352

INTERNATIONAL TRADE

now yields less than before. Less American goods are got per
unit of the labor given to the British products that go out. Those
goods, the American goods, rise in price. But here too no
other prices are affected; the British domestic price level remains
the same, and the price of each several British article remains the
same. These propositions, as I need hardly say again, refer to the
permanent results, the definitive stage; the reader will supply for
himself the qualifications as regards probable temporary changes
in the prices of exported articles and the quite conceivable temporary
changes (indicated in the footnote) of some domestic articles.

Looking now at the broad consequences under paper régime
as regards prices and money incomes, we find, as already intimated,
changes essentially different from those to be expected under a
specie régime, and yet, as regards the welfare of the trading countries,
 an outcome not essentially different. The mechanism is
altered, but the substantial results remain the same. Under the
specie mechanism the total money income of the population of
each country, so far from remaining constant, becomes greater or
less with the movement of the specie. Domestic prices likewise
have their ups and downs. In the case chosen for illustration,
that of larger payments from Great Britain to the United States
because of a steady succession of loans, money incomes are lower
in Great Britain, domestic prices show a fall, the general index of
prices presumably registers a fall. Imported goods are dearer,
and the British consumers are worse off in that they buy dearer
imported goods with lower money incomes. Under paper, however,
 money incomes are the same and domestic prices are the
same; the only difference is that imported (American) goods are
dearer. The general index number records a rise in prices. The
British consumers in this case also are worse off ; with the same
money incomes, they pay more for American goods. Here is the
substantial outcome, the same under paper as under specie.
Conversely, of course, in the United States. Under specie we
expect as a result of the increased British remittance to the United
States higher money incomes, higher domestic prices, lower prices