DISLOCATED EXCHANGES FURTHER CONSIDERED 365

point where it stood before). Steel tends to become cheaper in
the United States, and the people of the United States get a larger
physical quantity of steel than before. The barter terms of trade
are modified in favor of the United States. The deus ex machina
is able to maintain its wonder-working efficacy during the period
of transition only.
Still another possibility, nay probability, has now to be considered.
 Cotton has been treated as the only article of export
from the United States, or rather as the representative and type
of all the exports. In fact, however, every country exports a
number of different articles. Each article has its own demand
schedule, at home and abroad; each is subject to changes in
demand quite independent of changes in demand for other articles.
[t is highly improbable that at any one time an increase of demand
will take place for all the articles of export from a given country.
When such an increase takes place for any one of the exported
goods, the others are also affected under dislocated exchanges,
but in a way quite different. As regards the exported goods for
which the conditions of demand are unchanged, the new rate of
foreign exchange operates as a check or restriction. It does so,
at all events, in the first stages. The sterling exchange which
the sellers of such goods have for sale commands a lower price
than before, and they do not have the compensating circumstance
that their goods sell in Great Britain for a higher price than before.
In other words, these exports feel a chill because of the decline
in sterling exchange which follows from the offerings of other exporters
 whose sales to foreigners do show an increase. And the
consequence must be a lessened volume of those other exports.
That decline in volume, again, is presumably no more permanent
than is the initial decline in sterling exchange. It is part of a
general process of readjustment, resulting eventually in a modified
and settled rate of exchange (one settled in the sense of remaining
constant so long as conditions do not again change) and in modified
barter terms of trade. It is hardly profitable to follow out the
altimate possibilities as regards the exports not affected by the
increase of demand. Like many other theoretic possibilities they