INTERNATIONAL PAYMENTS 209 
The import of goods may readily come at a somewhat later stage 
than that of specie; since the movement of goods is more sluggish 
than that of gold. But come it will, and then the inward flow of 
specie will be followed by a current the other way. Prices cannot 
continue to advance indefinitely as they may during the first stage. 
On the contrary, they will tend to be brought back to a level that 
is in accord with the normal long-run relation between cash basis 
and credit superstructure. Just as a sustained inflow of specie 
will in the end push prices upward, so an upward movement of 
prices, even tho initiated merely thru deposit expansion, cannot 
persist unless supported by this same force — a sustained inflow 
of specie. 
A sustained inflow of specie may of course be induced by other 
forces. There may be some cause of an extraneous character, 
acting of itself to make the balance of payments continuously 
favorable to the country in which expansion has begun. If, for 
example, the country is in the early stage of large borrowings — 
if a succession of loans from abroad is in course of being contracted 
— the proceeds of the loans will provide the means for paying for 
added imports. While advancing prices will tempt imports, the 
loans, so long as they continue, enable them to be paid for from 
year to year. They may even enable still more specie to flow in, 
and so give support to a still further advance in prices and still 
further imports. The process may go on crescendo, until at last 
there is a halt in the lending operations, not unlikely to be 
sudden, and marked by a financial and industrial crash. During 
the years of the upswing period, the import of specie into the 
borrowing country may seem to be due at each several date to the 
higher prices and the higher money rates to follow these, not 
precede them. But these higher prices could not be maintained, 
much less could move still higher, unless the flow of specie came to 
the rescue, so to speak. And it could not be a supporting factor 
for the persisting expansion unless there were some other force 
at work, such as an international loan. Of all this the expe- 
rience of Canada, to be referred to presently, offers a striking 
illustration.