CH. 21

INTERNATIONAL DISEQUILIBRIUM

363

in the absence of the artificial check of sharp changesin the local rates of interest, are likely to be largerelatively to those corresponding fluctuations in theamount of the foreign balance which can be broughtabout quickly and with a moderate change in the termsof trade. The answer to the last point is not unaffectedby the tariff policy of the rest of the world—for ahigh degree of sensitiveness in the rate of foreign lend-ing to small changes may be inconvenient, and evendangerous, if it is not accompanied by an equally highdegree of sensitiveness in the response of foreign tradeto small changes.

END OP VOL. I

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