I. Scope of the treatise, 547.—II. The theory of prices; the equations of exchange; relation between investment and saving, 549.— Does it solve the “dilemma” of the “over-savings” theories? 553. — Specific maladjustments, 555.— Profit versus anticipated profit, 556.— III. The money mechanism. Distinction between income and savings deposits; treatment of demand and time deposits, 558. The problem of business deposits, 560. Security booms and deposits; does speculation tie up credit? 567.—IV. Bank control of prices, 573. Bank rate and investment, 575.— Market rate and “natural rate,” 578. Bank control and the major depressions: the nineties, 581; — England since the war, 583; — the current depression, 584.— Bank control by action “in advance,” 584.— External versus internal stability, 586.

I. Germany's economic paradox, 482. — The pre-war trade balance, 483. — Why the London Settlement on reparations broke down, 483. — The two periods of falling exchange since the Armistice, and the different behavior of the foreign trade, 485. — II. The reasons for the paradox: composition of the exports and the imports, 487. — Effect upon imports of the abolition of food price control, 489. — Relation of United States exports to German imports last year, 489. — The system of export control, 490. — Effects of depreciating exchange on home buying, 492. — The export trade has responded more sympathetically to a moderate rise of the mark, 493. — A growth of exports sufficient to pay reparations depends largely upon recovery of the Russian market, 493. — How the imports have been paid for and the reparation charges met, 495. — III. Germany's experiences furnish light on the theory of foreign exchange under paper, 498. — Export and domestic prices compared, 499. — The causal sequence appears to have run as follows: reparation payments, depreciating exchange, rising export and import prices, rising internal prices, budgetary deficits and increased private demand for credit, increased note issue, 501.

The credit-exchange arrangements, 422.—Comparison of the course of exchange in the four leading countries, 425.—Buenos Aires and Montevideo exchange, 428. — The Argentine balance of international payments, 431. — Quantity exports of meat and cereals, 436. — The Chilean trade balance, 438. — Nitrate, exports, production, prices, 439. — Exports of coffee, 443. — Interest payments, 443. — Chilean exchange a depreciated paper exchange, 445. — The fall of the rate since the armistice, 448. — The new exports and industries of Brazil, 449. — The fall of Brazilian exchange, 453. — The decline of exports (and prices) of coffee and rubber, 455. — Comparison of trade balances of Brazil, Argentina, and Chile, 459. — Foreign borrowings of Brazil, 460. — Budgetary deficits, 462. — Inconvertible paper money, 463. — Interest payments, 464.

THE outstanding features of our balance of international payments in I92I and the present year have been the pronounced reduction of the balance of merchandise exports,' an inflow of gold unprecedented in the history of any nation, and a marked increase in the flotation of foreign bonds in this market. Mainly as' the result of these changes, it appears certain that our balance of international payments since January I, I92Iincluding invisible as well as visible trade -has not shown any surplus in favor of this country. This is in striking contrast with the state of our international balance in IgIg and I920, and is an important part of the explanation of the rise of sterling exchange from a monthly average of 3.64 in July I92I to a monthly average of 4.44 in May I922. The excess of merchandise exports over imports in I92I was $i,976,000,000 compared with $2,950,000,000 in I920. The net import of gold was $667,000,000 compared with $50oooo,ooo 2 in I920. The excess of foreign bonds floated in this market over maturing issues was $4IO,000,ooo, whereas in I920 maturing issues exceeded new flotations by $65,ooo,ooo. The visible trade balance in I92Imerchandise, gold, and silver showed a surplus in favor of this country of $I298,000,000, compared with $3,029,00o,0003 in I920. The balance of goods, gold and silver, and foreign bonds issued and matured was in I92I only $888,ooo,ooo, as against a surplus in our favor in I920 of $3,094,000,000. It is not surprising, therefore, that when all items are taken into account our international balance for I92I shows no surplus whatever in our favor. In the current year it appears probable that we shall have a substantial debit in our international account. The balance of merchandise trade in the first quarter of I922 showed an excess of exports of only $I7I,000,000, and this was reduced by gold imports to only $86,ooo,ooo. When this balance is put over against the unprecedented flotations in our market of foreign government and corporate bonds, which amounted to $302,000,000 4 in the first three months of the year, we find a debit on these three items alone merchandise, gold, and foreign bonds issued here of $2i6,000,000. For the first half of this year, the debit will be even greater, since the monthly export balances have continued to be small, and the aggregate issues of foreign bonds to July i reached a total of $686,ooo,ooo,5 exceeding the entire amount issued in the full calendar year I92I or I920. This is a striking reversal of the conditions which obtained for the first two years after the armistice, when the excess of merchandise exports reached figures unequaled even during the war, and the flotations of foreign bonds in this market did not exceed the aggregate of maturing issues. Our balance of international payments for the calendar year I92I is given in the table below. The sources of the data and the bases for estimating the items for which definite data cannot be obtained are given in the Appendix. For the first time since the armistice the table shows an approximate balance of debits and credits. Aside from the merchandise trade and the huge inflow of gold, the most important items in the table are those relating to the international movement of capital and interest. The aggregate outgo on capital and interest account amounted to $I,097,000,000 6 and the aggregate

John H. Williams, The Balance of International Payments of the United States for the year 1920: With a Statement of the Aggregate Balance, July I, 1914-December 31, 1920, The Review of Economics and Statistics, Vol. 3, Supplement 1 (Jun., 1921), pp. 169-212