Principles of Political Economy · John Stuart Mill
FOREIGN EXCHANGES.
212. What is the ordinary limit to the premium on foreign bills of exchange, and why? 213. What are the chief effects on the foreign exchanges which are produced by the breaking out of a war? Account for the fact that in 1861 the exchanges on England in America fell considerably below specie point. 214. Suppose that the next harvest in England should be very defective, and extraordinary supplies of American grain needed. How would this probably affect the price of bills of exchange between England and America, and the profit on the exportation of English manufactures to the latter, and why? 215. Trace the process by which the precious metals spread from the mines over the world. 216. Suppose the exchange between England and the United States to be heavily against England, how will this fact affect the export and import trade between the two countries, and why? 217. What is meant by exchanges being against a country? 218. Enumerate the principal circumstances which affect the rate of exchange between two countries. How is the _par_ of exchange ascertained? 219. In what way are gold and silver distributed among the different trading countries? Between different parts of the same country? 220. Trace the effects of large and continuous issues of inconvertible paper currency on the prices of commodities, on importation and exportation, and on the foreign exchanges.
221. State the conditions under which international trade can permanently exist. What will be the ultimate effect of a large movement of foreign gold upon prices, imports, and exports in the receiving country? 222. State the theory of the value of money (i.e., “metallic money”), and clear up any apparent inconsistencies between the following statements: (1.) The value of money depends on the cost of production at the worst mines; (2.) The value of money varies inversely as its quantity multiplied by its rapidity of circulation; (3.) The countries whose products are most in demand abroad and contain the greatest value in the smallest bulk, which are nearest the mines and have the least demand for foreign productions, are those in which money will be of lowest value. 228. The effects of the depreciation of the paper currency in the United States are thus described by Mr. Wells: “It renders it impossible to sell abroad the products which have cost too much at home, and invites from other countries the products of a cheaper labor paid for in a sounder currency. It exaggerates imports, while destroying our ability to pay in kind.” State how far you agree with the deductions here drawn, assigning your reasons where you differ. 224. When the foreign exchanges are manifestly against a country, and a balance of indebtedness is the cause, the equilibrium can be restored in two ways. State and explain the operation of each.
225. What are the conditions which determine for a country a high range of general prices? How far is this advantageous? 226. What is the effect of the imposition of a tribute by one country on another upon the course of trade between them, and the terms on which they exchange commodities; and why? 227. For what reasons may a nation’s exports habitually exceed or fall short of its imports? 228. Explain the real and nominal exchange. 229. Expound Mr. Mill’s theory of the influence which a convertible currency exercises on foreign trade. 230. What is the effect of a depreciated currency on (1) foreign trade, and (2) the exchanges?
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