DISLOCATED EXCHANGES FURTHER CONSIDERED 369 
steady rate — is likely to advance in one year, to falter or sink in 
another. Unmistakable as are the immediate consequences of the 
fluctuations in supply on the exchanges and on prices, the ulterior 
effects are usually obscure. Almost invariably they are interwoven 
with the effects of other factors, most of all with those of changes 
in the monetary policy and the monetary conditions of the country 
having paper currency. Even tho the immediate effects of crop 
fluctuations on the foreign exchanges in such a country are plain 
enough, the ulterior consequences of sustained changes in supply 
are in this sort of case, asin so many that stir the curiosity of the 
speculative economist, concealed in the disordered and confusing 
march of events. 
I turn now to another problem, that of silver exchange. If one 
country has a gold standard, another a silver standard, the situa- 
tion obviously is also that of dislocated exchanges. Gold can 
not flow as money from the gold-standard country into the silver- 
standard country. It can flow only as bullion, like any other 
commodity; and its transfer cannot affect prices in the silver 
country. Conversely silver can flow only as bullion into the gold 
country. Such was the situation as regards international pay- 
ments and the foreign exchanges in the trade of Great Britain and 
most of Western Europe with the Orient after the demonetization 
of silver in 1873. It remained so for the trade with British India 
until the cessation of the free coinage of rupees in 1893, and for 
the trade with Japan until Japan adopted the gold standard in 
1897. It still persists (1925) for the trade of the gold standard 
countries with China. 
In this case we must have regard to a factor different from 
those hitherto considered. The money of each of the trading 
countries, while not available in other countries as money, is yet 
available as bullion, i.e. as merchandise. Paper money cannot 
move at all from the country in which it circulates. Silver, how- 
ever, is a commodity valuable in itself, and can move from the 
silver country into the gold country; and of course it can move 
from the gold country to the silver country. Gold likewise can