COMPARATIVE COSTS

Fa

gl

29

These last figures, however, call for correction. They have
been worked out on the supposition that, as before, one-half of the
wages in each country are spent on linen, one-half on wheat. But
this supposition is not consistent with what has been assumed with
regard to the conditions of demand; namely, that the demand
of the Germans for wheat has increased. The Germans, under
that assumption no longer spend one half of their wages on wheat.
They have come to spend a larger proportion of their total income
on wheat. The Americans, on the other hand, have been tempted
by rising prices of wheat to send more of that commodity to Germany,
 and have been led to consume less of it themselves. And
they have also been tempted by falling prices of linen to buy from
the Germans more of that article; they have come to spend a
larger proportion of their income on linen. We need to modify
our figures accordingly.
Make the modification by supposing that under the changed
conditions of demand % of the Americans’ income is spent on
linen, % of it on wheat; and that in Germany 4 of the income is
spent on linen, § on wheat. Then we have:

2 or $0.68 spent on wheat @ $0.85 = 5% wheat
In the 1. S. wages $1.70 ‘1.02 ” » linen @ en 2) A linen
r 80.60 ” 7 wheat @ &’ wheat
In Germany wages $0.90 or 80.30 ” ” linen @ $0.60 5 linen

Compare now the figures with those arrived a ton page 26,
where the commodity wages were worked out under the first set
of conditions, before the increase in German demand for wheat.
Because of the increase in demand the nature of the changes in
commodity wages is as follows:

In the U. S. commodity wages were

[n Germany commodity wages were

BEFORE
wheat
linen
wheat
men

AFTER
3. wheat '
linen
wheat
— linen

Can it be held, under this revised (and consistent) statement,
that commodity wages in the United States have unquestionably
risen, those in Germany unquestionably fallen? True, the Amer-