EXPORTS 67
oxtr BuppoBed curtailment of imports is permanent, gold would continue to flow until prices in general changed, on both sides of the water and in opposite directions. Thus prices will go up in America and down in Great Britain, and English merchants will buy less in America in favor of their own home market. Since their purchases in America are our exports, it follows that our export trade will fall off. Which is what we wished to show.
The change in the prices we have just shown can have no permanent effect upon the internal commerce of either country, for an equal change in the price of everything simultaneously is not a change in exchange values generally.^ But as between nations, the change is in an opposite direction and very materially affects the international trade. It should be noted that although the change in imports is permanent, the flow of gold induced is not permanent. It is only an initial flow, just sufficient to change the stocks of gold in circulation in the nations in question, to the critical point where changed prices will affect exports in like amount After that, gold will return to its normal rate of flow.
Of course such a chain of cause and effect could never be illustrated by the actual course of events, for the reason that the " other things ^^ we have imagined equal never are equal. This tendency to a decrease in exports might be entirely neutralized by a counter tendency such, for instance, as a rise in rents of American real estate owned by Englishmen living in England. Economically speaking these rents go to England as commodities, exports, real goods — ^although the recipient receives not any speciflc goods so exported, but a draft for gold, which in its turn is merely a draft for so much of any kind of wealth the holder may choose to select from the whole English market. The credit instrument rep- resenting the rent due is the effective cause of the flow of just so much real wealth from American shores. International payments are made in goods — ^real wealth, imports and exports.
This mechanism of trade is purely automatic. It bears the same relation to society that the involuntary functions of the body, such as the circulation of the blood, bear to the individual. Since a coimtry does not transact its foreign commerce in its corporate capacity as a nation, but only as the sum of the transactions of its individuals and commercial houses — ^a national debit and credit account can not be periodically drawn up to show the total of all transactions. But such an accoimt exists in effect as the sum of the accounts forming its parts. For a single year, or some short period of time, such an account would show an outstanding item or balance representing transactions not yet closed, but this would always be in the act of liquidating itself and would
iFrom 1870 to 1897 there was a gradual faU of about 60 per cent, in priees generally, but by 1910 about half of this had been regained. (Prin- dples of Economies, H. B. Seager, page 377.)
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