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INTERNATIONAL TRADE 
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a superior advantage in wheat; Russia has an inferior disadvan- 
tage. Tho the United States produces both wheat and cloth with 
less labor than England, the effectiveness of her labor is particularly 
great in wheat. With the same labor, the output of wheat is twice 
as great as in England (20 to 10), while that of cloth is only 
one-third greater (20 to 15). Russia has no superiority over 
England in either commodity; but she has equal effectiveness in 
wheat (10 to 10), with a less effectiveness in cloth (10 to 15). 
Russia and the United States, it is obvious, have no occasion to 
trade with each other. They present the simple case, already 
considered sufficiently, of equal differences in costs. The effec- 
tiveness of labor is twice as great all around in the United States as 
in Russia. Neither country would find it worth while to exchange 
with the other. The United States is the more prosperous, Russia 
the less prosperous. Were they alone, and England out of 
the case, neither would pay attention to the other; neither 
would be better off or worse off because of the presence of the 
other. 
The terms of trade possible under these conditions would be 10 of 
wheat for anywhere between 11 and 14 of cloth. These terms, 
that is, would be possible in trade between the United States and 
England, and also in trade between Russia and England. England 
would exchange with each of the others on the same terms. So far 
as concerns the gain ascribable to international trade, both the 
United States and Russia would be on a footing of precise equality : 
their income in terms of the cloth secured from England would be 
enlarged to precisely the same extent over and above what that 
income would have been without the trade. 
Express the same situation in prices and money incomes. As we 
have already seen, the double effectiveness of American labor as 
compared with Russian would cause money wages to be twice as 
high in the United States as in Russia; while the relations between 
the effectiveness of labor in England and in the other two countries 
would bring it about that money wages would be higher in England 
than in Russia, lower than in the United States. We may have, 
for example :