332

INTERNATIONAL TRADE

alii

no rise in prices ensued, and no increased importation of goods was
induced by rising prices. One would argue that such an absorption
 of gold could not go on indefinitely without enlivening and
enlarging the circulating medium as a whole. Eventually there
must be rising prices, then increased importations, and thus in the
end a readjustment of imports and exports. But it was not eventually,
 it was promptly, that the equalization of the imports and
exports took place. The insensitive character of the monetary
system kept the price level impassive and unchanged; yet the
new and presumably normal relation between imports and exports
none the less was reached with comparatively little delay.
To put it in the fewest words, things just happened so. As
regards the merchandise movements, an inspection of the figures
shows that it was a fall in exports rather than a rise in imports
which caused the money value of the two to become approximately
equal. The European demand for American goods declined markedly,
 especially for American agricultural products. The Americans
 did buy somewhat more of imports, especially from the Orient
and other non-European regions. But these ups and downs cannot
 be related to any general price movements of the kind contemplated
 in the theoretical analysis. There were also, as we have
seen, irregular changes of one sort and another in the invisible
items. The final state of the international account was the combined
 result of all the items, visible and invisible. The erratic
shifts in the whole series of transactions and the final net relation
between the debits and credits led first to a prolonged inflow of
specie, and then, by the close of 1924, to a cessation of the inflow.
The gold which did come in during 1920-24 had no traceable effect
on the merchandise imports and exports. Neither did it have an
effect on the other item whose marked fluctuations were important
 in the final balance of payments — the export of capital. To
repeat, it all just happened. One can make out nothing in the nature
 of an ordered sequence, of conformity to rule or to reasoning.

It will prove most interesting to watch the course of events
during the next decade or so, say till 1935. A common Opinion