32 
INTERNATIONAL TRADE 
German prices and in money incomes will go on until the eventual 
limit is approached when there is no longer any gain at all to 
Germany from the exchange. In the United States, on the other 
hand, the extent of the readjustment will be affected by the state 
of her demand for linen. If that demand is elastic — if her people 
buy more linen quickly as the price begins to fall — the movement 
of specie into the United States will be less great than it would be 
if the demand were inelastic. The rise in prices and in money 
incomes will be less, the alteration in the barter terms of trade less 
markedly to the American advantage. 
Something must be added to this. It is not merely the character 
of the American demand for German goods that has to be con- 
sidered. Regard must be had also to the demand schedules of the 
Americans for their own product, of the Germans for theirs. 
When German linen falls in price, the Americans, while tempted 
to buy more linen, must consider the fact that in order to do so 
they must dispense with some wheat which they have been con- 
suming. And the Germans on their part, when American wheat 
rises in price, have to consider that their payment of an additional 
price for the wheat necessarily involves a diminution in the amount 
they can spend on their own linen. 
In other words, the supposition of the preceding paragraphs 
tacitly included the assumption that the Germans did experience 
this sort of double change in their demand schedules. When the 
German demand for wheat increases, as was assumed above, that 
very change necessarily implies that the German demand for 
linen is less insistent than before. They care more for wheat and 
less for linen. 
Analogous, tho not quite the same, is the position of the Amer- 
icans. They are offered more of linen than before for a given 
quantity of wheat, and have to decide whether they will take more 
linen and consume less of their own wheat. The character or 
intensity of their demand for the two articles is not supposed to 
have altered. It is only that, with demand schedules unchanged, 
they are called on to use less of wheat and to buy more of linen. 
While the outcome depends in both countries on the double aspect