VERIFICATION. INTRODUCTORY 153
place, the conduct of international trade by a process which is
substantially barter. These are matters familiar to economic
students. The part played by the foreign exchanges, where
the trading countries have the same standard (gold), is one of
the topics best understood and most adequately discussed in the
subject matter of economic science. The man on the street,
knowing that international transactions are conducted in terms
of money, thinks commonly, or at least commonly speaks and
writes as if they were settled in actual cash; he imagines money
to go out in payment of imports and to come in for the exports.
The economist, indeed any attentive observer, sees in these trans-
actions a typical case of trade carried on in terms of money but
with little intervention of money. All this, to repeat, is familiar ;
it is quite in accord with theoretic reasoning; and so far verifica-
tion is simple and easy. In the present volume it needs no further
attention.
The more complicated relations between imports and exports
which arise when there are non-merchandise transactions serve
almost as well among the simpler verifications of the theory of
international trade. The well-known discrepancies between the
money values of imports and exports — an excess of imports here,
an excess of exports there — are quite in accord with the theoretic
analysis. They will be considered at some length in the follow-
ing pages. I may remark at once that, while the general character
of the phenomena is in accord with the hypothetical deductions,
some features can be explained only by the introduction of variants
in the assumptions. Some, too, prove in the end not easily recon-
cilable with the generalizations of pure theory either in its original
or in a modified form. The more detailed consideration of certain
cases of non-merchandise transactions will be among the most
instructive in our attempts at verification.
A different phase of that verification which is derived from the
attentive consideration of these familiar phenomena appears when
we observe prices and money wages in different countries. It is a
common impression that there is a tendency to world-wide equali-
