International trade

Bibliographic data

Monograph

Identifikator:: 1758394757

URN:: urn:nbn:de:zbw-retromon-136209

Document type:: Monograph

Author:: Taussig, Frank William http://d-nb.info/gnd/120199459

Title:: International trade

Place of publication:: New York, NY

Publisher:: Macmillan

Year of publication:: 1927

Scope:: XXI, 425 Seiten; graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part I. Theory

Collection:: Economics Books

ABSOLUTE DIFFERENCES IN COST 15 will arise. And the converse applies, of course, to Germany. If German wages are twice as high as in the United States — $2.00 there against $1.00 here — the price of linen will be as low in the United States as in Germany, and copper alone will move between the two countries. With German wages less than $2.00 — less than twice as high — linen will move from Germany, and an exchange of goods for goods will begin. In analyzing the possibilities of exchange under the supposition of barter, we have seen that the terms on which the barter of goods for goods will take place may vary between wide limits. It is easily shown that the same possibility of wide variation in these terms exists under a money régime also. Let us suppose money wages to be higher in the United States than in Germany, but not as much higher as they might possibly be. Let wages in the United States be $1.50, wages in Germany $1.00: not twice as high, but 50 per cent higher. Then we have: In the U. S. 10 days’ labor ”» » U. S. 10 » ¥» ” Germany 10 " Germany 10 WAGES PER Day £1.50 ‘1.59 £1.00 21.00 ToraL WAGES . Propuce Ser SE 30 copper $0.50 1% linen $1.00 15 copper 80.66% 30 linen $0.33% Linen is produced more cheaply (in money) in Germany, and flows thence to the United States; copper more cheaply in the United States, and flows thence to Germany; linen obviously being relatively the cheaper of the two. The barter terms of trade are 15 of copper for 22% of linen. At the price of copper which rules in both countries ($0.50) the sum of $7.50 will buy 15 of copper; while at the ruling price of $0.33} for linen, that same sum will buy 22} of linen. In other words, 15 of copper sent from the United States to Germany will procure 221 of linen. And these barter terms of trade are, of course, in accord with the money wages in the two countries. Money wages in the United States are 150 per cent of those in Germany, and the product of ten days of American labor (30 of copper) ex- changes for the product of 15 days of German labor (45 of linen).

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