Conversely, the people of foreign countries will have lower money 
incomes, and will be buying American goods which have risen in 
price. The Americans will be the gainers under the new terms of 
trade, the others the losers. For a given physical quantity of 
exports the Americans will be receiving a larger physical quantity 
of imports. The barter terms of trade will be changed to their 
advantage. 
Needless to say, the fax which the American consumers pay, in 
the form of enhanced prices of the dutiable imports, is not to be 
regarded as a loss, not as something which offsets the gain to them 
from the better terms of trade. The proceeds of the tax serve to 
pay public expenses. Had it not been for them, some other levy 
would presumably have to be made. If it be suggested that the 
tax may lead to public extravagance, to expenditures that are 
wastefully made or bring no substantial gain to the community, 
it is sufficient to remark that this may happen under any and every