390

INTERNATIONAL TRADE

during that brief period at great profit; a profit so great that they
could be sold abroad at low prices and yet leave a handsome margin
to be shared between the German exporters and the various trade
speculators. But the volume of this trade was small, because
Germany was bare of physical goods. For that very reason, the
bounty, so long as the peculiar situation endured, was high on the
few goods that were available.
The much-discussed German episode was exceptional in another
respect. The paper issues early assumed such extraordinary
dimensions that those phenomena emerged which are characteristic
of a currency much distrusted and no longer circulating freely.
What has been said in the preceding paragraphs tacitly assumes
that the output of paper money proceeds in a quasi-orderly
fashion, in such way that the currency continues to circulate in
normal ways. So long as this is the case, it affects prices in the
same way as any increase of the circulating medium, be it specie,
convertible notes, mere deposit currency. But very great issues
of paper, succeeding each other very rapidly, work in a different
way. As is familiar in monetary theory, their effect will be
catastrophic; in a sense, quite abnormal. The usual ways of
handling money and of handling goods become quite upset ; everyone
 who has the money wishes to get rid of it, to spend it, as
quickly as possible; everyone who has goods is chary of parting
with them for money. Then ensue the familiar phenomena of
complete monetary collapse and complete demoralization of trade
and industry. All is chaos; perhaps not quite without rhyme or
reason, but very much less reducible to rule than what happens in
ordinary experience and is premised in ordinary reasoning. The
conclusions just indicated concerning the effects on international
trade of continuing issues which are fairly moderate, are little
applicable to this extreme situation. Foreign exchange, like everything
 else, fluctuates in price spasmodically, with little discernible
relation to other prices. I doubt whether any trend toward its
being higher or lower than the prices of exported goods or of
imported goods is likely to appear. What happens is mainly the
complete dislocation of all trade, and the deadening of all industry,