VARYING COSTS; DIMINISHING RETURNS 79
favorable to the United States, — if she gets 14 of linen for 10 of
wheat — money incomes are comparatively high in the United
States, comparatively low in Germany. Wheat then is com-
paratively high in price in the United States, and is at the same
comparatively high price in Germany. Linen is at a comparatively
low price in Germany, and at the same low price in the United
States. As consumers of linen, the Americans gain from their high
money incomes ; as consumers of wheat, the Germans lose from
their low money incomes. But as producers of wheat, the Ameri-
can wheat-growers are under a handicap in selling their wheat in
Germany. They cannot sell so much, nor can they displace as
many German wheat-growers as they could if their money incomes
and their wheat prices were lower. And the Germans as pro-
ducers of wheat are not so hard pressed by American competition
as they would be if their (the German) money incomes were higher.
The low rates of money wages lessen their expenses of production,
and wheat lands which would go out if money wages were higher
are able to hold their own and maintain themselves in face of
American competition.
In the talk of the man on the street, and also, unfortunately, in
the reasonings of pretentious books on economies, consequences of
this kind are dealt with as if they indicated a disadvantage to the
United States and an advantage to Germany. The American
wheat-growers find in higher money wages an obstacle to the cheap
production of wheat and to the extension of exports; this is bad for
the United States. The German wheat growers find in lower
money wages an aid in meeting foreign competition ; this is good
for Germany.. The man on the street almost invariably has the
mercantilist point of view: exports are to be promoted, but
domestic production is also to be safeguarded against competing
imports. Not a few economists share these prepossessions, some-
times deliberately, more often thru a lack of sustained and con-
sistent thinking. True, no economist, and indeed no thinking
person, would deny that high money wages, combined with low
prices of goods, bring material prosperity; but, when faced by a
concrete situation, few accede readily to the conclusion that high
