GREAT BRITAIN, I
243
of specie, small in comparison with the great streams of merchan-
dise; a movement of the specie that on the whole is toward Great
Britain, is fairly steady, tho sometimes faltering, occasionally
reversed ; with oscillations that can be plausibly explained, but
can hardly be said to be observably and specifically in accord with
the formulations of theory.
The best that we can do toward bringing this phase of theory
into accord with the facts is to dwell again on the circumstance that
the circulating medium of Great Britain thru the entire period
was highly sensitive. Specie movements into the country or out
of it, even tho small in comparison either with the country’s total
monetary stock or with the volume of merchandise imports and
exports, none the less had a prompt effect on its credit and cur-
rency structure, and so on the movement of prices and money
incomes. If they are steadily in the same direction, their effect
is cumulative. Reasoning in this way, we can maintain that the
observed movements, tho clearly the resultant of many and inter-
acting factors, are yet not inconsistent with the general reasoning.
This cannot serve as verification; but it is no ground for saying
that there is failure of verification.
On the subject at large I venture to repeat what I have said
elsewhere : 1
“So insignificant are the ordinary movements of gold from one
country to another, so likely to be disguised by eddies and cross
currents due to the complexity of international dealings, that
some writers have pooh-poohed the whole theory of the equaliza-
tion of imports and exports thru changes in international prices.
Yet without this theory it is impossible to explain the facts, and
especially the equalization of the money value of exports and
imports. The influence of the quantity of gold on prices, slow-
moving as it is, and subject to all sorts of disturbing causes, is the
anderlying persistent force which determines not only the inter-
national distribution of specie, but also the variations in the pur-
chasing power of gold in different countries and the greater or less
extent to which those countries share the gains from international
I Principles of Economies, Ch. 33, Vol. 1, pp. 460-461 (3d ed.).
