Effects of the American devaluation on prices and export trade

The effects of the American devaluation policy on commodity prices and foreign trade may be discerned by an analysis of pertinent statistical data. Analysis of price data revealed no automatic rise in the general level of prices corresponding in degree to the increase in the price of gold. There was, however, a fairly close correspondence between the rise in prices of commodities important in international trade and the increased price of gold. Although no exact mathematical correspondence is shown, the conclusion appears warranted that the devaluation policy did cause a reversal of the downward movement of prices. Data relative to American export trade show that after the adoption of the devaluation policy both the value and volume of the export trade increased, though the former increased more rapidly than the latter. The revival of American export trade may to a considerable extent be explained by the fact that the dollar was made a cheaper unit which stimulated its use by foreigners.