International trade

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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 65 is still at the same price in both countries, copper has become cheaper in the United States, and can be profitably exported to Germany. Linen at the outset will not move from Germany; specie will be sent to pay for the American copper. As prices and money incomes rise in the United States and fall in Germany, linen will become dearer in the United States and cheaper in Germany, and will begin to move. The extent of the consequent readjustment of prices depends as need not again be explained, on the conditions of demand for copper in Germany, for linen in the United States. A possible outcome would be the following : Days’ wanes TorAL LABOR Day WaGes £2.10 $2.10 $1.20 $1.20 U.S. 10 U.S. 10 Germany 1G Germany 10 INTEREST TorAL CHARGE ! EXPENSES 5% on $105 = $5.25 nil 10% on $60 = $6.0G nil $26.25 221.00 $18.00 £12.00 Propuce 30 copper : linen 20 copper 10 linen DowmesTic SuppPLY Price 20.87% 81.40 £0.90 £1.20 We now have the conditions under which both articles will move. Copper is cheaper in the United States, as before ; but linen is now cheaper in Germany. International trade arises and rests on enduring conditions. It will go on indefinitely, to the advantage of both countries. The general proposition to which this series of illustrative figures points is that interest on capital acts on international trade not in itself, but only in so far as it operates differently on different commodities. At the very start it is obvious that an interest charge, added uniformly to the expenses of production, brings no alteration in relative prices, since it acts equally on all com- modities. Nor does an interest charge have an effect simply because it is at a different rate in the two countries — higher in one than in the other. If within each it acts uniformly thruout, it 1 Tt will be noted that in calculating this interest charge, the capital amount has been made greater than before for the United States ($105 instead of $100), and less than before for Germany. This modification of the capital sum is in accord with the changes in money wages in the two countries and the consequent changes in domestic prices. As wages have risen by 5 per cent in the United States (from $2.00 to $2.10), the money value of the capital instruments will have risen by 5 per cent, or from $100 to $105. As wages have fallen by 10 per cent in Germany (from $1.33% to $1.20), the money value of the capital instruments will have fallen by 10 per cent, or from $66.66 to $60.

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