GREAT BRITAIN, I 
239 
unsteady. While the tendency toward a growing excess of imports 
has been unmistakable, and has been beyond doubt a result of 
the uninterrupted growth of inflowing income, the irregularities 
of the outflow of capital have often caused a marked diminution of 
the net incoming balance. Even at a comparatively late stage, 
there were years when a net excess of exports still appeared, as 
in 1859 and 1872, and some when the balance was even, as in 
1873 and 1886. The more common effect of bursts of capital 
export has been the diminution for the time being of the excess 
of imports — a phenomenon which, as will presently be pointed 
out, was noticeable during the first decade of the twentieth 
century. 
These are familiar matters. The point that is less familiar, 
in connection with the theory of the subject, or at all events is not 
commonly considered, is the closeness and rapidity with which 
the varying balance of payments has found its expression in the 
varying balance of trade. The actual merchandise movements 
seem to have been adjusted to the shifting balance of payments 
with surprising exactness and speed. The process which our 
theory contemplates — the initial flow of specie when there is a 
burst of loans; the fall of prices in the lending country, rise in 
the borrowing country; the eventual increased movement of 
merchandise out of the one and into the other — all this can 
hardly be expected to take place smoothly and quickly. Yet no 
signs of disturbance are to be observed such as the theoretic 
analysis previses; and some recurring phenomena are of a kind 
not contemplated by theory at all. Most noticeable of all is the 
circumstance that periods of active lending have been characterized 
by rising prices rather than by falling prices, and that the export 
of goods apparently has taken place, not in connection with a 
cheapening of goods in the lending country, but in spite of the 
fact that its goods have seemed to be dearer at times of great 
capital export. 
It must be confessed that here we have phenomena not fully 
understood. In part our information is insufficient; in part our 
understanding of other connected topics is inadequate. The