VARYING ADVANTAGES 
Tal 
yp CLEA fants 
95 
from Germany to the United States, being put on the market in 
Germany at the price of $0.89 as against an American money 
cost of $1.00. The marked change from the previous situation is 
that linen, which before moved from Germany to the United 
States, now moves from the United States to Germany. 
The barter terms of trade are, as between wheat and cloth, 10 of 
American wheat for 11.2 of German cloth; as between linen and 
cloth, 10 of American linen for 11.2 of German cloth. The United 
States thus gets for 10 of wheat only 11.2 of cloth, as against 15 of 
cloth under the previous conditions. Under those conditions she 
had such favorable terms for cloth as to lead her to confine her labor 
to wheat alone. Linen was then got more cheaply from Germany 
than by domestic production. Now the case for linen is reversed. 
It can no longer be got at lower price from Germany. On the 
contrary, it can be produced at so much lower money cost at home 
that it is actually exported to Germany. The explanation for this 
overturn, to repeat, is that the United States no longer gets the 
lion’s share of the potential gain divisible between the two coun- 
tries. She did get that preponderance of gain when her wheat was 
greatly in demand in Germany, and when on her part she did not 
readily take either cloth or linen in exchange. The relative states 
of demand have changed; the United States wants more cloth, 
Germany wants less wheat; to get what she wants, the United 
States finds it advantageous to send not only wheat, but linen 
also. The money wages and money prices constitute the mecha- 
nism by which those new conditions are transformed into actualities; 
but the fundamental cause of the change is the altered state of 
demand for the several articles in the two countries. 
(3) Finally, the intermediate case. Let German wages be $1.50 
a day — not so high as $1.60. no* low as €*.20. Then we have: 
Propuce te 
In the U. S 
"iY 
Te 270. S, 
” Germany ° 
” Germany 10 
 Germanv 10 
Toi 
Af 
~~ 
3 
5 
0 
20 wheat 
20 linen 
20 cloth 
10 wheat 
15 linen 
18 cloth 
$1.00 
$1.00 
$1.00 
$1.50 
$1.00 
$0.831