240 
INTERNATIONAL TRADE 
uneven stages by which the outgoing loans proceed are evidently 
related to the stages of the business cycle. We know much more 
of this matter than was known twenty years ago; yet it is only 
about the recent cycles that we possess the more detailed knowledge 
and the better understanding. The sequence and the interde- 
pendence of the several stages in the earlier days may have been 
different. We know, too, more about the course of prices during 
recent decades than we knew about prices in preceding times. It 
is only of late that attention has been paid to the possibility, nay 
the probability, of divergent movements in import prices, export 
prices, domestic prices. Price indices usually are given for a 
single lumped aggregate of all goods; whereas for the problem 
of international trade series of separate indices are needed for the 
different classes — domestic goods on the one hand, international 
goods on the other. We do not know what degree of verification 
of our theoretic reasoning would be found if the needed informa- 
tion were at hand — indeed, whether any verification at all would 
appear, or only the uncovering of new perplexities. 
The difficulties of verification become manifest when one com- 
pares what we know about the movements of prices and incomes 
with those that might be expected on theoretic grounds. What 
we might expect prima facie is a general tendency to falling money 
incomes and falling prices during the early stage, that of capital 
export, running to the middle of the 19th century. Thereafter, a 
reversed movement might be expected: rising money incomes 
and rising domestic prices, with falling prices of imports. What 
we find in fact is thus summarized by Professor Bowley,! an 
observer whose competence is not to be questioned : 
“From 1775 to 1815 prices rose, but incomes rose still more. 
From 1820 to 1851 prices fell 35 per cent, while incomes remained nearly 
steady. 
From 1851 to 1873 prices rose 50 per cent, but incomes rose 60 per cent. 
From 1873 to 1895 prices fell 45 per cent, while incomes fell, but rose 
again to the 1873 level. 
From 1895 to 1901 prices rose 12 per cent, but income rose 15 per cent.” 
 England’s Foreign Trade in the 19th Century, 2nd edition, p. 106.