TRIBUTE AS EXAMPLE 115 
the United States, on the other hand, the amount of linen bought 
shrinks greatly in consequence of the rise in linen price (from $0.68 
to $0.763) ; and the total amount which she spends on linen falls 
substantially, from $8,500,000 to $7,200,000. If the German 
conditions of demand were the opposite from these — elastic for 
wheat — there would be a mitigation of the American loss in the 
barter terms. The United States would still find that she ex- 
changed wheat for linen on terms less favorable than before, but 
not so much less favorable as in these illustrative figures. 
It need hardly be pointed out that in all such cases the figures of 
relative money wages are in the last analysis the results of the 
prices of the goods. They have been stated, for convenience of 
exposition, as if the wages determined the prices; the wages being 
the “supply prices.” But it is the goods, of course, which first feel 
the impact of the play of international demand, and it is the prices 
of the goods which determine the money incomes. Wheat and 
linen rise or fall in price as changes take place in international 
payments; thence are derived the rates of wages; these wages 
then appear as the money costs, the supply prices, of the goods. 
The reader who is not wearied by the details of such figures may 
follow them as they can be worked out for still one other sort of 
case, illustrative of a situation in which the play of demand is more 
favorable to the United States — that is, one in which the German 
demand for wheat is elastic (greater than unity) and the American 
demand for linen is also elastic.! 
Reverting to the figures with which we started (p. 110), suppose 
once more an initial flow of specie, caused by a payment for tribute, 
and the consequent changes in prices and money incomes. Assume 
the following stage to have been reached : 
In the U. S. 
1) »» J: S. 
” Germany 10 
" Germanv 10 
er 
JA 
ToraL 
«10.50 
$10.50 
PRODUCE 
2 wheat 
) linen 
10 wheat 
15 linen 
Domestic 
SuppPLY PRICE 
80.825 
$0.82; 
$1.05 
20.70 
! The following pages deal with some refinements which the reader may skip 
without break in continuity, passing to page 117.