TRIBUTE AS EXAMPLE 
eat i EN 
111 
linen bought, and the tribute of one million. Foreign exchange is 
no longer at par; the American exports of wheat no longer yield 
bills on Germany in amounts sufficient to supply the needs of those 
who have to remit to Germany. Exchange on Germany rises to a 
premium in the United States; specie flows to Germany. Prices 
and money wages fall in the United States, rise in Germany. These 
changes will go on until a stage of equilibrium is reached, which may 
be exemplified as follows : 
In the U. S. 10 days’ lah 
2.” U.S. 10 88% 
” Germany 10 
Germany 10 
rr 
Wages 
PER Dav 
at fviy 
Sl. 10 
TorAL 
Wages 
ra 
v1 15} 
Propuce 
20 wheat 
"linen 
10 wheat 
15 linen 
DowmEesTic 
SuppLY Price 
$0.80 
$0.80 
$1.15 
$0.762 
Wages have fallen in the United States from $1.70 to $1.60 ; 
they have risen in Germany from $1.02 to $1.05. The money cost 
of wheat has fallen in the United States from $0.85 to $0.80 and is 
now considerably lower than the German money cost of wheat ; 
the money cost of linen in Germany has risen to $0.762 and is now 
not much lower than the American money cost of linen. 
At these prices suppose the movement of goods to be - 
10% millions of wheat at $0.80 exported from the United States = $8,200,000 
9.4 millions of linen at $0.762 exported from Germany = $7,200,000 
The exports of wheat from the United States exceed in money 
value the exports of linen from Germany. The difference is a 
million dollars, precisely the sum which has to be remitted to Ger- 
many ; that is, it suffices to yield the volume of bills in Germany 
which are wanted by those persons (private individuals or public 
officials) having the remittance in charge. The demand for bills 
is just met by the supply; foreign exchange is at par; equilibrium 
has been reached. 
The equilibrium, it is to be noticed, is one in the “balance of 
payments,” not one in the “balance of trade.” The payments to 
be made by the United States to Germany are completely met. 
But the balance of trade — the balance of merchandise operations 
— 1s “favorable” to the United States ; her exports of goods exceed