[54 
‘INTERNATIONAL TRADE 
zation of prices and wages; that, given free trade, the same rates 
of wages and the same range of prices must prevail in all countries ; 
that the flow of gold tends to make them uniform thruout the 
world. 
Another impression or belief, closely related to this, is that not 
only prices and money wages, but real incomes and the standards 
of living would be brought to one uniform level everywhere by 
unfettered international trade and international competition. 
Hence the uneasiness, even terror, about the “yellow peril”: a 
supposed danger that the teeming millions of the East will compete 
with the peoples of the West and reduce the economic conditions 
of all to a common low level. 
Yet it is elementary knowledge that countries trade with each 
other and that wide differences in wages and prices persist none 
the less. The most striking illustration is in the relations between 
Great Britain and British India. Here exchange between two 
large populations has been carried on for several generations In 
great volume, with rapid and cheap transportation and with com- 
plete free trade. Yet money wages have remained very much 
higher in Great Britain, and the general monetary scale has re- 
mained very much higher. Commodity wages, too, have been 
vastly higher. The same phenomenon, less striking as regards 
the differences in real and money wages, but more striking as 
regards the closeness of the contact, appears on a comparison 
between Great Britain and Continental Europe in the period that 
followed the adoption of free trade in Great Britain — a period 
of about fifty years in the latter half of the 19th century. The 
relaxation of duties, to a point almost negligible so far as concerns 
the present discussion, which took place in Great Britain about 
1840, was followed twenty years later by a similar relaxation on 
the Continent. The Anglo-French Treaty of 1860 (the Cobden- 
Chevalier Treaty) led to a network of conventional arrangements 
between the important European countries, and brought about 
not, indeed, complete free trade, but a range of import duties so 
low that it could have been no appreciable factor in maintaining 
differences in wages and prices. Yet these differences persisted.