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

CAPITAL AND INTEREST TAA 63 Suppose the rate to be twice as high in the United States as in Germany. The interest charge (not the same thing, of course, as the rate of interest) to be added to the expenses of produc- tion then becomes twice as high. Suppose the interest charge be 50 per cent of the wages bill in the United States, 25 per cent in Germany ; then we have: Wa Re $2.00 $2.00 $1.33 $1.33 Domestic Probpuce SuppLy Price £1.00 $2.00 $0.83 $1.66 50% on $20 = $10 50% on $20 = $10 25% on $13.33 = $ 3.33 25% on $13.33 = $ 3.33 $30 830 $16.66 $16.66 Both copper and linen are lower in price in Germany; both move to the United States; specie flows from the United States to Germany. Prices and money wages will fall in the United States, rise in Germany. Copper will rise in price in Germany until it is at the same price as in the United States; linen will rise similarly. After the redistribution of specie, the price of each article will be the same in the two countries, tho at a level somewhat higher all around than in the bare and simple situation first considered. Money wages will be readjusted, at rates somewhat lower than before in the United States, somewhat higher in Germany. The change in money wages signifies that with the higher interest charge in the United States the share of total national income which goes to the laborers is smaller there than in Germany. So far as con- cerns international trade, nothing happens except the temporary movement of goods one way and the redistribution of specie. Once this much is accomplished, the two countries have no trade connection ; each goes its independent way. The mere fact that the interest charge is lower in the one than in the other does not cause the conditions for international trade to be different from what they were before. Now change the situation in still another way. Assume that one of the articles is produced with much capital, the other with little. Make the case extreme : suppose that one of them (copper) ! On the manner of constructing these figures, on some pertinent criticisms, and on the grounds for putting them together as is done in the text, see the note at the close of this chapter.

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