366 
ws TR iy 
ih 
INTERNATIONAL TRADE 
afford plenty of scope for elaborated analysis, but little opportu- 
nity for verification in the actual course of trade. 
Returning now to the initial effects on the article for which there 
is the increased demand, and on the rates of foreign exchange, we 
have to confess that here also the deduced conclusions are rarely 
subject to verification or correction from actual experience. 
An increase of demand is an elusive thing. Changes in demand 
doubtless are taking place all the time, but it is rarely possible 
to put one’s finger on a specific case and keep it under continuous 
observation. Commonly an increase of demand sets in not by a 
sudden sweep of the kind assumed in the preceding pages, but by 
slow and gradual steps. The further changes which ensue under 
conditions of dislocated exchanges — the altered supply of sterling 
exchange and the shifts in the rates of exchange — also appear 
gradually. During their slow course they are likely to be offset or 
reénforced, as the case may be, by other changes occurring in 
the same period. And the reverse effect on other articles of export, 
caused by the change in demand for a particular article or group, 
appears also by insensible gradations, and would be no less 
difficult of disentanglement. It is only in time of war that 
an abrupt and extensive change of demand for a given article is 
likely to occur; but in time of war still other factors will also 
undergo great and sudden changes; and the entire situation will 
be even more complex and confused than in time of peace. I 
doubt indeed whether there are any conditions at all — war or 
peace, dislocated exchanges or gold exchanges — under which it 
would be possible to verify or substantiate by actual observation 
the theoretic conclusions on the effects of changes in demand which 
play so considerable a part in the literature on international trade. 
Another case, however, belonging in the same class, can be 
discerned in the actual course of trade and its sequence followed. 
It is that of a change in supply, not in demand. Suppose there is 
abrupt increase in the quantity of a given commodity offered for 
export. In a country whose industries are chiefly extractive, 
just this frequently happens. If its exports consist largely of 
agricultural products, its international trade is subject to spas-