36 
IN TERNATIONAL TRADE 
(wheat) ; as regards both wheat and bricks the same labor produces 
twice as much in the United States as in Germany. The 10 days’ 
labor produce 2000 bricks in the United States and but 1000 in 
Germany. Then, altho wages are higher in the United States, 
bricks are actually lower in price. 
If now we change our supposition by assuming that the effective- 
ness of labor in the United States is not double that in Germany, 
but only one and one-half times as great, —if the 10 days’ American 
labor produce 1500, — the American price of brick will be $1.00 per 
100, identically the same as the German price. And if we change 
still further by assuming that the effectiveness of labor is the same 
in the two countries, —if in the United States as well as in Germany 
the 10 days produce 1000 bricks — the price will be higher in the 
United States; the American price will be $1.50 and the German 
$1.00. 
In other words, the prices of domestic goods are not necessarily 
higher in a country of higher money wages. They will be higher 
only if the effectiveness of labor is not higher in the purely domestic 
field. If the effectiveness of labor is positively higher than it is 
for the same articles in foreign countries, domestic prices may be 
as low in those countries or may be lower. High wages and high 
prices do not go together, either as regards international com- 
modities or domestic commodities. 
We may proceed now to indicate summarily what determines 
the range of money wages in a given country and what determines 
that of commodity wages. 
Money wages, it is seen, are high in a country which has advan- 
tageous terms of international trade, which carries on trade with 
other countries in such way as to secure large gains from the trade, 
— favorable barter terms of trade. The main factors on which 
these gains depend have been sufficiently indicated : an outstanding 
comparative advantage, and the play of demand in the terms of 
trade. High money wages and incomes are the indication of 
favorable terms of trade, and constitute the mechanism by which 
the gains are secured. The countries having these favorable 
conditions realize them concretely by buying with their larger