TRIBUTE AS EXAMPLE 
117 
Obviously, however, the United States gets terms which still 
remain less favorable than they were at the outset. We started, it 
will be remembered, with barter terms of trade such as to divide 
equally between the two countries the possible gain from the 
trade — 10 wheat for 12% linen. The new terms just worked out, 
tho more favorable to the United States, are still not so favorable 
as those from which we began: the United States still gains less 
than at the outset. 
The terms will be again shifted, and in the same direction, if we 
suppose the German demand for wheat to be still more elastic, and 
the American demand for linen still more elastic. All the figures 
will then be correspondingly modified — higher price of wheat, lower 
price of linen, higher money rates of wages in the United States, 
lower money rates of wages in Germany. But the rates of wages 
in the United States will always be lower than they were before the 
tribute payment set in, the German rates always higher. The 
barter terms of trade, again, might be but little less advantageous 
to the United States than before; they might be almost as much as 
125 linen got for 10 wheat ; but they would never be quite so much. 
The barter terms might be 12.2 or 12.4 linen for 10 of wheat, but so 
long as the annual remittance of $1,000,000 was necessary and no 
other new factor intervened, could never be 12.5. The United 
States always would have not only to pay the tribute, but would 
have to exchange its exports for its imports on less favorable terms. 
“Less favorable terms.” A distinction is to be drawn with re- 
gard to the significance of this designation according as it is applied 
to the sort of situation here analyzed, or to that arising from a mere 
change in demand. The latter case, that of a change in demand, 
was considered in a previous chapter.! It was there pointed out 
that a change in demand is a voluntary act, or rather change of 
attitude, on the part of one or both of the exchangers. When the 
demand schedule, for example, shifts in such manner that at the 
same price more of a commodity is bought than before — if the 
demand curve moves to the right — the change means that people 
1 See Ch. 4. pp. 26-33.