THE UNDERLYING PRINCIPLES 355 
Still another aspect of the problem remains for consideration ; 
namely, how the barter terms of trade shape themselves under 
dislocated exchanges. It is to be expected, on grounds of general 
reasoning, that the principles valid for specie conditions will prove 
applicable under paper conditions also. Nay, since under paper 
conditions there is no flow of money at all, and nothing moves 
from country to country except merchandise — an even closer 
resemblance to barter than under specie — it is to be expected 
that the fundamental causes which settle the barter terms will 
operate at least as effectively and surely. They do; and the 
preceding exposition indicates in what way. 
The situation which finally emerges in consequence of a remit- 
tance operation such as has been used for illustration is one in 
which more goods move from Great Britain to the United States 
than before, less goods move from the United States to Great 
Britain. In the United States, prices of British (imported) goods 
are lower ; in Great Britain prices of American (imported) goods 
are higher. The British have a less quantity of American goods 
than before. The Americans have a greater quantity of British 
goods than before. In other words, the barter terms of trade have 
altered to the advantage of the United States. And, as we have 
seen, the extent to which this change takes place, the degree to 
which the barter terms become more favorable to the United 
States, depends on the conditions of demand in the trading 
countries. The concrete way in which the British experience the 
less favorable conditions is that with the same money incomes 
they buy less of imported goods at higher prices; the concrete 
way in which the Americans experience the more favorable condi- 
tions is that with the same money incomes they buy more of im- 
ported goods at lower prices. The outcome is essentially the same 
as under specie conditions; the difference is that money incomes 
are stationary in both countries under paper, and vary inversely 
to each other under specie. 
As just remarked, international trade under paper approaches 
the conditions of pure barter. Under specie we may indeed lay 
it down that the trade is in essentials one of barter, since over-