It is well understood that the introduction of conditions of decreasing costs into economic analysis alters or disrupts many conventions of the discipline. The price-taking postulate characteristic of perfectly competitive firms becomes untenable when firms encounter continuously declining average cost schedules [17]. Generalized marginal product factor pricing is not sustainable when enterprises experience increasing returns; if all factors are paid the exchange-value of their marginal products the sum of the factor payments will exceed the exchange value of the output [13, 37-9]. The pure theory of international trade requires modification, orienting it toward analysis under conditions of imperfect competition [6]. The implications for David Hume's price-specie-flow mechanism also must be reconsidered once increasing returns come on the scene. Hume's [7, 60-77] well-known essay Of the Balance of Trade, originally published in 1752, was intended to establish that the mercantilists were wrong in their belief that a nation could expand indefinitely its share of precious metals through foreign trade. Hume argued, instead, that there was a natural level of specie appropriate to each nation and unrestricted international trade always would restore the normal level everywhere. This natural level of specie, determined by the unique productive capacities of each country, served in Hume's view as a barrier or limit to mercantilist desires to acquire hard money. Decreasing costs in specie production, however, undermine the self-adjusting character of the price-specie-flow mechanism. The objective here is to provide a dynamic two-country model of international trade that incorporates the price-specie-flow mechanism-the Hume process-and facilitates evaluation of the conditions that sustain Hume's argument. The investigation is integrated with various stylized features of Ricardo's [11] famous example of the Anglo-Portuguese trade. This will permit a brief examination of some issues that have been raised by economic historians to be undertaken at the close of the paper. The central issue to be addressed is the following: With the Hume process in operation must each of two nations engaged in trade arrive at a condition where they each possess fixed shares of the world's money, or is it possible for one of them continuously to increase its share of the global money supply?