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INTERNATIONAL TRADE

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results which would presumably come in the long run do come at
once and without a hitch. The mechanism of outflow of money, falling
 prices, increasing exports, declining imports — all this automatic
readjustment — does not work out its results in one year, or two,
or three. It has been abundantly set forth in the preceding pages
how long a time must be allowed before the eventual consequences
appear, before the final readjustment can be expected. It is not
to be supposed that a sudden huge remittance can be really brought
about in this way. If we picture to ourselves a situation such as
Adam Smith tried to analyze — subsidies which exceeded in
amount the whole circulating medium of the country — and imagine
 a sudden export of perhaps half of the specie, we must imagine
further a collapse of prices, a complete disorganization of trade and
industry, a chaos in which neither exports nor imports could move
quickly or in large volume, from which recovery and readjustment
would be long and disastrous. Clearly nothing of the kind happened
 in 1756-63. Nor can this sort of explanation fit the conditions
 of the Napoleonic period. The Ricardians imagined that
changes in prices would follow quickly and smoothly from the
inflow and outflow of specie; goods would also move in and out of
the country with ease and promptness. The whole machinery
would work without giving any trouble, without disconcerting
either the business world or the public Treasury or the observing
economist. This intellectually courageous simplification of the
problem is quite out of accord with the experiences of their own
times or of any later time when there was the sudden impact of a
huge remittance.
What then has happened? What was the course of events in the
Seven Years War? What in the Napoleonic period? What in
the Great War of 1914-1918, when Great Britain advanced
enormous sums to her allies ?
I have no more than a provisional hypothesis to offer; no more
than this, at all events, on the earlier cases. As will be seen when
the extraordinary operations of the Great War come to be considered,
 they are susceptible, as regards the mechanism of international
 payments, of a comparatively simple explanation. The