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: INTERNATIONAL TRADE 
It will be convenient to turn first to the exports. Before 1890 
there was a relatively low premium on gold, that is, a relatively 
low rate of sterling exchange. The low rate was the natural con- 
comitant of the heavy loans then made to the Argentine. The 
borrowings in London being large, large sums of exchange on 
London were in the market, and the exchange rate and the gold 
premium tended to be low in Buenos Ayres. And this in turn 
tended to check exports. The Argentine exporter, selling for gold 
in London, got for his bills on London a price which was low in 
relation to the increasing volume of the paper, and low (presum- 
ably) in comparison with domestic prices. After the crisis the 
situation was reversed. Loans ceased, and the exchange market 
was no longer burdened by the sterling bills which Argentine 
borrowers had hitherto been offering. The effective rates of 
exchange, the gold premium, went up. The exporter now got 
in Argentine paper a much larger return for his goods; and 
exports advanced, both in quantity and in money value. In 
other words, the substantive course of trade — the deficiency of 
exports during the first stage, and the excess of exports during 
the second — was directly affected by the foreign exchange market. 
It was the varying price of exchange which brought about the 
relation between exports and imports. Our deus ex machina was 
in action. 
Unfortunately the statistical evidence does not enable us to go 
much further than to reach this comparatively simple conclusion. 
To go beyond, one would need to know what was the course of 
domestic prices, and whether these advanced more than did export 
prices. In the last paragraph it was intimated parenthetically 
that one might presume they did. The gold premium failed to 
advance in proportion to the increasing volume of the paper, 
whereas prices in general, and domestic prices in particular, might 
be expected to do so. But this is no more than an expectation 
or presumption. The movement of prices under paper money 
inflation is always irregular, and its accordance with the rising 
quantity of paper is never exact or in form. There can be no 
certainty that full evidence, if attained, would substantiate the